Covid has impacted every business and the Construction industry seems to be the worst hit. This can be seen from the fact that as per the latest statistics more than 10% of the companies in the construction industry are unable to settle their bills on schedule. This has brought down a complete slow down in the Industry and still the bad effects of the pandemic are continuing to haunt the construction industry.
This has led to the pathetic situation as stated by the Creditor Watch Report on Business arrears putting the unpaid business arrears at over 12.3 % the highest among various industries only next to the hospitality industry that is struggling with over 11.2 % business arrears.
The pandemic has largely affected every part of the construction industry putting enormous pressure on the prices, shortages in labor leading to delays in completing the projects. Unexpected prolonged lockdowns have to lead to supply issues causing further delays in the day performance on the construction sites.
This situation is also compounded by the Banks’ unable to comply with their timely project equity tie-ups taking unduly long times for fund settlements. As far as Australia is concerned, ACT leads the worst-performing states. Among the poor performing construction, industry business arrears across various cities Sydney comes first and it has the highest business arrears among other capital cities across the country.
But the business arrears situation is somewhat better in cities that have established self-contained economies. For instance, the cities like Perth, Darwin, etc have mining industries to help the cities sustain their economical stability.
Due to the Covid and the situations that developed due to its restrictions, most smaller businesses are failing fast unable to bear the financial burden caused by the complete collapse of cash flow.
As per an industry expert, the Government Income Support schemes available to states like New South Wales and Victoria should slow down the spate of insolvency proceedings that have become inevitable due to the complications created by the Covid Pandemic.
Adding to these woes, the newly emerging Delta Strain of the Virus and the resulting disruptions to the recovery process have further added to the burden of the builders. It is causing more hardships and is postponing the complete recovery from the Covid effects indefinitely.
In Australia, the construction industry has more than 360000 listed Construction companies responsible for more than 9% of its total GDP standing at $360 Billion. The Covid pandemic has shrunk the total economy by up to 10% and the losses faced by the Construction Industry alone comes to over $ 5 Billion.
This has led to unemployment of 6.8% and these have impacted the entire construction industry and the building delays are causing immense hardships to all the companies irrespective of their size and resources at their disposal.
Due to all these, there is a fear in the construction industry that the number of insolvencies in Australia will go up substantially and more than 25% of them will be from the construction industry. Thus the covid induced building delays are pushing the Australian Builders into the red zone.
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