Hunter building industry in fear of tailspin

DOZENS of Hunter building companies have closed and many others are facing financial ruin with the loss of thousands of jobs as the region’s construction industry downturn gathers momentum.

The postponement of several major mining infrastructure projects in the past month, that were expected to employ up to 5000 skilled construction workers, has fuelled fears the industry is being pushed into a tailspin.

Information obtained exclusively by the Newcastle Herald from NSW Fair Trading shows 40 Hunter building companies have collapsed in the past four years, with more than one a month being wound up last year.

Many remaining have been forced to downsize, seek work outside the Hunter or shift into mining infrastructure work.

Newcastle insolvency expert James Shaw, of Shaw Gidley, and the Construction, Forestry, Mining and Energy Union (CFMEU) warned a downturn in mining services work would result in further construction job losses and company closures in the coming year.

CFMEU Newcastle construction organiser Peter Harris said workers were bracing for a rough ride and many would be left with no choice but to chase jobs interstate.

He said to date the Hunter’s construction industry had been less affected than some because many workers had turned their skills to mining infrastructure projects, but few companies would be left unscathed in the coming year.

Many, including some of the region’s largest civil contractors, were reviewing staffing levels.

‘‘I have had advice in the last couple of weeks that four major mining engineering projects have been placed on hold for up to 12 months or longer,’’ Mr Harris said. ‘‘The mood among construction contractors and mining services is very pessimistic ... and there are very little prospects in major commercial development. We may see both sectors go into a severe downturn together and that will not be good for anyone.’’

According to Fair Trading, there were 22,797 companies with contractor licences in the Hunter in 2010.

Master Builders Association regional manager Len Blakeney said while there had been thousands of construction jobs lost in the region since the global financial crisis, there were a ‘‘few little green shoots starting to come through’’.

‘‘Residential has been stable and I think we are starting to see a few projects in commercial that are promising,’’ he said.

‘‘There is no doubt though that times are tough and builders have been forced to cast their nets a lot further afield for jobs.’’

Hunter Valley Research Foundation director of research Simon Deeming described commercial construction in the Hunter as ‘‘extremely weak’’ and residential as ‘‘phenomenally weak’’.

‘‘It’s been a nightmare outside of infrastructure for a while and there was a push to cram too much infrastructure through, which meant costs went through the roof,’’ he said.

‘‘But I think the tail of infrastructure is still to come and the Reserve Bank wants to see more housing activity so they have to keep stimulating until that happens ... I would expect a bit more activity in the residential sector in 2013.’’

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