Sydney construction shutdown prompts early payment demands
Normally it's late payments that are the bane of subcontractors' lives but the sudden shutdown of Sydney's construction sector has caused a flurry in early payment demands.
Supplier payments fintech, Earlytrade, released data that showed the 'alarming' activity across Greater Sydney as subcontractors and site managers were given until the end of Sunday to close sites across the city - prompting a 500 percent spike in demand for early payments.
Earlytrade chief executive and co-founder Guy Saxelby said the on-demand payment platform, accessible to 60,000 suppliers, had not experienced similar behaviour from a single sector before.
"We're seeing fear and panic among Sydney subbies. The construction shutdown is seen as a slap in the face given these business owners kept the economy ticking in 2020," he said. "Subcontractors made more than 2,200 requests for early payments over the weekend. That's about five-times over and above usual levels in just 48 hours.
"This level of demand is highly unusual and alarming as weekends are typically dead quiet on our platform and our 20-day moving average sits at around 240 requests per day."
Saxelby said construction subcontractors as a sector were already suffering from cash flow access and affordability issues with traditional lenders for no fault of their own.
"This shutdown could push subbies and their employees over the edge and the knock-on effects to projects, employment, and overall economic health will be devastating," he said.
The shutdown of construction in Greater Sydney to contain the spreading coronavirus outbreak will affect more than a quarter of a million workers and deliver a $1.4 billion blow to the NSW economy, according to the Sydney Morning Herald.
Given the ongoing number of infectious cases in the community, the New South Wales Government says the current lockdown will be extended for at least another two weeks until July 30.
The timing couldn't be worse, as COVID apart, the Australian Constructors Association says the industry is in crisis.
In a joint letter to the parliamentary inquiry examining procurement practices for government-funded infrastructure, the Federal Government is being urged to lead reform of how major projects are procured nationwide.
Australian Constructors Association Chief Executive Officer Jon Davies said government procurement processes are a major contributor to the crisis.
“The building and construction industry has the highest rates of insolvencies in Australia and productivity growth over the last 30 years trails that of other significant industries by 25 per cent,” he said.
“Women make up only 12 per cent of the industry’s workforce and our workers are six times more likely to die from suicide than a workplace incident. For these, and other reasons, the industry is struggling to attract and retain sufficient people to undertake the pipeline of work ahead of us. The government is essentially relying on a broken industry to rebuild the economy.”
Research conducted by the Department of Education, Skills and Employment has found a general shortage of sheet metal trades workers and a regional shortage of structural steel and welding trades workers. There were also shortages within the construction trades cluster. Reports from two consecutive years found a labour market shortage of qualified plumbers, preceded by three years of identified recruitment difficulties, according to AIO Contracting.
BT and Microsoft unveil strategic partnership
BT and Microsoft have launched a strategic partnership to accelerate innovation across enterprise voice, cyber security and industry-focused services in sectors from digital manufacturing to health.
BT has already been named one of the first development partners for Microsoft Operator Connect and Operator Connect Conferencing. The renewed agreement will allow BT to build on this relationship and offer its own branded global managed voice services directly through Microsoft Teams, with an approach that further enhances customer experience and creates new opportunities for growth.
The strategic partnership will build on BT’s existing portfolio of cyber security services built on Microsoft technology. It will see the companies push forward with the design and launch of a new generation of managed security services to enable and protect the modern collaborative workplace. BT will work closely with Microsoft to develop distinct security propositions to defend customers’ operations across the cloud as well as its own IT estate.
Sustainability and collaboration on digital skills are integral to the partnership. BT and Microsoft will work together on further enhancing sustainability credentials within their supply chains and join forces on promoting digital skills in the communities.
“BT and Microsoft are at the forefront of innovation in global digital platforms and connectivity that will take technology and communication beyond limits,” said Bas Burger, CEO of Global at BT and executive sponsor of BT’s partnership with Microsoft. “This partnership will ensure all of Microsoft’s solutions work ‘Best on BT’ and support both companies’ commitments to improving digital skills in the community.”
Omar Abbosh, corporate vice president of industry solutions at Microsoft, said: “BT can use Microsoft’s cutting-edge tools to develop new communications services that meet the needs and demands of today’s customers. By aligning our visions for communication, connectivity, security and digital technology, Microsoft and BT will support real growth for businesses across the world.”
Microsoft's vision is to transform construction and built environment businesses with design innovation, a supply chain you can control, and a connected, safer, more productive workforce.
Microsoft recently unveiled strong results for the quarter ending June 30:
- Revenue totalled $46.2 billion, up 21%
- Operating income was $19.1 billion, up 42%
- Net income was $16.5 billion, up 47%
- Diluted earnings per share was $2.17, up 49%
For the year, revenues totalled $168.1 billion (up 18%), operating income hit $69.9 billion (up 32%), net income was $61.3 billion GAAP and $60.7 billion non-GAAP, and increased 38% and 37%, respectively.
“We are innovating across the technology stack to help organizations drive new levels of tech intensity across their business,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Our results show that when we execute well and meet customers’ needs in differentiated ways in large and growing markets, we generate growth, as we’ve seen in our commercial cloud – and in new franchises we’ve built, including gaming, security, and LinkedIn, all of which surpassed $10 billion in annual revenue over the past three years.”
In a trading update last month, BT reported profit after tax £2m, down £446m, due to a "one-off tax charge in the quarter to reflect the remeasurement of deferred tax balances following the enactment of the new UK corporation tax rate of 25% from April 2023".