Supply Chain Issues Crippling Construction Sector

The building and construction industry in Australia has been faced with a series of unprecedented challenges over the last several years. The sector has been impacted by events both national and international and despite government assistance, many operators are facing extremely difficult circumstances.

The uptick in abandoned worksites and construction firms facing financial stress has received a significant amount of publicity in recent times. Staffing shortages brought on by the COVID-19 pandemic and subsequent restrictions have placed significant pressure on project timelines. With the building industry in Australia historically having a large contingent of contract labourers from overseas, restrictions forbidding workers from entering the country only further exacerbated the already reduced pool of available labour. With workers facing extended quarantine times, FIFO work and moving interstate became increasingly difficult. These staffing issues created enormous pressure on the industry, which continues even as restrictions have all but gone.

In addition, supply chain issues continue to severely impact the industry with the cost of materials such as timber, PVC piping and steel increasing exponentially. This has led to contractors and construction businesses bearing the increase in project costs but being forced to meet timeframes and budgets agreed to prior to many of these issues surfacing. The large amount of materials and equipment sourced overseas has left the industry vulnerable with inflation also playing a key part in the financial woes many firms are facing. With the cost of materials rising and the value of the Australian dollar falling, it has become a frequent source of pain for business owners and has led to the demise of a number of large firms in recent months, with many others on the brink of insolvency or entering administration. As these larger firms have folded, the flow on effects have impacted not just their thousands of direct employees, but also their sub-contractors.

If your construction business is experiencing the issues discussed in this article, we have financial stress management that can help. Our experience assisting businesses both large and small across the sector means we can objectively assess your situation and work with you to implement a plan to ensure the best possible outcome. If you would like more information on our Members Voluntary Liquidation or Small Business Restructuring services, you can book in for a consultation via our website.