Mark Hoppe, Managing Director Australia and New Zealand of Atradius, provides an update on insolvency risk within the Australian construction sector.
The Australian construction industry is one of Australia's largest sectors by revenue and employee numbers. According to research firm Ai Group, it is the third-largest industry in the country, contributing eight per cent of Australia's Gross Domestic Product and directly employing nine per cent of the nation's workforce.
Yet for all of its size and economic weight, the construction industry's susceptibility to cash flow troubles and insolvency remains uniquely disproportionate compared to most other sectors. In 2014 for example, ASIC reported taht 1802 construction organisation in Australia had collapsed. In comparison, there were just 218 collapses in agriculture and 472 in manufacturing.
This is interesting given that the Australian economy is generally stable compared to other countries in the region and around the world. The Australian construction industry wasn't affected by the 2008 economic shake-up in the same way the industry in markets such as the United States and Europe were.
However, despite a relatively strong and stable local economy, there is some deterioration in the insolvency landscape, according to a recent Atradius Insolvency Forecast report, the construction industry plays a part in that trend.
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