As many as 49 Illawarra construction firms are at risk of going under in the next 12 months, according to a report from an insolvency firm.
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The SV Partners firm’s Commercial Risk Outlook Report uses the same credit data as used by banks to work out whether to loan money to a business.
It found 49 construction firms – 5 per cent of those based in the Illawarra – were at high risk of financial collapse.
Across all industries, 187 businesses are at serious risk of going under.
Retail and accommodation businesses were also in the Illawarra’s top five in terms of risk of financial collapse, with 18 and 12 businesses respectively.
SV Partners director Darren Vardy said the data did not come with company names attached so there was no easy way to know which companies were at risk.
Mr Vardy did say these construction businesses were likely in trouble because they were playing catch-up in terms of their working capital.
“The 5 per cent that are at risk have probably had historical projects that they’ve made losses on and they’re trying to use current projects to recoup on those losses,” Mr Vardy said.
“It doesn’t necessarily mean they’re going to go under but if they continue to operate, they’re operating with little to no working capital.
“They're continuing to take on these big jobs, robbing Peter to pay Paul and eventually it’s going to catch up with them.”
Mr Vardy said the field of construction was always “the lead contender” in terms of financial collapse.
This was partially because things like disputes and projects running over schedule can quickly see the costs escalate, particularly at the back end.