Sunshine Coast builders warned that insolvency rates could rise amid crisis

Builders have been warned that some companies would fold on the back of a construction materials, trade and price crisis that is now being predicted to extend into 2023.

Sunshine Coast builders have been warned to expect some companies to go bust amid a construction materials and trade crisis that’s sent prices soaring and threatens to spiral into 2023.

The head of Australia’s largest private construction company Hutchinson Builders has predicted that many firms would fold in 2022.

Hutchinson Builders chairman Scott Hutchinson said he did not expect the widespread crisis to improve until 2023.

“I’ve been saying for a while now that collapses are going to happen,” Mr Hutchinson told The Courier Mail.

“We are in a profitless boom and the industry needs to be settled down. There will be a lot who will go broke next year.”

Cooroy-based sustainable firm Overland Design and Construct’s owner Andrew Webb say 2021 had been tough. Picture: Patrick Woods.

Worrells Solvency and Forensic Accountants Maroochydore partner Paul Nogueira said it was likely that some local builders would fold in early-2022.

Mr Nogueira said he had spoken to “half a dozen” firms who were struggling to meet their yearly financial requirements with the Queensland Building and Construction Commission.

“Some of them might fall into insolvency,” Mr Nogueira said.

“I do expect to see some turmoil in the first or second quarter of next year.”

Sunshine Coast builders said the past 12 months had been some of the most challenging of their careers.

Two long-time builders last week opened up on the crisis and feared suicide rates could rise with no end date in sight.

Sunshine Coast builder of 20 years Dave Becker said he was concerned about the mental state of builders across the region battling through a materials and trade shortage. Picture: Patrick Woods.

Architect and licensed builder Andrew Webb said the crisis had been a “massive” problem for the industry but one that was now considered the new normal.

The owner of Cooroy-based Overland Design and Construction said it was particularly difficult to explain the extra costs to clients.

“We’re having to rethink fixed price contracts for housing, which has always been the preferred way,” Mr Webb said.

“It was a real shock early and it took us three or four months to adapt to but now we are able to plan.

“It’s a real challenge. There’s no shortage of work, it’s the problem getting it in over the line.”

Mr Webb said he hadn’t heard of any businesses folding but admitted cash flow was hard.

“Everyone is adapting and we are a smaller player so the scale is less for us,” Mr Webb said.

Caloundra-based JCo Constructions managing director Joe McGuirk said some of the larger companies he had spoken to all predicted ongoing doom.

“Absolutely 2023, it could even get worse,” Mr McGuirk said.

“Lots of builders are hurting, no doubt.

“I haven’t heard of anyone going under but it’s going to get harder before it gets better.”

Mr McGuirk said one of the hardest parts of the issues was planning at times five months ahead and not knowing of a looming price spike.

Coolum-based Ward Builders owner Ray Ward said the past year had been difficult to navigate.

Overland Design and Construct owner Andrew Webb at a sustainable home he was building at Tanawha. Picture: Patrick Woods.

Mr Ward said he had been forced to turn down work due to some sought-after materials simply being unavailable.

“It’s really hard when you have to wait so long, sometimes you have to turn down work as you can’t get the materials,” Mr Ward said.

“This year there’s been a spike just about every month on something, it all adds up.”

Neither Mr Webb, Mr McGuirk or Mr Ward had a solution for the crisis.

“I don’t know what is going to happen but people can’t afford to just keeping on paying what they have to pay,” Mr Webb said.

Mr Nogueira said he had not taken over any major Sunshine Coast firm in the past few years, however, he said the issues were widespread.

He urged anyone under stress to plan ahead.

“Planning is the key for builders if they want to survive and take necessary steps to shore up their figures,” he said.

“If any builders are struggling to keep their budgets in order, they really need to seek advice from people like myself, or accountants or lawyers.”