Business collapses rise as another manufacturer is liquidated and put up for sale

Statistics from the Australian Securities and Investment Commission show another rise in business collapses as another Australian manufacturer goes under.

ASIC’s statistics show that for the most recent three months, 2,655 businesses have entered external administration, an increase on the last three months where administrations were at 2,589.

The statistics can’t be dismissed as a seasonal rise, as at the same time last year the number of external administrations recorded by ASIC was only 2,275.

Back in February, Australian small business insolvencies reached record levels, with the number of companies placed into external administration in February at the highest level since the statistics were introduced in 1999.

John Melluish, partner at Ferrier Hodgson, told SmartCompany the slump in construction, manufacturing and retail was a key driving factor behind the high insolvency figures. 

“The real factor at play is we have had a lot of building companies go down in the last month or so and that has an impact on hundreds or thousands of sub-contractors, so I would expect to see a lot of construction related insolvencies,” Melluish says.   

He says there is a similar issue in the manufacturing industry, but the impact of a collapse is not as far reaching as in construction. 

“Depending on the scale, many of the big manufacturers rely on smaller parts, which comes from elsewhere, and that has an impact. But the industry tends to be less interrelated than construction,” he says.   

The figures follow another Australian manufacturer being put up for sale, with liquidator HLBV Mann Judd advertising the sale of Melded Products Group, a “leading Australian fabric and carpet manufacturer”.

The advertisement says that Melded Products is the exclusive Australian manufacturer of non-woven fabric and carpet and that it has an established customer base, specialised machinery and intellectual property including the company name, registered trademarks and patents.

Melded Products began manufacturing fabrics and carpets in Australia in 1976 and its products are marketed worldwide with overseas markets including the USA, Canada, UK, Europe, New Zealand, South East Asia and Japan.

The company employs over 50 staff and operates from a leased premises in Dandenong, Victoria.

The liquidator is calling for written offers by June 15.

SmartCompany contacted the liquidator and Melded Products. However, both were unavailable for comment prior to publication.