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Episode 160 - Week 3 of the Hudson VA drama ...and the news gets worse
262 Plays8 days ago
RNA episode 160 has news for 12 May 2026 covering the latest on the Hudson Aust administration, SEEK's latest product competing directly with their recruitment agency clients, Momentum Consulting in administration, positive news about New Zealand's labour market and details on how you can hear Ross speak (and then sing!). Question of the Week covers the reasons Ross believes are the cause of Hudson's slide into administration.
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Transcript
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Speaker
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Hudson's Financial Troubles
00:00:35
Speaker
This is the news for the 12th of May, 2026. I'm Adele Last.
00:00:40
Speaker
And I'm Ross Klenit. Adele, I understand it was a sobering picture presented to Hudson's creditors at their first meeting held by the company administrators last Tuesday.
00:00:50
Speaker
It certainly was, Ross. The business is reportedly nearly $48 million dollars in the hole, with the biggest creditor being the ATO, owed more than $20 million. dollars The other major exposure is to lender Scott Pack, which has owed more than $10 million dollars in secured debt tied to factored invoices.
00:01:10
Speaker
Most of the creditors at the meeting, we were told, were Hudson employees. They discovered that current and former staff are owed around $7.5 million, dollars including roughly million in unpaid superannuation.
00:01:25
Speaker
And that, no doubt, was an unpleasant surprise because super is money. Employees assume has already been paid on their behalf. And when the number gets that large, it does raise serious questions about cash flow management over an extended period.
00:01:43
Speaker
The total debt suggests quite a downward trend over a number of years as the business was acquired by the current management team in 2018 when it million dollars in debt Additional reporting on Hudson by the AFR on Monday has revealed that ASIC had issued charges against Hudson for failing to lodge accounts for the 2022, 2023 and 2024 financial years.
00:02:09
Speaker
Also in the same AFR article was the news that the administrators from WLP Restructuring are ah working with corporate advisors TIP Group to seek a potential buyer for Hudson.
00:02:20
Speaker
with non-binding indicative offers due by last Friday and conditional binding offers requested by next Monday, the 18th of May.
Unprofitability and Employee Loyalty at Hudson
00:02:30
Speaker
Wow, that's a lot of fresh bad news for Hudson. I'm sure the Hudson employees will be even more unhappy once they learn how much in ASIC's bad books the company was. And whatever loyalty they may have felt at the time of the voluntary administration announcement last month is sure to be diminished by this latest news. The article finished by saying,
00:02:50
Speaker
Sources who have seen Hudson's financials say the company has been unprofitable for some time.
Momentum Consulting Group's Financial Uncertainty
00:02:57
Speaker
Separate to the AFR article, I've uncovered information about what has happened at Hudson over the past four years that has led to the current situation. i will dig into this in question of the week after the news.
00:03:09
Speaker
Adele, another recruitment business is facing an uncertain future with Momentum Consulting Group holding its second creditors meeting today, the 12th of May. Yes, we recently learned the company entered administration in late March with administrators from BDO appointed to oversee the process. Momentum has been around for 26 years. it was founded by former Manpower Manager John Patrick. The business is well known in the industrial and blue-collar labour hire market in Sydney.
00:03:38
Speaker
From a search of LinkedIn, it seems the company employs around 20 internal staff. The agenda for today's meeting notes a vote on a proposed deed of company arrangement. So it seems there may still be an attempt to restructure or save the business in some form, which means this may not necessarily be the end of momentum.
00:03:57
Speaker
However, it's another long-established recruitment operator like Quest Personnel in Hudson Australia that has found the current market conditions too difficult to overcome despite decades of successful trading.
Seek's 'Guaranteed Hire' Product
00:04:10
Speaker
Seek is back in the news, Ross. They've launched a new product called Guaranteed Hire. Yes, and yet again, Adele, it seems they are taking on recruitment agencies directly. The product page for guaranteed hire, Sprux's local market specialist knowledge, hands-on support and innovative thinking and insights.
00:04:30
Speaker
The service specifically includes writing and posting job ads, optimising campaigns and using Seek's own data and tools to improve ad performance. But looking at the website, it appears to be largely an AI-driven sourcing and matching tool, Essentially taking a position description, generating an ad, matching suitable applications. <unk> Based on what you're telling me, Adele, it seems there's no screening by a human.
00:04:56
Speaker
Candidates are assumed to have submitted a resume that is both complete and accurate. I can't see how salary expectations can be aligned doing it this way either.
00:05:07
Speaker
The pricing seems hard to believe. I understand employers are charged around 8.5% of one month's salary, which works out at less than 1% of annualised salary, with a refund if no placement is made.
00:05:22
Speaker
Well, Seek never stop, do they? They continue to bite the hand that feeds them. This move seems to have caught the whole industry by surprise. Even the RCSA was not advised about this new product. And CEO Charles Cameron has contacted Seek with a Please Explain.
00:05:39
Speaker
If you know any more about Seek's guaranteed higher product, please message either Ross or myself on LinkedIn.
Restructuring at Hayes ANZ
00:05:47
Speaker
Adele, very big news at Hayes ANZ. Last week, APAC CEO Matthew Dickerson emailed all staff last Wednesday advising them of a restructure, with the result being five senior executives, including the Managing Director for Specialist Recruitment in Australia, Jane McNeill, will leave the company over the next seven weeks.
00:06:09
Speaker
No doubt it was a huge shock to local Hayes staff, Ross. Jane McNeill joined Hayes in London back in 1987. So she's been with the company nearly four decades, including 25 years in Australia.
00:06:22
Speaker
Hayes Victorian director Sue Drew will also finish at the end of June. Drew had been with Hayes for decades as well, having started with Hayes UK in early 94. She then moved to Melbourne in mid-1997.
00:06:36
Speaker
Drew and McNeill are not the only ones leaving. Other departing executives include New South Wales State Director David Corley, Technology and Technical Workforce Solutions MD Adam Shapley and the Director of the Hayes Mining Specialism Nationally Jed Welsh.
00:06:53
Speaker
That's a combined 145 years of institutional knowledge and experience walking out the Hayes door by the end of the current financial year. Replacing McNeill's National MD role will be a regional structure. Four existing executives now move to regional managing director roles that will cover the ANZ region.
00:07:14
Speaker
Clare Forsyth has responsibility for WA in South Australia. Simon Bristow adds the Northern Territory to his Queensland remit. Andrew Hanson will be leading the New South Wales ACT and Federal Government divisions from Sydney. And rounding out the promotions will be David Trollope, who is relocating from Auckland to Melbourne to manage Victoria, Tasmania and New Zealand.
00:07:36
Speaker
The five departures, whether voluntary or involuntary, reflect executives who either had no choice or saw little future for themselves in this new structure as their remit had narrowed or their career path at Hayes ANZ had diminished.
00:07:53
Speaker
Dickerson clearly felt he had to make these tough calls because the business has been struggling. The sales and profit slump is evident when you look at the headcount reduction. He's essentially resizing the business to match the current market.
00:08:06
Speaker
You're right. As of December 31 last year, the number of fee earners in ANZ had dropped to 645, down 42% from the 1,110 consultants they'd had just three years earlier.
00:08:21
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Whether Dickerson has made the right calls in terms of structure and personnel will be seen in the next couple of years.
New Zealand's Unemployment Rate Drop
00:08:29
Speaker
In an encouraging sign that the worst of New Zealand's recent economic malaise may be over, the seasonally adjusted unemployment rate dropped 0.1% to 5.3% in the March 2026 quarter, according to figures from Statistics New Zealand released last week.
00:08:47
Speaker
The recruitment sector across the Tasman will be relieved to know that not only did the number of unemployed people drop by 2,000 to 163,000, hundred and sixty three thousand The number of employed people rose by 0.2% to $2.9 million in the March quarter, and average ordinary time earnings rose 0.3% in the quarter to reach $44.12 per hour.
Recruitment Curry Club Fundraising Event
00:09:10
Speaker
Adele, a quick shout out. Thanks to the Recruitment Curry Club and sponsors, including Infinity Staff Global, Roll Relay, Shazami, RatesCalc, Tech2Rec,
00:09:24
Speaker
rick The Stoop Payroll by Deal and Recruit Wizard. There's a great fundraising event happening the night before Talent X next week. Yes, on Wednesday the 20th of May, Ross will be giving a 20-minute industry update over dinner at a well-known Indian restaurant called Daughter-in-Law in the Melbourne CBD, followed by networking and I even hear karaoke for the brave. What is your go-to karaoke song, Ross?
00:09:53
Speaker
You will have to find out by coming along, Adele, but I promise you it will be worth it. Tickets are $99, which includes a $20 donation to my 2026 Mother's Day Classic fundraising campaign. There are only 90 seats available, so search LinkedIn or Eventbrite for Recruitment Curry Club.
Hudson's Voluntary Administration Timeline
00:10:14
Speaker
And that's your news up to date. Stay tuned now for Question of the Week.
00:10:24
Speaker
It's week three of the Hudson Voluntary Administration situation. Why does the news just get worse, Ross? It is getting worse, Adele, by the day. So perhaps for latecomers, let's provide a brief timeline of what's happened.
00:10:40
Speaker
Yeah, it is in recent weeks. 22nd of April was the first notice that Hudson Global Resources Australia Pty Ltd entered voluntary administration and administrators were appointed The company was supposedly trading profitably according to the existing executive team.
00:10:58
Speaker
On the 5th of May, the first creditors meeting was held. Total debts revealed to be just under $48 million dollars and the ATO is named as the single largest creditor but owed $19 million. dollars On the 11th of May, the Australian Financial Review reports Hudson was being pursued by the corporate regulator ASIC for the failure to lodge financial statements for three years in a row.
00:11:21
Speaker
And also on the 11th of May, the AFR reported non-binding indicative offers for the purchase of the business were due on the 8th of May and conditional binding offers due on the 18th of May.
00:11:33
Speaker
I believe you have some more information about this though. ah Well, certainly in terms of the contract decline, which is really where the issue has been, specifically federal government contracts for Hudson.
Hudson's Decline in Government Contracts
00:11:45
Speaker
So ah based on a contract website that I've just gone through, there's some pretty startling data here, which paints a very clear picture of what's happened. So let's go back to 2022, the calendar year 2022. Hudson had on-hire workers across the whole of the federal government. So this includes both ah departments and agencies. So agencies are places like the Fair Work Ombudsman and the Australian Bureau of Statistics.
00:12:15
Speaker
So across that year, they had 1,188 on-hire workers responsible for $159 million dollars in billings or contracts, as they call them in federal government language. The following year, 2023, worker numbers fell by about ah a third 832, and the contract value declined to million. 2024, contract value remained relatively stable, 128 million. However, worker numbers fell from 832 to 699. it was last year where
00:12:55
Speaker
ah trouble really ah set in. Worker numbers dropped another 40% and contract value fell nearly a quarter to $95 million. dollars And the first four months of this calendar year before the administrators were called in, worker numbers collapsed by another two thirds and contract value fell by nearly ah another quarter.
00:13:18
Speaker
So if my maths is right on this, Ross, across the past four and a half, four and a bit years, Hudson's federal on-hire workforce has declined 86%, federal contract value almost halved. Is that what you're saying has happened here?
00:13:35
Speaker
that That is what's happened. However, the federal government is only part of Hudson's problem because unfortunately at the same time, the work that Hudson had with state governments and territories also declined very rapidly.
00:13:51
Speaker
And what we see is Queensland government was far and away Hudson's largest state government client. Disclosed spending peaked in 2023 at around $100 million. Then very sharply. 2024 down $41 million. 2025, $27 million. And at this point, it looks like that's going to halve
00:14:10
Speaker
twenty seven million and at this point it looks like that's going to halve again this year. So very bad timing for Hudson. Federal government spend falling off a cliff and state government spend also falling off a cliff.
00:14:27
Speaker
This is a pretty sad story. Do we know what percentage of government work compared to other work Hudson
Impact of Federal Policies on Hudson's Contracts
00:14:36
Speaker
had? Do we have an understanding of how much of this is their actual total revenue? No, that's not been revealed. I don't know that. But based on historical turnover figures, I'm going to guess that ah government work combined, federal and state, is something around half of Hudson's turnover. It might even be more than that. But certainly, given...
00:15:03
Speaker
falling into administration, you'd you'd have to suspect that um it was a pretty substantial part of their sales and also a very important part of their profitability.
00:15:15
Speaker
And correct me if I'm wrong on this, Hudson didn't lose this work. they They weren't not filling jobs. They weren't ignoring their client and not servicing the account. Like they didn't just randomly lose government contracts, right? So um we need to be very clear here that Hudson have been, along with the rest of the recruitment industry, the ah the fallout has been from the election of the Labor government in ah May 2022. So do you remember what the Labor government promised about the Australian Public Service when they returned to office in May 2022 at Alton? Recall an announcement about trying to reduce spend with you know external agencies, that sort of thing. Is that right?
00:16:01
Speaker
Well, that's right. um they The first thing they did was they ordered an audit of employment to find out that within the Australian Public Service, what number of workers were in fact APS employees compared to what number of workers were on hire workers. And what do you think they found, Adele, for the 2021-2022 financial year?
00:16:27
Speaker
This is going to be a scary number, I'm assuming, which prompted them to reduce spend, right? Well, yes, they found out that there was just under 200,000 full-time equivalent roles in the APS in terms of workers doing those roles, but only 144,000 of those workers were APS employees. And there was around 54,000 full-time equivalent roles that were attributable to on-hire workers. And if you look at the data that the APS released some time ago, Hudson was the third largest supplier of on-hire workers to the federal government.
00:17:09
Speaker
It's kind of like the perfect storm, right? So you've got roughly one in four workers in the APS are a contractor from an agency. There are three top agencies managing most of that work. Hudson falls into one of those top three and then the government makes a policy decision to reduce spend, convert those people.
00:17:31
Speaker
and And that's why none of this has been sudden, because the federal government was explicit about their policy, and then they were in enacting their policy. And the numbers that Hudson, that I've just read out with with respect to Hudson's declining amount of work with the federal government, I suspect has been replicated proportionally across other recruitment agencies, particularly those agencies that have been ah big on supplying on-hire workers to the federal government.
00:18:06
Speaker
Okay, and we might sound like we're defending Hudson here, saying poor old Hudson, they're just victims of the the government making a policy decision, cutting spending. But um what what's gone what else has gone
Hudson's Dependency on Government Contracts
00:18:20
Speaker
wrong here, Ross? What didn't they do? Well, I think it's pretty clear that the work that Hudson lost from the federal government was not replaced by new work from non-government clients, that whatever new work Hudson were able to generate, it was far less than they needed to replace the lost federal government work.
00:18:43
Speaker
And even though they've had four years notice effectively that whatever changes they made to the culture, whatever they implemented in terms of sales initiatives or bringing in BD staff, it didn't work or certainly didn't work on a scale that was large enough to turn the business around.
00:19:04
Speaker
So this wouldn't be an uncommon story in some of these larger organisations where they've got these big contracts, work is coming in, they've got teams of job fillers and not many hunters.
00:19:16
Speaker
Well, effectively, I mean, I ah don't know anything about the Hudson culture, but you could certainly reasonably state that based on federal governments, ah the the federal government and state and territory governments, that Hudson had a very strong culture of winning and filling jobs under the various tenders, contracts and panels.
00:19:37
Speaker
that Hudson were successful for and that they were relatively unsuccessful at bringing in new work. So that would have to say that there was something lacking in terms of a new business culture at Hudson.
00:19:55
Speaker
All right. What's next steps from here then? Well, we don't have a date for the next creditors meeting, but given what we know about the conditional binding offers having to be submitted by Monday, the 18th of May, you would have to expect that a second creditors meeting would be held shortly thereafter for the creditors to consider a deed of company arrangement that's already been flagged by the administrators as coming from the current management team, or as has has been rumoured, an offer from another buyer to buy the business. But it is just a rumour at this point. We don't know anything about this potential or rumoured potential buyer.
00:20:37
Speaker
Okay. And anyone listening to this that might have a big portion of their work coming from government contracts, Ross, what should they be doing right now? What should they be doing to prepare or learn from this situation?
00:20:50
Speaker
Well, it's just a simple lesson that no matter how well you service a client, that a change in policy or circumstances or decision maker could mean that you lose that work or lose a substantial amount of that work. And that work's going to need to be replaced to cover your existing costs.
00:21:09
Speaker
And this can happen to any recruitment agency. It's just happened, unfortunately, to Hudson at a very large scale. Is this a little bit of eggs in one basket situation, you think?
00:21:20
Speaker
I think you can reasonably say that, Adele, yes.