Steel manufacturing business turning over $40 million collapses

Another manufacturing business has collapsed, with a Melbourne-based steel company turning over between $40-50 million up for sale as the high dollar continues to wreak havoc on the industry.

The collapses aren’t set to slow down, either, with economists warning the dollar will stay above parity for a while with many governments in both Europe and the United States favouring low interest rates.

The collapse also follows a number of insolvencies in the steel manufacturing business.

Rebar Prefab, a Melbourne-based manufacturer of steel-based concrete reinforcing materials, was placed in administration on April 8.

Richard Albarran, David Ross and Shannon Thomson of Hall Chadwick were appointed to the company on that date. On April 9, the company was placed in receivership.

Thomson told SmartCompany this morning the business has continued to trade in a limited capacity.

Although Thomson could not comment on the specific reasons Rebar Prefab was placed in administration and receivership, he noted in general the steel manufacturing industry has been under pressure.

The business is now up for sale. The company turns over between $40 and $50 million every year, with the administrators saying the company has a “blue chip customer base”, along with specialist plant and equipment. The business itself claims a “state of the art factory” on its website.

The manufacturing industry has been under severe pressure, with several collapses. Margins are falling as the Australian dollar continues to climb. And economists don’t expect that trend to slow down any time soon.

Craig James, chief economist for CommSec, told SmartCompany he believes the dollar will remain above parity for the next 18 months to two years.

“Gradually, over time, you would expect the United States and European central banks to start to retreat from low interest rate policies.”

“But there is no likelihood they will do so any time soon. We’ve maintained credit ratings; we are regarded as a safe haven currency. The Aussie dollar is likely to remain firmer.”

While the manufacturing industry has been hit hard, specifically the steel market is under pressure.

In January, two separate companies, Spillane Fabrications, and Capital Steel Buildings, were both placed in administration. In October last year, engineering group RPG Australia also entered administration.

James says the Australian dollar is likely to be supported by resource demand from China, “even if we look out over the next three to five years”.

 

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