Family businesses in key sectors of the Australian economy are in for some tough times ahead, a new IBISWorld research has shown.
The auto-electrical, motor vehicle parts and accessories, petroleum refining and duel manufacturing, as well as heavy industry and non-building construction sectors will all experience falling earnings in the year ahead, with the pastoral sector in particular in for a disastrous year, according to the Business Spectator.
The IBISWorld research forecasts the revenues in the pastoral sector to drop by a staggering 22.6% and settle at $7.6 billion, which is a significant drop from $9.8 billion last year.
George King, manager of Coombing Park near Orange, run by family business the Whitney Pastoral Company for the last 134 years, said he has never seen it as bad as this.
“This would be as hard as it has ever been,” King said. “Never in the history of the country has it been as hard as this. Something has to change to make it sustainable, everyone is living on equity. Most of the rural industry is living on equity, increasing the overdraft to pay the operating costs every year. We had to buy out other family members so it’s really tough. I can’t imagine it getting much tougher.”
“We are getting the same price for cattle that we were 15 years ago and our costs have doubled and tripled in that time, it’s just getting leaner and leaner. The biggest problems we are having at the moment, apart from declining terms of trade since world war two and increasing costs, is the high Australian dollar and the drought in Queensland putting too many cattle on the market.”
Peter Hughes, whose family has owned and run Hughes Pastoral Company since 1872, dismissed the IBISWorld forecasts, saying they’re a year off.
“We have had two years of well below average rainfall and I don’t think it goes much longer than that,” Hughes said. “Certainly the market is looking a lot better. It’s taken an awful battering for the last two years, the last two years have been atrocious but we are working our way through that.”