Carillion’s Collapse and What It Means for the Construction Industry
Feb 16, 2018
News of Carillion’s collapse has been dominating the industry’s headlines over the last month. With a global workforce of over 43,000 and countless development contracts, it’s needless to say that this news will impact many lives, companies and countries.
Carillion’s Rise and Fall
Carillion was built out of the Tarmac business in 1999. Carillion then spread its roots, and expanded into other sectors such as facilities management services. Overtime, the company acquired other businesses, giving it a wider offering, global network and greater skillset. Acquiring the likes of GT Rail Maintenance (2001), Mowlem (2006) and Alfred McAlpine (2008), Carillion built up it’s reputation and growing list of contracts. Outside of the UK, most of Carillion’s workforce were spread between Canada, the Middle East and the Caribbean.
As Britain’s second largest construction company with its head office based in the UK (Wolverhampton), Carillion has worked on significant private and public sector projects. Notable projects that Carillion have helped deliver include the Battersea Power station redevelopment, the Anfield Stadium expansion, as well as many hospitals, prisons, schools, housing developments, road and railworks and development projects abroad.
On the 15th January 2018, Carillion went into compulsory liquidation after having financial difficulties the previous year. With debts of £900 million and a £590 million pension deficit, things became impossible to manage or recover from. In July 2017 the share price plummeted from 200 to just under 50 pence.
What’s the Wider Impact?
There have been two primary concerns following the announcement in January, including the wellbeing and future of the 43,000 members of staff and safeguarding their pensions. The second key concern is what will happen to all of Carillion’s contracts and who will take the work on.
This is a very difficult time for Carillion people and briefings continue to take place. Employees can call the helpline on 0800 0639 282 or +44 (0) 203 2811805. You can also email employees.carillion@uk.pwc.com
— Carillion plc (@Carillionplc) 19 January 2018
Although in 2016 Carillion had a turnover of £5.2billion, very little of its work was done in-house. To meet the number of operations and contracts, Carillion employed SMEs (small and medium-sized enterprises) as subcontractors. Therefore, news of the company’s liquidation will have had a wide impact in the supply chain, leaving thousands of SMEs unsure of what’s next.
“The domino reverberations as it travels down the supply chain could be unprecedented.” – Rudi Klein, Chief Executive of the Specialist Engineering Contractors’ Group
As 43,000 people have been waiting anxiously to hear their fate, the Government stepped in urging those working on public services to carry on as normal, reassuring them that they will continue to be paid by the Government. This means the taxpayers’ money will keep the vital public services running after the collapse.
“We continue to engage with staff, elected employee representatives and unions throughout. Those who have lost their jobs will be able to find support through Jobcentre Plus’s rapid response service and are also entitled to make a claim for statutory redundancy payments.”
“The liquidation process continues and we remain focused on engaging with staff and new suppliers about any changes to jobs and contracts.
“Continued support by Carillion’s public and private sector customers is enabling as many employees as possible to be retained in the interim until all contracts have been worked through.” – The Official Receiver’s Spokesperson (Source: The Guardian)
Let’s Look on the Bright Side
There’s a skills shortage in our industry which means that there is plenty of work to go around. With just under half of Carillion’s workforce based in the UK, we can expect to see a significant rise in the number of highly skilled and experienced construction workers looking for new employment.
“Given the construction skills shortage, it would be a crime to allow even one of these individuals to slip through the industry’s fingers.” – Brian Berry, Chief Executive of the FMB
‘The FMB’s latest State of Trade Survey revealed that two-thirds of construction SMEs are struggling to hire bricklayers. This increased by nearly 10 per cent in just three months. The FMB is working with the Department for Work and Pensions and the CITB to match up ex-Carillion workers with SMEs that are recruiting skilled workers.’ (Source: Construction News)
With Chancellor Phillip Hammond’s plans to increase employment opportunity in the construction industry and Sadiq Khans’ plans to double the annual house builds in London to 66,000 in a year, UK based skilled construction workers are in high demand; a demand that will continue to grow over the next few years.
179,000 construction sector jobs are predicted to be created over the next 5 years, and by 2021, output will grow by 1.7% a year.
We all have a part to play
Although the news of Carillion’s collapse has come as a shock to the industry and raised cause for concern for so many of its employees, the future of our industry is bright with lots of new exciting projects already having been announced. To ensure a strong and stable future for the UK construction industry, it’s important that every company plays its part and strives to better its performance; thinking of new ways to improve the services we deliver and the effects they have on the environment.
At strukta we’re always thinking about what customers need and how we can deliver that in the most efficient way possible. Just like everything else, our industry is evolving, which is why we need to be at the forefront of that evolution, delivering new and improved solutions. We often support large scale projects, helping to ensure that the project is completed to perfection each time. If you’ve any suggestions on ways we could support you and your projects we’d love to hear from you!
We offer speedy next day delivery and are constantly bringing our customers the very best prices and deals on their building supplies with struktaSAVE. Our Customer Service team listen carefully to our customers to ensure that we are meeting (and hopefully exceeding) their requirements and expectations. At strukta, we’re always looking for new ways to deliver the best possible service to our customers.
Our struktaSTOR offering is one way we help support large projects. It’s proven to save clients’ time, money and reduce their project’s environmental impact. Designed to provide a secure store of products immediately available on your site, struktaSTOR is a safe, organised onsite storage solution.
“struktaSTOR allows us to plan ahead, getting materials to site on time and enough stock so we don’t run short (I like to have 2 months stock topped up every month) – it is a buffer stock in a safe place!”– Graham Paxton, Director, GRT Builders Ltd
