In February this year, Andrew Ellison knew he had an uphill battle on his hands when he acquired the operating business of Bunbury-based Devaugh Constructions from administrators.
In February this year, Andrew Ellison knew he had an uphill battle on his hands when he acquired the operating business of Bunbury-based Devaugh Constructions from administrators.
Capital was injected into the business to fund existing contracts and purchase new equipment and, in August, Devaugh was re-branded as Cimeco.
Devaugh had 100 employees and reported debts of $14 million when Mr Ellision bought the company from administrators Ferrier Hodgson for $3 million, and injected another $5 million worth of funds.
The investment has proven worthwhile, with Cimeco’s workforce expanding to 160 employees and the company securing an additional $25 million worth of contracts in the past six months.
Mr Ellison said the biggest challenge in taking on the business was to rebuild the relationship with clients and suppliers, and subsequently Cimeco has been able to fulfil many contracts left hanging in the balance by the administration.
“Devaugh had been trading for around 30 years with an excellent team of management and a good workforce – we took over as many contracts as we could and continued the relationship with clients,” Mr Ellison said.
“We had to give clients and suppliers the confidence that we were meeting payment terms and obligations – we had to prove that and it just took a bit of time.”
Mr Ellison added the Bunbury and South West communities had been very supportive, as had several major clients.
Alcoa procurement specialist Ben Ford told WA Business News that Alcoa was more than happy to see Cimeco come out of Devaugh, and that Alcoa tried to support local businesses who employed local people.
“Cimeco was given the opportunity to continue existing Devaugh contracts with Alcoa, and we believe that Andrew has done a good job of getting the business back up and we have no hesitations dealing with Cimeco,” Mr Ford said.
According to Mr Ellision, after Devaugh’s acquisition, the entire workforce was retained but a new layer of senior management with experience and proven track records were put in.
“We were confident all the ingredients were there to turn the business around, and a lot of things have come out of the woodwork since, but we have dealt with them and business is now great,” Mr Ellison said.
Mr Ellison was not previously involved in Devaugh, and said he was not sure what went wrong to cause the company to go into administration.
Former owner Merv Waugh, who established Devaugh in 1972, is still its client relations manager.
Master Builders Association executive director Michael McLean said it was pleasing to see that an arrangement had come about with Devaugh and that Cimeco had become another player in the South West.
Mr McLean added there were several MBA members still owed a significant amount of money from Devaugh’s collapse, and he hoped that issue would be resolved soon.
One of the high profile projects Devaugh was working on at the time it went into administration was the $20 million Albany Justice Centre.
At the time, WA Premier Geoff Gallop ordered an independent inquiry, which called for major changes to the Department of Housing and Works contracting process after the creditors report revealed Devaugh had an insolvent balance sheet at least nine months before the Albany Justice Centre contract was awarded.
The Department of Housing and Works took over the Justice Centre contract, but Devaugh’s management team and equipment were left to work on the job.
Mr Ellison said he wanted to continue to grow the company over the next five years in a controlled and well managed way.
Devaugh’s current projects are 50 per cent resource-based and 50 per cent commercial building.