Manufacturing closures raising national insolvency rate

A string of manufacturing and retail closures has been responsible for raising the number of corporate insolvencies in Australia by 4.4% for the 2010-11 financial year so far.

Official figures released by ASIC yesterday showed insolvencies – including receivership and voluntary administration appointments – rose 9.8% in Victoria, 13.2% in South Australia, 20.7% in Western Australia, and 55% in Northern Territory.

During the last month, Clothing company Colorado, paper manufacturer Australian Envelopes, school-uniform manufacturer Fairy Meadow’s Poppets Schoolwear, and cement works Cement Australia have also closed their doors. 

Cement Australia announced its closure only yesterday — 64 people will lose their jobs as the company can only afford to redistribute the remaining 34 workers at its other sites Around australia.

Retail casualties include bookstore owner REDgroup and electrical retailer Clive Peeters.

Tighter consumer spending and a high Australian currency have been responsible for weaker demand in the shopping centres. A looming carbon tax, overseas competition and a skilled worker shortage have added to the manufacturing community’s woes.

ASIC’s senior executive leader of the Insolvency Practitioners team, Adrian Brown, said that despite a decrease in external administration appointments in May, these latest figures show the number of court liquidations and director-initiated creditors voluntary liquidations have risen.

“Statistics collated by ASIC up to and including May 2011, show court liquidations in Australia rose 8.6% and director initiated creditors voluntary liquidations rose 7.6%,” he said.

"Western Australia is also seeing its fair share of corporate insolvencies, despite suggestions that it’s in the fast lane of a two speed economy.”

 

Leave a Reply