The South African construction industry has raised concerns about the potential liquidation of the iconic company, Murray & Roberts. Key industry players and labour unions say this will have a profound impact on the sector.
A creditor has initiated legal proceedings in the Gauteng Division of the High Court, seeking a final or provisional winding-up order against the company.
In a surprising turn of events, Murray & Roberts has indicated that it does not intend to oppose this application. This comes after a period of intense financial distress for the company, which had been undergoing a business rescue process.
South African engineering and construction company founded in 1902, with operations spanning 120 years. The company is now set to close its doors through creditor-initiated liquidation proceedings in the Gauteng High Court.
Economist Prof. Jannie Rossouw says this comes as no surprise, as the company had experienced significant liquidity constraints and the sale of its core assets.
“It’s been known for a while that Murray & Roberts experienced financial difficulty, first with business rescue, and now with an application for liquidation, brought against it and not being opposed by the company. So, what we are really seeing here is the effect of very low economic growth for more than a decade. Murray & Roberts structured itself for infrastructure development in South Africa, which didn’t happen. It structured itself for more rapid economic growth in South Africa, which will bring more construction projects to the country, and that didn’t happen. So, as a result, the company became non-viable from an operational perspective. And then in the end, they decided that liquidation is the only way out of this. So, this is also testimony to the fact that the low economic growth that we’ve been at for more than a decade in South Africa takes a serious toll on South African businesses. They simply cannot keep their doors open.
Murray & Roberts was placed on business rescue in November 2024 due to years of financial strain.
The engineering and construction giant is behind landmarks like the Carlton Centre and Gautrain, and says in a statement that, given its financial position, it does not intend to oppose the liquidation application.
President of the South African Council for the Project and Construction Management Professions, Lufuno Ratsiku, says the liquidation will serve as a blow.
“It represents a very sad scenario. These are organisations that employ our professionals in the construction industry. And if you understand, Murray and Roberts happened to be one of the listed companies at some stage on the Johannesburg Stock Exchange, with an estimated number of employees around 2021 sitting at 10 000.
“I think the latest number was just over 5 000, but employees employed in different formats, temporary and those permanent in nature. So the number might still be higher. You can imagine the loss of jobs and employment opportunities in this type of economy that we have in place in South Africa,” Ratsiku explains.
Murray & Roberts | Outcry over construction giant’s pending demise
Thousands of jobs on the line
The workers will be the ones hard hit in the liquidation process, with thousands of jobs on the line. The National Union of Mineworkers’ Tebatso Mokoena says they are worried about developments at Murray and Roberts.
“It really concerns us, because, one, our members are already indebted in terms of the salaries that they are getting, and they are unable to acquire any houses. They are unable to pay for school fees for their own children. And so, therefore, when retrenchment comes, it means that it will be the last income that they will have with the unemployment rate, which is so high, and they’re unable to get jobs anywhere else. So, it is worryingome.”
Ratsiku says the construction industry has seen setbacks, with many companies closing their doors. He cautions that if not safeguarded, the industry will get lost.
“There’s a bigger issue around the pace of payments in the country. There’s also a bigger issue around how the size of these companies ruins their cash flows to an extent that their creditors would react in a particular way when they are not paid over time. It does worry us to an extent that some of the regulatory frameworks of the industry were supposed to be going towards the direction of protection of opportunities for local companies, such as companies of the size, Murray & Roberts, and then, particularly, the number of employees that they employ. One would have imagined that by now, we should have been having a legislative framework that allows them to have what we call a first right of refusal in some of these opportunities, before they are taken by international players as well.”
The liquidation application filed in the Gauteng High Court could seal the company’s fate, leaving shareholders in the dark about what’s next.
Murray & Roberts says it plans to continue engaging with its legal advisors and will update shareholders on further material developments from the court process.
