Capital Steel Buildings Australia was placed in voluntary administration yesterday, a troubling sign for the steel industry.
The company manufactured cold rolled steel buildings and offered people the opportunity to start their own business as Capital Steel Buildings (CSB) product resellers.
Independent advisory firm Cor Cordis have appointed Ozem Kassem and Jason Tang as the administrators. The first meeting of creditors will be held on February 6.
According to the company website, CSB also has a sister company that deals in the UK and Europe.
Cor Cordis told SmartCompany they were unable to comment on the administration at this stage.
Figures from IBISWorld suggested some sectors of the steel industry were struggling while others flourished.
The structural steel services industry averages an annual revenue growth of 2.5% and is expected to remain stable in 2013 with revenue of $4.85 billion.
This industry offers services such as steel framing supports, walls, and steel roofs. The IBISWorld October 2012 report said the growth rate was influenced by accelerated growth in key infrastructure and work on multi-storey building since the early 2000s.
In contrast, IBISWorld’s November 2012 Structural Steel Fabricating Market Research report found the growth rate of the steel fabricating industry had dropped by 0.9%.
This steel sector deals with a range of products from simple reinforcements to highly engineered, custom-built structural components used in the construction of mines and bridges.
IBISWorld senior analyst Craig Shulman told SmartCompany it was likely CSB had been hit with a “double whammy” of concerns making business difficult.
“I would believe that these businesses are being battered from both sides in terms of demand and costs concerns.
“Over the past five years structural steel fabrication in Australia has declined at an annual rate of just under 1%.
“This has been influenced by the weak domestic demand related to the construction industry, volatility in steel prices which have raised costs and the introduction of the carbon tax,” Shulman says.
It’s these factors, he says, that have caused the steel fabrication market to decline, placing financial hardship on businesses.
“Since many of these factors are placing strain on the operating expenses, this has eaten into businesses profit margins.”
Shulman says the declining growth rate of the steel fabrication industry in Australia is likely to continue, signifying the potential administration of more steel companies.