Another Australian home building company has gone into administration.
Mahercorp told its customers it will enter voluntary administration but say it has ‘not collapsed’.
The construction company is based in Melbourne and is the parent company of Urbanedge and Eight Homes.
In a statement emailed to customers, director and CEO Steve Maher said: ‘I want to emphasise that Mahercorp has not collapsed and is not in liquidation,’ he said.
‘My intention is to work with the administrator on a plan that I hope allows us to restructure the business, creating a more sustainable footing and to complete your home.
Another Australian home building company has gone into administration. Mahercorp told its customers it will enter voluntary administration but say it has ‘not collapsed’
‘It’s no secret that all builders are facing unprecedented challenges right now. Building costs are skyrocketing — materials and labour costs are at record levels and rising inflation is putting huge pressure on builders.
‘To ease the strain of these cost increases, for some months now we have been renegotiating our trading terms with our suppliers and insurers. Their support to date has helped us manage spiralling costs.’
He explained that entering voluntary administration was their ‘only option’ after learning that their insurer would no longer support their business.
‘I understand this is disappointing news for you, and I want to give you an explanation about why this is happening and tell you myself what it means for your home,’ he said.
‘Preparation of your new home to go to site will be put on hold for the five-week duration of the voluntary administration. Any appointments, including contract, electrical or colours, that you have booked during this period will also be on hold.
The construction company is based in Melbourne and is the parent company of Urbanedge and Eight Homes (stock image)
‘Let me assure you again that I intend to work closely with the administrators on a plan to get the business back on track.’
The majority of their work is in Melbourne’s northern and western suburbs.
Cor Cordis has been appointed as administrators.
In a statement, they said construction works will be paused while they asses the business’s operations.
‘We’ve commenced an urgent review of Mahercorp’s financial position and have held preliminary discussions with senior management regarding a proposal to restructure the business,’ they said.
Mahercorp told its customers it will enter voluntary administration but say it has ‘not collapsed’
‘We’ve set up a direct phone line and email address for customers, employees, and creditors.
‘We will be providing regular updates to all stakeholders as we work through the voluntary administration process.’
Which Australian construction companies have gone out of business?
Last month, luxury apartment builder EQ Constructions went into administration owing between $40 and $50 million.
The NSW-based company, also known as EQ Projects, owed money to between 400 and 500 creditors.
Westburn Advisory is handling the administration, with its director Shumit Banerjee saying some projects were still incomplete.
In February Victorian-based Delco Building Group appointed liquidators on February 2.
The announcement came as a shock as the company was held in high regard and had won a Master Builders Victoria Excellence in Housing Award.
The week before, it was announced that two Western Australian companies, WA Housing Group and Individual Developments WA, had collapsed.
And Hallbury Homes filed for bankruptcy on January 4, owing about $7million to creditors.
It is the latest in a string of construction companies to collapse over the past year as they continue to reel from the impacts of the Covid pandemic and the lack of timber and other materials due to the Russia-Ukraine conflict.
Across Australia, hundreds of millions of dollars are owed by failed companies to subcontractors, tradesmen, clients and the tax office.
Some of the biggest names in Australian construction have become insolvent over the past year, including Probuild, Home Innovation Builders, Privium, Condev Construction and Pivotal Homes.
The rot started during the Covid-19 pandemic, with many companies unable to find staff and facing problems sourcing and paying for materials due to a worldwide shortage.
Choked supply chains were made worse by the war in the Ukraine and embargoes on Russian supplies like timber, along with increasing fuel prices and high wages.
This has led to the cost of materials rising by more than 20 per cent since the start of 2022, and some items went up by far more.
Pine more than doubled in price, with reinforcing steel, glass, plasterboard, fibre cement and other materials also going way up.
Such price rises meant many fixed contract building projects were no longer viable.
If an agreement is made, for example, for a $10million fixed contract and the price of materials suddenly shoots up again, then the potential profit dwindles or possibly becomes a loss.
Perth’s BGC Group recorded a loss of $41.6million last year, despite seeing its revenue rise by 20 per cent to $1billion.
It was put up for sale last April, but was taken off the market five months later due to ‘market conditions’.