One of the country’s leading manufacturers of stainless steel tanks, tubes and pressure vessels has collapsed into receivership.
The collapse comes as the manufacturing industry continues to suffer under a significant amount of pain. Businesses have collapsed as debts mount and the Australian dollar turns up the pressure on smaller players.
The collapse comes just a few weeks after another steel manufacturing business turning over more than $40 million a year collapsed into receivership.
The steel industry has been suffering under weaker domestic demand and a higher Australian dollar.
Two companies, Stainless Tube Mills and Stainless Tanks & Pressure Vessels, both part of the STM Group of companies, have been placed in receivership. A third company, Duraduct, which manufactured stainless steel products, has been closed.
KordaMentha receiver Craig Shepard told SmartCompany the business had suffered an excessive debt burden, and was placed in receivership as a result.
Both companies have continued to trade. According to an advertisement placed by the receivers, both companies have recorded EBITDA of approximately $3 million.
Shepard says KordaMentha and consultants Kennedy Needham have already received expressions of interest for the two companies – especially for the Pressure Vessels business, which distributes products to the mining industry.
“The management had already been proactive in taking these businesses to market. There has already been some live interest in aspects of the group, and we’ve placed ads. Particularly for the Pressure Vessels business, we’re calling for expressions of interest,” he says.
Shepard says the companies were holding a significant amount of debt, and, while not referring specifically to the collapsed companies, noted the general pressure on manufacturing caused by the Australian dollar.
However, he also said the companies are in a solid position to continue trading and is confident of a sale.
Stainless Tanks & Pressure Vessels was founded in 1991, and counts 24 employees. The business mainly constructs stainless steel cylinders for industrial use. The other business in the company, Stainless Tube Mills, is one of the largest manufacturers of steel tubes in the country.
The advertisements say the companies maintain ‘strong customer relationships’.
The collapse is the latest in a string of bad news for the manufacturing industry. Earlier this week, the latest figures from the Australian Industry Group survey of the manufacturing industry found it contracted yet again during April.
A Dun & Bradstreet survey of spending expectations also found the manufacturing sector has pulled back its investment plans for the near future.