The collapse of a New Plymouth building company will have a ripple effect right through the local industry, the head of the Master Builders Federation says.
Award-winning Abode Design and Build went into voluntary liquidation this week.
While it's not known exactly how much the company owes to subcontractors and suppliers, the chief executive of the New Zealand Registered Master Builders Federation, Warwick Quinn, said the business' failure would be felt through the industry in the region.
"What happens is there is a ripple effect right through those suppliers," Quinn said.
"It can be long and it can cause hardship."
He said more than 90 per cent of New Zealand construction companies had five staff or less.
"So they don't have necessarily huge amounts of capital where they can withstand many of these sorts of events.
"The degree that it will affect them will depend on how much money is owed."
Quinn said subcontractors needed to make sure they were paid regularly and payments were up to date or they could find themselves virtually caught short overnight.
He said Abode's collapse was the first he'd heard of in a while.
"I think it's a reflection that although there is a lot of confidence going forward, we are still coming out of five years of recession and there's still companies out there doing it tough."
Taranaki Master Builders Association president John Street said it was sad and regrettable that the economy had taken its toll on another local contractor.
Martin Stephens, managing director of Clelands Construction, said his company wasn't owed any money by Abode but he felt sympathy for those who were.
"Obviously it's not good when any construction or building company goes into liquidation because it has a detrimental effect on subcontractors and suppliers."
He said it was a surprise Abode had gone broke.
Aluminium Creations owner Barry Arbuckle said he was owed money but stressed his business was in a strong financial position.
"I haven't spoken to the liquidators yet so I can't really comment too far on that," Arbuckle said.
He said the liquidation came as a surprise.
He knew other subcontractors who were also owned money by the company.
"There will definitely be a flow-on effect right down the chain," he said
Clinton Ansell, owner of Ansell Flooring, said he had done four high-end jobs for Abode and was owed for the work.
While it wasn't a large amount it could affect his business.
"I'm only a small business with big overheads and mortgages to get my company off the ground," he said.
"I will notice that amount."
- Taranaki Daily News