By LUKE VOOGT
Geelong Chamber of Commerce has slammed a report by an insolvency firm which claims 28 local “construction industry players are heading towards financial failure”.
Chamber of Commerce CEO Bernadette Uzelac dismissed the report as misleading.
“It’s an incredibly emotive headline which gives a false impression of what’s happening in Geelong,” she said.
“It really flies in the face of what we’re seeing in businesses here on the ground.”
The SV Partners August 2016 Commercial Risk Outlook Report revealed the “28 high-risk construction companies”, from 1135 in Geelong.
However a spokesperson for company clarified the 1135 included “operating construction businesses of all sizes”.
This, they said, included any tradespeople, subcontractors and single-person businesses.
Ms Uzelac said the report gave the impression that major construction companies were in financial strife.
“I would take this with a grain of salt,” she said.
There were plenty of opportunities for construction businesses in Geelong such as the new Workcover and NDIA Headquarters, and developments such as Armstrong Creek, she added.
According to the report, a further 131 Geelong businesses are highly likely to face financial failure within the next 12 months.
The report is based on more than 20 million financial records relating to Australia’s 2.39 million operating businesses, including business trade payment history.
SV Partners Victoria executive director Michael Carrafa said he was unsurprised by the results considering the challenges the industry had faced in recent years.
“Construction businesses represent more than six per cent of operating businesses across Geelong,” Mr Carrafa said.
“That fact, combined with the recent softening of the construction industry, has seen the sector represent the highest number of high risk businesses in the region.
“The industry will however receive some much needed relief once the construction of the new headquarters for the government’s new national disability insurance scheme, DisabilityCare commences.”
Mr Carrafa said inadequate cash flow, high cash use and poor strategic management were the key causes for businesses getting into financial trouble.
The financial and insurance services industry had the highest percentage of businesses in the “low risk category” in Geelong, with more than 81 per cent.
The professional, scientific and technical services industry had the highest number of individual businesses in the low risk category, with 515 businesses operating at low risk.
Mr Carrafa said Geelong’s economy has continued to diversify and this was strength for the region.
“Geelong’s economy is more diverse now than ever before and it continues to attract considerable investment from both the public and private sectors.”
