Carillion’s collapse has dominated the headlines since news of the compulsory liquidation broke in January. While news that the business had gone under cannot be described as surprising after a number of profit warnings last year, the company’s poor business practices were shocking and have increased impact on the industry.
Carillion has not had a direct role in the ground engineering industry since it sold its piling business Expanded Piling to Laing O’Rourke in 2011. But, this move did not protect the business from ground-related delays and cost overruns, with issues on the Royal Liverpool Hospital and Aberdeen Bypass contributing to its downfall.
The sale of the piling division positioned Carillion as a tier one contractor heading up the supply chain, and many foundation businesses are now counting the cost of working with the company. Liquidation experts have suggested that Carillion’s creditors may only get 1p for every pound they are owed. Van Elle has already reported the cost of doing business with Carillion at £1.6M in unpaid bills but they are not alone within this sector.
The government appears to be keen to get to the root of the problems and the Commons work and pensions and business, energy and industrial strategy committees’ joint inquiry into the collapse of Carillion has already started to hear evidence from the company’s directors. However, while the wider industry is picking up the pieces and news is emerging about how Carillion’s contracts will be completed, the company’s executives seem unremorseful about the effects of their actions. Former chairman Philip Green said he took responsibility but was“not culpable” for the collapse and former finance director Zafar Khan appeared to blame poor performance within the supply chain. The evidence adds insult to injury for those left without jobs and with unpaid bills.
While the impact of Carillion’s collapse cannot be changed, many industry leaders – including the Federation of PilingSpecialists – are calling for alternatives to cash retentions and fairer payment terms to ensure businesses are better protected in the future. Just because the ground engineering industry has always accepted such terms in the past, why should it continue to do so?