Post Companies Insolvencies and Redundancies

Hi there

It seems every day there are more and more companies going bust or people made redundant. It seems to be a global thing.

I thought it would be good to get people post and comment...as I suspect there will be more and more of these and track what happens to the economy.

Here are some I found recently.....

https://www.news.com.au/finance/bus...s/news-story/3b4f7f5def1c401d27d77cbc1d698ab5

‘Serious red flag’: Insolvency experts see increase in collapses in 2023

 

This is common in economic cycles incl when the pandemic occurred. I would expect that some retail traders may face some concerning changes with rising costs for product based on suppliers and freight and even exchange rates etc , less consumer spending demand and rising costs eg labour etc. Rents may be tied to CPI increases too. And rising energy costs to keep the lights on. So almost their entire costbase is subject to costs pressure with declining sales volume and competition with discounting. Its impossible to generalise since some businesses are smart and will raise prices and avoid deep discounts where competitors may go hard and burn cashflow. One of the easiest areas to slash costs is reducing stock and cutting staff hours.

I suspect we may see some retailers with rising stock levels. These stocks may be exposed since if the landed costs if say $1000 and other retailers discounting etc it could squeeze margins so sales are at a loss. Those businesses may tread water to later collapse when cashflow is consumed and avenues to finance are closed.

One statistic I recently saw was alarming. Its was insolvencies in the construction sector. Now this includes retail home builders. But there are also second tier builders who do contract work etc. But also subbies and suppliers etc. Its a chain reaction. The stat I saw was 34,000 so far. Recent media reports suggested other home builders have passed on cost increases which exceed actual costs so they may even have more profitable contract completion and be putting people on. making assumptions can be fraught with error.

 

Not to mention Construction collapses normally have ripple effects.

 

Yes construction type ones will ripple through the non-bank & commercial debt markets. That gets spread around the world via debt instruments.

 

another one. Xero trimming 700-800 jobs.

Xero to shed around 15 per of staff

 

Australian software giant Atlassian to shed 5 per cent of workers, or 500 jobs globally, as tech industry layoffs grow - ABC News

 

only 120 of those in Australia

 

Agree. roughly a quarter of global retrenchments and an example of IT being ones of the leaders in retrenchments.

For a more precise record, filter by country (Australia - 36 Companies, total 6560 redundancies as of 09 Mar 23)
LayoffsTracker – Track all Tech & Startup layoffs globally

 

I was more thinking of suppliers, trades & other services.

 

Especially IT contractors...Not counted as employees but are the silent ones wearing the costs of cuts. No redundancy too. They are hidden victims. Software, app, social media etc have all faced cuts. Often very significant cuts.

 

Zombie Apocalypse coming for high leveraged and low (or no) profitability businesses. . I heard an interview with Christopher Joye and Mark Bouris last year and something like 15 % of all listed companies are zombies and this was FY 22 data when cash rates were basically zero. Cannot imagine it won't be higher moving forward

 

Yep.... my contact who are in finance roles in Tech companies said contractors were laid off as far back as Sept last year.

 

Am i evil in thinking that, its time those in these industries that have been milking it for years with overpriced, crappy service and entitled get a reality check

 

I don't want to name names, but a recent MYOB purchase laid off 40% of IT staff..

Most of the crypto/blockchain types have laid of many workers in the last few months, probably adds up to way more than Atlassian+Xero combined.

Online education providers are laying off staff (maybe due to a return of face to face learning) - again can name names but shall not.

 

They had a re-hiring freeze for a long time now, 3–4 months at least. So they have reduced quite a bit of staff prior to this announcement.

 

It won't be obvious but AI is replacing jobs already. Example it's much quicker to code with chatgpt/copilot, less juniors needed.

 

Yes. I believe Google is already doing this.

 

The amount of "House wife" IT testers recruited "Just" in last 2 years is unbelievable. Just for simple manual testing using ALM. I think these will be the first jobs to go when AI is ready.

 

Yep.

Tech companies massively over hired....the immigration systems is still awarding places based on IT skills...as always when the demand exceeds supply it will get very very interesting....... areas where these people congregate will be under pressure. Hills district comes to mind....

 

except that proprietary code should never be put into a public system, and anyone doing it without written permission from appropriate people can get themselves into deep ***t if found out.