Carillion – Creating Chaos in the Construction Industry
The biggest news to hit the construction industry over the past week or so has been the collapse of construction services giant, Carillion which went into compulsory liquidation on 15th January. The story is still ongoing right now as the collapse of Carillion has wide-ranging repercussions throughout not just the construction industry, but several other sectors as well.
Carillion is headquartered in Wolverhampton and is the a supplier of construction services with clients including Network Rail, the NHS, schools and the prison service here in the UK. The company is responsible for repairing and maintaining many of our schools and hospitals and is the provider of facilities management services with responsibilities ranging from finding and fixing faults to providing meals and even cleaning services.
The UK government has said that financial support cannot be guaranteed beyond the end of this month, so Carillion’s directly employed workforce of about 2,000 staff and the 2,000 more who work in professional construction roles (such as quantity surveying, project and site management) are unclear on whether they will be paid next month! The company was one of the government’s major contractors and ministers have agreed to guarantee the jobs of Carillion’s public sector workers in hospitals, schools and courts and a deal has been made with 90% of private sector clients to keep receiving the company’s services.
However, sub-contractors which carry out regular work for Carillion are facing a gloomy future. Geotech engineering company, Van Elle expects to lose a whopping £1.6 million owed to it by Carillion, and that’s just the tip of the iceberg. It’s suspected that as many as 30,000 small businesses are owed money by Carillion and banks are already beginning to put pressure on subcontractor companies that worked for the giant.
The managing director of one company has revealed that he has had to lay off more than 10% of the workforce already because Carillion owes him £1 million and, despite having a profitable business, expects a struggle to stay in business due to the collapse.
To add insult to injury, Carillion regularly took 120 days from invoicing to pay its bills which has already led to problems for subcontractor companies which typically pay their own workers on a weekly or monthly basis. Blue collar staff are already being sent home unpaid and it’s the site workers who are the most seriously affected by this situation, those who can least afford to weather this storm.
As with every cloud, there is a silver lining here in the shape of developers who are initiating contingency plans and lining up contractor replacements on Carillion’s major projects across the UK. This represents an opportunity for subcontracting companies, including roofing specialists as the projects planned or begun by Carillion will still need to go ahead. Over the coming months, some of this work will become available so any roofing company owner or manager worth their salt should be on the lookout for this work and ready to rush to the rescue of projects to avoid the mad scramble for work.