WA builder Cooper & Oxley suspends trading as it reviews its 'financial viability'
One of Western Australia’s largest commercial builders has suspended trading as it reviews its “financial viability”.
Jolimont-based Cooper & Oxley sent a letter via email to its subcontractors yesterday instructing them to stop work, saying it was not in a position to pay any accounts at present.
The company later put out a statement confirming that all works on its seven active building sites around Perth had been suspended as of Sunday February 4.
“This step has been taken while the company continues to conduct an urgent review of its financial position,” the statement said.
“The company has been working with its stakeholders, including financiers and key clients, to undertake a restructure and refinance process.
“Unfortunately a suitable agreement has not been reached at this time, and the company has suspended trading while reviewing its options and continuing discussions with stakeholders.”
The ABC has been told at least one subcontractor is owed $800,000.
Key Cooper & Oxley projects in WA
- 500 Hay Street
- 1309 Hay Street Hotel
- ALDI stores – Cockburn Central, Morley Galleria, Currambine, Banksia Grove
- Baldivis Senior College — stage 2
- Belmont Forum redevelopment
- Butler Railway Station
- Byford Secondary College
- Claremont Goods Shed
- Cockburn Gateway Shopping City redevelopment
- Hollywood Hospital redevelopment
- Kalgoorlie Courthouse
- Karratha Health Campus
- Kununurra replacement courthouse
- Osborne Park Hospital — surgical centre redevelopment
- Perth Airport Terminal 1
- Scarborough Beach pool
- Singleton Village Shopping Centre
- Toyota WA head office, Kewdale
- West Kimberley Regional Prison, Derby
In a statement, WA Building Commissioner Ken Bowron said the Department of Mines, Industry Regulation and Safety was investigating reports Cooper & Oxley had entered voluntary administration.
However, the Building Commissioner had not received any notification that the company is unable to meet its financial obligations.
Mr Bowron added there was “no previous information” to indicate Cooper & Oxley may have been in financial distress.
ALDI, David Jones among clients
Cooper & Oxley has traded for more than 60 years, completing projects across WA for government and private clients.
On its website, the company says it has been able to “react more effectively” to changing market conditions because it is not publicly listed.
The builder has seven major projects currently underway, including the 500 Hay Street hotel and cinema complex in the Perth CBD and the David Jones store at the Mandurah Forum shopping centre.
The statement said the company hopes to provide an update on the situation in the next two to three days and would be making no further comment until then.
ALDI said Cooper & Oxley were directly involved in the construction of their Banksia Grove and Currambine stores, but they had been operational since last year.
“We are currently assessing the potential impact that the news around Cooper & Oxley may have on ALDI stores in Western Australia,” said a statement from the grocery giant, which has only begun operating in the state in the past few years.
“ALDI will continue to work closely with the relevant parties involved to ensure there is minimal disruption to future projects.”
Fears for subcontractors
Subcontractors WA chairwoman Louise Stewart said hundreds of WA subcontractors would be affected by the suspension.
“I have been inundated with emails and telephone calls this morning,” Ms Stewart said.
“We are very, very concerned and very angry that this is happening, yet again, because we still do not have widespread use of project bank accounts to protect subcontractor payments.”
Ms Stewart, whose husband is a subcontractor employed by Cooper & Oxley, said builders were worried they may not receive a cent of overdue accounts.
“They’re pretty much all scrambling at the moment in terms of what can be done,” she said.
“The sad reality of these situations with the corporate structures that builders set up and the way that liquidators go in and perform their roles, there’s quite often very little that can be done.”
Ms Stewart said WA subcontractors had fewer financial protections under legislation than builders in other states.
“The WA Government went to the election promising better protections [for subcontractors]. There’s been a lot of talk and there’s been a fair amount of time that’s gone past now,” she said.
“We want to see the same sort of protections in Western Australia and we want to see extensive rollout, full rollout of project bank accounts, whereby funds are protected and they get paid directly to the entity that has completed the work, rather than going into the builder’s bank account.”
Mining collapse hits construction hard
The move comes amid a slowdown in spending in non-residential building in the state, in line with the collapse of the mining boom which fuelled vast numbers of government and commercial projects at its peak in 2012.
The value of non-residential building activity has fallen in Western Australia over the past five years, according to Australian Bureau of Statistics data, from a peak of around $14.5 billion in March 2014 to $10.9 in September 17.
Master Builders Association WA director Michael McLean said many commercial builders had been under pressure in the last few years following the economic downturn.
“Most have tried to keep their workforce engaged, and to some degree they’ve had to really drop their prices to the lowest possible level,” he said.
“Unfortunately some of the contracts builders are tendering on have become more onerous, with a lot more risk allocation on the builder, rather than the client.”
He said the situation at an established firm like Cooper & Oxley would make people “sit up and take note” that the industry was operating at pricing levels that were unsustainable.
A statement from the Construction, Forestry, Mining and Energy Union blamed cheaper tenders “undercutting market rates”.
“Workers should not be a bank to underwrite shortfalls, they deserve a fair day’s pay for a fair days work,” the statement said.
“These cheap tenders are not about negotiating a fair sustainable price; it’s all about undercutting decent, well-founded market rates and then cutting corners at the workers’ expense.
“All it does is to destabilise the industry and destroys the corporate image of any principal builders by bringing disrepute to the project.”
The statement said “devastated” subcontractors had been in touch, with some reportedly unable to retrieve their tools from the construction sites.