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Wideform's cash flow crisis puts hundreds of jobs at risk

BY BRETT COX

24 Nov, 2009 09:01 AM

Hundreds of Illawarra jobs are under serious threat as the Wollongong-based Wideform Group of Companies faces a cashflow crisis.

Its problems have been brought about by the global financial meltdown and lack of demand from buyers for some of its developments.

Wideform employs 700 workers across Australia, including between 150 and 200 in the Illawarra.

Wideform's rise as major industry force

Future of Wideform Group in question

Its website indicates it also provides work for some 4000 contractors.

Unions NSW spokesman Chris Christodoulou said the precarious situation was a major concern for workers and their families ahead of Christmas.

"The last thing that the Illawarra can afford to have is a further 200 people out of work," he said.

The Mercury understands Wideform was approached by creditor the ANZ Bank six months ago suggesting directors place the company into voluntary administration and a new buyer be sought due to the cashflow concerns.

The request was knocked back.

Asked to comment yesterday, an ANZ spokesman said the bank "has been providing financial support to Wideform and ... proposed a way forward which would preserve jobs".

However, he said the bank had "no plans to place the company into receivership".

"Any decision on the way forward is one for the company's directors," he said.

It is understood the bank will not extend further financial support to the business.

Wideform Group of Companies is chaired by one-time Illawarra Businessman of the Year, Fred (Fernando) Ferreira, who founded the company as Wollongong Formwork in 1974.

It has grown into a diversified group with divisions specialising in formwork, building and senior living and aged care.

Its major projects in the Illawarra include the $28 million Victoria Square and $85 million Links Seaside retirement village at Wollongong Golf Course.

Mr Ferreira could not be reached yesterday, but a company spokesman said Wideform "continues to trade".

"The bank is still supportive of the group," he said.

Wideform Group of Companies' problems were compounded on Friday when project management and construction firm Bovis Lend Lease cancelled a Wideform formwork contract for four projects in Sydney and Newcastle.

The CFMEU said 200 Wideform employees in total, including some from the Illawarra, were working on the Bovis Lend Lease projects.

Late yesterday, the CFMEU said Bovis Lend Lease had agreed in principle to find work for the 200 Wideform employees affected by the contract termination.

If the workers agreed, they could complete the four projects with contract companies also already working on them.

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RELATED COVERAGE

24 Nov 09:

Wideform's rise as major industry force

23 Nov 09:

Future of Wideform Group in question

comments

Date: Newest first | Oldest first

Another anomaly, our Government saved Banks and Banks instead of return a favour and save businesses through “rough patch”, simply pull the rug under their feet. But what else would you expect from the Bank? It would be better if Government directly helped the companies!

Posted by Barry, 24/11/2009 10:11:54 AM

Just hold your horses, Barry, 24/11/2009 10:11:54 AM, the Government bank guarantee was designed to retain confidence in the banking system and is a bit like insurance, there is some automatic cover and then depositors over the threshold can select to opt in or not. I’m not so sure the Government should start going around injecting funds into businesses that have found themselves in strife, whatever the reason. The Government would end up with a whole new department dealing with “investments” or rescue packages to distressed businesses. And if a business turns out not to be salvageable what then, the taxpayers carry the can? No thanks.

Posted by fisho, 24/11/2009 11:04:50 AM

It is obvious Barry has never been in business of his own, the way it works is that you borrow money from the Bank for a business that you believe will make a profit. The interest on that money borrowed is tax deductible, if a profit is made you pay tax to the Government. However if the business goes pearshape because you have made bad business decisions why would the Government save you, throwing our tax dollars at the business, or , why would the bank allow longer time to recover its money when the writing is on the wall.

Posted by johne, 24/11/2009 11:54:50 AM

If 7000 workers are sole bread winners and half of the contractors will have to go on a dole: all of the sudden Government picks up 2700 x $600 per fortnight, give or take $40,000,000 a year so indirectly Government should be interested in wealth of any company while we go through “ROUGH PATCH”. As to our future? We cannot do the same thing and expect different results. Old way of doing finances failed miserably, we have to change how we deal with people’s life. When are we going to realise that population grows out of proportion with growth of resources and food industries? Level playing field will only bring third world conditions to our country. Many European countries directly plugged up their failing companies, are they stupid?

Posted by Barry, 24/11/2009 12:08:50 PM

Couldnt agree any more with you Barry...you are spot on. As for you Mr Fisho we are not talking about any business here...this is just one example of one great company wich has provided work and security for loads of families for many many years...however as per usual when things get a litle rough the bank simplY pulls the rug under their feet rather then help save a company and above all employment for so many workers.

Posted by Anne, 24/11/2009 4:14:56 PM

So, Anne, 24/11/2009 4:14:56 PM, because it is a local business the Government should swing in and bail out private companies. So multiply this through every regional area in Australia, they are all entitled to use the same claim, and very quickly the account is going to get very high. If that was the case the Government would be bailing out lots of developers in Wollongong in recent years. As I said Anne, if a business turns out not to be salvageable what then, the taxpayers carry the can? Rather than me presume, are you an expert in corporate turnaround Anne?

Posted by fisho, 24/11/2009 4:48:10 PM

Without knowing all the facts behind why Wideform has found itself in trouble it is a hard ask to say the govt should bail them out or the bank should continue to support them. Should the company go under (and I hope it doesn't) there are various govt schemes in place to assist the employees but unfortunately its the subbies, as usual, who will bear the brunt of any collapse. Without cash flow and profitable work you can't continue trading; that unfortunately is the reality.

Posted by David, 24/11/2009 8:30:12 PM

The companies you are referring to Barry, 24/11/2009 12:08:50 PM, that were supported in both Europe and most prominently in the USA were companies like AIG (American International Group). These types of companies provided, amongst other things, liability insurance to airlines and power generation facilities and other “critical” businesses. Without this insurance these operations would have to cease trading, you are drawing something of a long bow in your comparison. johne, 24/11/2009 11:54:50 AM has nailed it, if you borrow money you need to pay it back, nothing too “old fashioned” about that Barry.

Posted by fisho, 25/11/2009 9:46:02 AM

i can see both side of this argument, but remember one thing: when Governments intervene there is always going to be abuse. For example, If i know that the government will come to my rescue in times of need, then i will take huge risks (high risk = high return). If it works. then i get rich, if it fails, then Kevin Rudd will bail me out--what a great incentive to be reckless!!!!

Posted by george, 6/12/2009 12:36:55 PM

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Posted by Lucy, 3/02/2010 7:26:58 PM

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