Number of Northland businesses in liquidation 'quite alarming'

The number of Northland businesses that have gone into liquidation since the start of Covid has alarmed Simon Crawford of Bella Homes. Photo / NZME

More than three dozen Northland businesses have wound up since the start of Covid and a liquidator says more will follow suit given the uncertainty around the pandemic.

Figures from the Ministry of Business, Innovation and Employment (MBIE) show almost half of the 43 that have had liquidators appointed between March 1, 2020, and February 01, 2022, were construction and house maintenance-type companies across the region.

MBIE said the liquidations in Northland occurred for a number of reasons and weren't necessarily due to the pandemic.

However, a liquidator claimed the opposite, stating Covid had played a huge part, particularly in the dire straits some construction firms found themselves in.

The Companies' Register has no link that lists the number of companies that have gone into receivership as a result of the pandemic.

Whangārei-based Garry Whimp, of Blacklock Rose, has been appointed liquidator for 11 businesses. He said many troubled family companies have had to shut up shop for weeks as they didn't have capital.

"They try and hold their stock, staff are not working to capacity but costs keep mounting. We'll see more liquidations coming up as businesses continue to struggle."

Jennian Homes Far North Limited, Trenz Homes South Pacific, Heritage Homes Far North 2018 Limited and Heritage Homes Whangarei 2017 Limited, Duder Construction, Casa Real Estate, Northland Road Haulage and Civil Bros were among the Northland businesses in liquidation.

Whimp said during the pandemic service industries could not have people come in or goods go out, which impacted heavily on their cash flow.

"Building projects stopped partly because of the unavailability of materials, cost overruns because staff had Covid, or other related factors.

"Now that the Government subsidies have finished, liquidators are getting a fair number of enquiries because people are finding it difficult to re-start their businesses. Some owe the IRD," he said.

Bella Homes director Simon Crawford said figures on the number of liquidations in Northland were "quite alarming".

"There's a shortage of both skilled and unskilled labour in the construction sector and I think the next 12 to 18 months will be OK. But there will be tough times after that, with rising interest rates and inflation.

"The supply of building materials is also a major issue - that's not going to go away overnight. If I order gib now, I'll get it in March next year, whereas normally I get it within four days."

Crawford said payments in many building contracts were based on progress, so when the supply chain creates ongoing problems builders get little to no income.

The average cost of building a home in New Zealand's main centres shot up 20.9 per cent in the last 12 months, according to the construction costs database QV Cost Builder.

Spokesman Simon Petersen said while the price update was done for the major centres, the price hikes in provincial areas like Northland would be similar.

The biggest price increases since the end of 2021 were for stairs and balustrades, which went up 17.4 per cent due to a rise in precast concrete and structural steel, followed by substructure (10.1 per cent), site preparation (9.7 per cent), framework (8.3 per cent), and windows and exterior doors (eight per cent).

"The fact that the cost of construction is increasing should surprise no one, least of all those who are pricing and doing the work. But what is surprising is the sheer size of some of these increases, at a time when the construction industry is pretty much at capacity," QV CostBuilder spokesperson and quantity surveyor Martin Bisset said.

"With inflation and interest rates also rising, and supply chain issues still prevalent, there will be further price increases in future."