A major Melbourne company connected to the building industry has collapsed owing $7.1 million, while 197 staff members have lost their jobs on the spot as a result of its demise.
CDC Plumbing and Drainage announced its closure, along with its related entity Aerolink, to staff in a shock letter which has been seen by news.com.au.
The company was one of the largest privately-owned plumbing contractors in Australia and was established in 1984.
It had delivered over $1.8 billion worth of major works across Australia, according to its website, but its collapse saw workers – some of who had been with the firm for over 15 years – made instantly redundant.
Its managing director Peter Carrick told staff on February 6 that it was with “sadness and regret” that CDC Plumbing and Drainage and Aerolink would cease trading immediately.
He said the decision was primarily made due to Covid “induced stress” within the building and construction industry.
“The companies did not qualify for the Jobkeeper scheme during Covid lockdowns in 2020 and 2021 and they were required to absorb the material increases to labour costs and fall in productivity during that period without government assistance,” Mr Carrick wrote in the letter to staff.
“Since then labour costs have continued to rise and maintaining productivity continues to challenge the industry.
“Ongoing supply chain issues and cost increases in materials have exacerbated the financial stress to the businesses while delay in payments and challenges to payment claims has become systematic.”
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Paul Harlond and Ross Blakely from insolvency firm FTI Consulting have been appointed as liquidators.
Between the two companies there are approximately 175 creditors, excluding employees, while dozens of active projects have been impacted, the liquidators told news.com.au.
“The two companies in liquidation, CDC Investment Group Pty Ltd and Aerolink Contractors Pty Ltd, owe creditors over $7 million, with the largest single trade creditor owed just over $2 million. Around 33 projects will be impacted by the closure of the two companies,” Mr Harlond said.
“Unfortunately, 197 employees were made redundant when the companies were put into liquidation. We are currently calculating the entitlements owed to the employees so they can make a claim under the Federal Government’s Fair Entitlements Guarantee Scheme.
“While our investigations are ongoing, advice from the directors indicated they had no access to Jobkeeper during Covid lockdowns and that, combined with continuing losses on key contracts due to industry pressures and increasing costs are the main factors leading to the liquidation.
“We are in the process of realising all the assets of the companies and will shortly begin our statutory investigations.”
Six months ago, the company had been working on the new Footscray Hospital project that’s expected to open in 2025, according to a LinkedIn post.
On its website, it said it had delivered over $280 million in residential and hotel projects nationally including significant hotel and residential towers from Australia 108 and 300 George Street to bespoke luxury apartments Aurora Apartments and The Jewel.
It added it had worked on complex developments in Melbourne, include the RMIT Design Hub, technically complex Peter Doherty Institute and Melbourne University Neuroscience development, as well as Etihad Stadium’s Great Southern Stand.
Plumbing giant Reece Group’s former executive chairman Alan Wilson was also quoted on the company’s website about the “many collaborative major iconic projects delivered by CDC and Reece that have shaped metropolitan sky lines throughout Australia”.
These included projects in health care such as the Royal Adelaide Hospital, prisons, government laboratories and stadiums like the MCG’s Great Southern Stand and Colonial Stadium.
Its website also revealed that CDC Plumbing and Drainage’s client list included some of the biggest builders in the country – including Probuild which experienced its own spectacular collapse at the start of last year.
The Australian building industry was plunged into turmoil in 2022 with a spate of collapses across the country and the grim news has continued this year.
Even well-known building products company James Hardie has slashed 6 per cent of its global workforce this week as it battles sliding sales due to rising interest rates with roles in its corporate office in Sydney and its manufacturing plants in Brisbane and western Sydney impacted.
Meanwhile James Hardie also announced its third profit downgrade this financial year, while the list of companies going under this year is starting to add up.
Melbourne-based residential builder Hallbury Homes was the most recent to go into liquidation with the firm owing between $8 million and $12 million to hundreds of creditors, including 62 homeowners with projects at various stages of completion.
Major NSW apartment developer EQ Constructions also collapsed this month owing at least $40 to $50 million with 400 to 500 creditors owed money.
Award-winning residential building company Delco Building Group in Victoria failed recently owing $780,000 to 50 creditors.
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Two more construction companies in Western Australia went under blaming to labour shortages and increasing construction costs.
Last year, some major players entered into insolvency including Condev Construction, Pivotal Homes, Privium, Home Innovation Builders and Norris Construction Group.
It was caused by a perfect storm of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, and extreme weather events.
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