Jake Wielstra worked through ‘the recession we had to have’ in the 1990s and the global financial crisis, but the Armadale mechanic describes those as a walk in the park compared to conditions now.
“It is rough, mate. I can tell you now, my figures this year, from last year or previous years, we’re about 20 per cent down,” he said from the office of his Jake’s Automotive workshop in the Armadale industrial area.
“We’ve taken a hit for the last past years, it’s not just this year, every year it’s getting worse and worse, we’ve never struggled as much as now to pay the bills.”
According to the latest economic data the WA economy – minus international and interstate trade – has shrunk 1.1 per cent last financial year, with business investment collapsing by a massive 8.7 per cent in annual average terms.
WAtoday decided to examine how these overarching economic conditions were impacting a business microcosm such as the Armadale industrial area.
Mr Wielstra’s story is not uncommon in the area, which is bordered by the Darling Range, housing subdivisions and a brickworks.
While job cuts on mine sites or redundancies in banks are often cited as a sign of the times, Mr Wielstra estimated the businesses around him have been forced to cut at least 100 full-time positions in the past three years – a huge hit for a small industrial area.
The estate is dominated by mechanics and cabinetmakers, and it is these Mr Wielstra said were hurting the most.
“We haven’t lost clients as such but they’re delaying stuff. It’s also very competitive out there, we’ll lose a job over $10 and we’re competitive,” he said.
“Years gone by, a car rolls in, we look at a vehicle and say it needs this and that and it was never a problem.
“We’re seeing that sort of stuff now, mate, where tyres are through to the canvas, but they don’t have the money.”
Perhaps the best indicator of conditions in any industrial area is the humble lunch bar.
For Armadale that’s the KB Junction Lunch Bar, owned and operated by 70-year-old Tye and his wife.
He said over the past three years there had been a noticeable drop in customers, largely thanks to a reduction in cabinetmakers.
He said this drop had made it all but impossible to sell the business and pushed retirement further down the track.
“We’re happy and we’re still plodding along but I’m just waiting for that Powerball,” he said.
Cabinetmakers are being squeezed by some of the toughest home construction conditions WA has ever seen.
Home builds fell 14 per cent in WA in 2018-19 to about 15,500. At the height of the boom in 2014, double that was being built.
In a recent report, the WA Housing Industry Forecasting Group said build commencements per 1000 persons were at a 30-year low and had been trending downwards five years – the longest downturn since records began in 1985.
WAtoday reached out to seven cabinetmakers in the area. Six either declined to speak or did not respond.
The Cabinet Makers Association of WA, however, confirmed the sector was hurting with 20 shops across the metro area closing in the past year.
“The share of the pie is less and so everybody is fighting for that smaller amount,” said association vice president Ugo De Laurentis, who has been in the industry for 30 years.
“The outcome of [the drop in construction starts] is that prices have dropped but our labour rates and material rates have not dropped so essentially the margins have been reduced.
“We’re working harder for less; that’s a bit of a cliche but that is certainly how it feels.”
Mr De Laurentis said the state government’s recent stimulus announcement for the apartment sector would do little for their businesses and called for a boost to the first homeowners grant.
The story changes dramatically for businesses with highly specialised offerings or a link to the mining industry.
Western Kitchens owner Fred Bosveld was the one Armadale cabinetmaker who did comment and he said his commercial work, including jobs for mining clients, was keeping him very busy.
Up the road mining safety equipment supplier SafeBoarder is “flat out”, according to owner Nathan Ellement.
“From the mining boom we had eight to 10 years ago or whatever where there was a monumental amount of new equipment deliveries, and the Komatsus and Westracs were absolutely flat out trying to kick machines out the door, all of that equipment has now come back for rebuild,” he said.
“Compared to the rest of the area here that is generally tied to housing and have been dropping a lot of staff to four-day weeks, we are an oddity in that we are chaotically busy which is great, is paying bills and 20-odd people here are paying all their mortgages.”
Superoo is a specialist Ford spare parts provider and an institution in WA for those looking to build or maintain their classic Falcons.
Owner Tony Devlin said 2018 was their best in more than 28 years of operations but they slogged their guts out to make it happen.
“We’re not finding it too bad but we’re pretty specialised, we don’t have a lot of competition in all the different areas that we do,” he said.
“Certainly, we’ve got to work a hell of a lot harder these days. For the same dollar that I used to get I put a lot more hours into it.”
St Vincent de Paul Society’s executive manager Andrew York said he’d never seen it so bad.
Mr York told WAtoday Vinnies had seen a significant increase in the number of small businesses owners needing emergency relief.
They helped 55,000 people last financial year and 40,000 the year before, but 65,000 this financial year.
“We’ve got small businesses and franchisees, they’re actually remortgaging their houses to keep the businesses afloat,” Mr York said.
“Your only option is then bankruptcy, really.”
Mr York said it was not unusual for small business owners to seek help with debts from between $250,000 and $1.5 million.
“With lots of our tradies we’re seeing 15-20 grand on their credit cards and they can’t pay it back,” he said.
The society, which also manages the National Debt Helpline in WA, is struggling to cope with demand.
“Big business is big business and it will always survive,” Mr York said.
“But when you’re a sole tradesperson or a franchisee and people aren’t spending, it doesn’t matter what economy you’re in, you’re in trouble.”
Looking closer into Armadale, as a miniature representation of a wider state, WAtoday found in these new anecdotes echoes of an older and familiar WA story: that of the two-speed economy.
But this resurgence lacks the power of the boom at the start of this decade and is yet to manifest any substantial trickle-down effect into population growth, housing contruction growth, food and beverage, or any other unrelated industry you care to name.
Uncertainty is the watchword for the whole country’s economy with the Reserve Bank issuing round after round of interest rate cuts that look increasingly like whistling in the dark, and WA is no different as it waits and hopes for a break.
Meanwhile, for families in the south-eastern suburbs but indeed the whole state, this Christmas could be a grim one.
This article first appeared in www.watoday.com.au