I fear that the fallout following the collapse of Carillion, the UK’s second largest construction company, will be felt throughout the industry with many small businesses severely hit.
The problem is simple; if Carillion’s suppliers do not get paid then they will struggle to keep going and the worry is that many will go bust.
Speaking to New Civil Engineer, Specialist Engineering Contractors’ (SEC) Group chief executive Rudi Klein said “There are millions of pounds of unpaid payments to the supply chain. I know lots of SMEs (small and medium sized enterprises) are concerned about whether they’re going to get paid, and whether they’re going to get their retentions back.”
New Civil Engineer also quoted the chairman of the Federation of Small Businesses Mike Cherry. “It is vital that Carillion’s small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion’s own employees”, he said, adding that some suppliers had been kept waiting four months for payment of bills.
He added “When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses.”
Formal inquiries into the affair have already been announced and the one good thing which may come out of it is a complete shake up of the procurement process in the construction industry and better protection for SMEs involved in the supply chain.