Construction hauliers are bracing themselves for the aftershock of Carillion’s high profile collapse earlier this month.
The construction giant, which was involved in a host of major contracts including HS2, the Bart’s Square development in London, and the Midland Mainline improvement programme, as well as numerous PFI contracts, went into compulsory liquidation after last ditch talks with the company’s bank lenders collapsed.
Pricewaterhouse Coopers (PwC) has been appointed as special manager to act on behalf of the official receiver and handle the collapse of Carillion, which employs 43,000 people worldwide, including nearly 20,000 in the UK. It also works with thousands of suppliers.
Carillion also holds multiple O-licences authorising just more than 200 vehicles across the group.
Tony O’Malley, director of Kent-based construction haulier Rendrive Haulage, which has worked on Carillion projects said “We aren’t exposed at all, thankfully. At one stage we were owed £500,000, but that money is now in.”
However, he said the firm was preparing for the knock on effects of Carillion’s failure.
“The problem is that a whole raft of companies will be weakened by Carillion’s collapse and like many firms, we are now doing a risk assessment because Carillion had over 18 projects on the go, which means there were a lot of subcontractors working for it and if they have been weakened, we need to know.”
Another major construction haulier, who asked not to be named, said “There will be a massive ripple effect from this throughout the industry and none of us can know what the full implications will be. It could take two years for the effects of this to play out.
“Fortunately, we took the view, two and a half years ago after Carillion took over Balfour Beatty, that we didn’t want to work with them. Call it a gut instinct but we didn’t have confidence in its prospects, even then.”
Union Unite called for an “urgent” inquiry into why the government continued to award Carillion contracts, including the first stage of the £2.75bn HS2 project, following its profits warning last July.
Unite national officer Jim Kennedy also raised concern at the impact of Carillion’s collapse on the wider supply chain.
He said: “Many of these small firms are the lifeblood of their community but their exposure to Carillion’s debt puts them at serious risk. PWC must put workers and suppliers at the head of the queue for payment, not the banks and certainly not the Carillion boardroom whose greed and recklessness has brought this giant company to its knees and imperilled so much of our public services.”
GMB also raised concerns about the wider implications of Carillion’s collapse. Rehana Azam, GMB national secretary, said “We seek transparency about the scale and nature of jobs and contracts which Carillion outsource to other subcontractors to evaluate how the collapse of the company could impact on infrastructure projects, the public sector and the wider economy.”
Azam called on the government to “urgently consider” setting up a public sector vehicle for taking on Carillion’s contracts.
Cabinet Office minister David Lidington defended the government’s decision not to bail out the company, and said that contingency plans had been drawn up following Carillion’s first profit warning in July last year, with contracts drawn up so that if Carillion failed other contractors would take over its responsibilities.
PWC said in a statement “The Official Receiver’s priority is to ensure the continuity of public services while securing the best outcome for creditors. Unless told otherwise, all employees, agents and subcontractors are being asked to continue to work as normal and they will be paid for the work they do during the liquidations.”