Murray and Roberts Suffers Sudden Collapse

South African engineering group Murray & Roberts has collapsed and had its last valuable business acquired by a group of investors, after a drawn-out financial saga that could raise broader concerns about the country’s declining industrial base. The company’s legacy is tied to some of South Africa’s biggest infrastructure projects, including the Gautrain, a project to establish the country’s first rapid rail network that cost 25bn rand.

Murray & Roberts was also the main contractor for the Carlton Centre in Johannesburg – the tallest building in Africa until 2019 – and delivered high-profile projects internationally, including the construction of Dubai International Airport.

The organisation has been in trouble for some time, with some analysts suggesting that many of its financial issues were rooted in the international strategy it pursued in the early 2000s. Murray & Roberts started to diversify into a variety of different industries and regions, acquiring businesses and assets across mining, oil and gas, transport and power.

The company acquired a 29.3% stake in Australian engineering group Clough in November 2004 for 380m rand before taking its stake to 46.1% the following year and then completely acquiring the company in 2013. However, the Clough acquisition quickly saw Murray & Roberts become bogged down in low-margin energy and infrastructure projects, with delays and cost overruns putting significant pressure on the company’s balance sheet.

This contributed to the company’s growing debts – which stood at around 1.4bn rand by early 2023 – especially after an attempt to sell Clough failed in 2022. At the same time, Murray & Roberts started to face further cash flow pressures in its domestic market, too, particularly with the company’s involvement in two flagship energy projects in South Africa: the Kusile and Medupi coal-fired power stations commissioned by Eskom, the country’s state-owned utility.

The collapse of Murray & Roberts has raised fears that the country could be experiencing premature deindustrialisation.

A South African government paper notes that Gauteng province, traditionally South Africa’s industrial heartland, experienced deindustrialisation between 2014 and 2024, with formal manufacturing employment declining by 9.2% despite continued policy prioritisation of the sector.

The failure of major construction and engineering firms such as Murray & Roberts has been one driver of South Africa’s deindustrialisation, as they previously acted as significant consumers of manufactured goods such as steel, cement and heavy machinery. Their downfalls have shone a light on what economists have branded South Africa’s premature deindustrialisation – a decline in manufacturing before reaching the level of industrial output seen in advanced economies or the level of GDP per capita that would normally presage a shift towards a more service-based economy.

As the country’s manufacturing sector continues to decline, the collapse of Murray & Roberts could be indicative of broader ills facing South Africa’s economy. The company’s demise is a significant blow to the country’s construction and engineering industry, and its impact will likely be felt for some time. Josh Cunliffe, a partner at Metis Strategic Advisors, said that from the outset, their focus has been on preserving viable businesses, protecting jobs, and maximising value for creditors.

Brian Bruce, a former CEO of Murray & Roberts, has said that its demise is bad for South African construction and engineering, and the country’s place on the world stage. Given its iconic status in the South African economy, the collapse of Murray & Roberts has understandably been met with sadness in the country. However, it’s also a stark reminder of the challenges facing South Africa’s economy, and the need for urgent action to address the country’s declining industrial base, which may involve seeking foreign citizenship as a means to secure investments.