A multimillion dollar electrical contracting business in Western Australia has been placed in receivership, falling victim to intense competition in the resources-rich state, which is forcing more companies to lower profit margins.
The collapse also comes alongside the troubles in the commercial construction and fit-out industries, which have seen several companies go under across the country.
Global Electrotech was placed in administration last month, then in receivership shortly afterwards.
According to managing director Damien Gardiner, who spoke with SmartCompany this morning, the business lost out on two major jobs – one worth $1.5 million and another $2.4 million in revenue.
While Gardiner says one job was affected due to poor management, several have gone under for various reasons relating to industry pressures – including an intense amount of competition.
“In electrical contracting as a whole, or commercial and resources too, it’s just way too competitive,” he says.
“People are buying jobs over here. We’ve had to go down to zero margin on a couple of projects just to survive, and that was three years ago.
“Some other companies that have gone into liquidation are those we just couldn’t get anywhere near on pricing.
“The industry is a bit shot over here.”
Gardiner suggests some of the competition is due to an influx of companies and individuals registered as electrical contractors.
If this competition had occurred over the space of a year, Gardiner says, then the company may have been able to survive – “but it’s happened over three years”.
Kim Strickland of WA Insolvency Solutions was appointed administrator last month, but Gardiner says the business continues to trade and he is optimistic about its future.
The administrators were contacted this morning, but no reply was available prior to publication.
“We’re bringing in an outside business partner from overseas,” he says. “We’re going to be fine.”
Global Electrotech claims to be one of Australia’s largest service providers, with most of its work in the electrical contracting, fire and security systems areas, working for the commercial development and resources sectors.
The company at its height had 169 employees, although Gardiner says that number is down to 138 because, under administration, the business cannot sign more long-term contracts. Redundancies have only amounted to two.
The collapse comes alongside several in the construction and commercial development industry. Most recently, an air-conditioning business collapsed in Sydney, while a Brisbane-based fit-out business also faced administration.