One of Western Australia's largest builders, Cooper and Oxley, has suspended operations because of financial viability problems, leaving subcontractors out of pocket and the company's future in doubt.
Work has stopped at major projects all over the state, including a $101 million development in Subiaco believed to have contributed most to Cooper and Oxley’s woes due to cost blowouts.
Angry subcontractors owed money were unable to collect machinery and tools from locked construction sites on Monday.
Sub-contractors received a letter from Cooper and Oxley managing director George Hampel ordering them to stop work.
“Cooper and Oxley is reviewing its financial viability and you will be advised in writing of the status and whether works will be proceeding and whether you will be required to undertake works.
“In regard to any account which is or may be due to you, Cooper and Oxley is presently not in a position to pay this subject to the financial review.
“Cooper and Oxley will provide an update on their financial position within one week.”
Complaints about late and non-payments to subcontractors on major projects were rampant in WA in the lead-up to last year’s state election.
The Labor opposition were particularly vocal, pressuring the previous Barnett government which brought in project bank accounts for large government projects.
However it was not yet widely used and was not the industry standard for private and public, enabling big builders to get involved with “unpriced” projects and get out of paying vulnerable small businesses, Subcontractors WA spokeswoman Louise Stewart said.
“We really need the WA government to move on this,” she said.
Cooper and Oxley had been caught out in a “race to the bottom” due to the prevalence of cheap tendering for projects by building companies, says the CFMEU.
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,” CFMEU WA Secretary Mick Buchan said.