It’s Wise Up Wednesday #2: Are Kier Really Going To Charge Subbies To Work For Them?
I have never sent two Wise Up Wednesdays on the same day, but when I read in Construction Enquirer that Kier intend to charge subbies to work for them i just had to send this.
Because if it’s true the world really has gone mad!
Or is that this story was meant to go out on Monday 1 April 2019?
Kier To Charge You To Work For Them?
According to the report in Construction Enquirer this morning, Kier is hatching a plan to charge subcontractors 1.5% of their package turnovers to become “closer strategic partners”.
The controversial new plan forms part of its new “Working As One Initiative”, which according to CE, has been designed to overhaul and promote “better supply chain relationships across the group.”
Forgive the daft question but how does charging a Subcontractor to work for a Contractor promote better relationships?
Kier says it is revamping its supply chain approach to encourage greater collaboration and alignment with subcontractors. But some subcontractors claim it is the latest twist in a developing pay to get paid culture as main contractors seek to strengthen balance sheets as clients shy away from large upfront payments on jobs.
If It’s Such A Great idea Why Keep It Secret?
Apparently, Subcontractors were told to keep the plan under wraps although the Enquirer has been told the new deal for highest ranked strategic subcontractors will involve the new 1.5% ‘management fee’ alongside the promise of more repeat work.
Is This The Same Kier That Just Announced A £35.5million Loss?
Kier racked up a pre-tax loss of £35.5m in the second half of 2018 after it was hit by problem contracts and mounting debts, and group net debt at the end of the year was £180.5m despite a £250m rights issue in December.
And according to Top Service Kier Construction Ltd had 82 negative trading experiences recorded against it in the last 12 months. Which doesn’t seem to fit with their stated “Fair and transparent payment practices”!
Not to mention the fact that their “standard” JCT Design and Build Subcontract they use has no fewer than 27 pages of amendments, a good many of which are onerous including 90 day payment terms!
So, forgive me for asking another daft question, but why would you want to pay to work for them?
Specialist Contractors Need A Voice
According to CE one subcontractor said: “We saw this sort of thing with Carillion – main contractor discounts, rebates. Now we are being asked for 1.5% just to work with them.
“The danger is what Kier is doing becomes contagious and other main contractors sit up and say we need to do this.”
And That’s Why I Had to Send This WUW #2.
It seems to me that the Specialist Contractors, Trade Contractors and Subcontractors in this country need to come together at grass roots level to share experiences, find answers and stand together to put a stop to this nonsense once and for all.
I want to hear from anyone and everyone that cares about the future of this industry. Please get in touch with your thoughts and any information you wish to share in confidence and let’s build a better construction industry together.
You can call me direct on 01773 715062 or email me on firstname.lastname@example.org.
I hope you found this WUW #2 of benefit, and please don’t hesitate to get in touch.
P.S. Please remember that we are here to provide solutions exclusively for Specialist Contractors, Trade Contractors and Subcontractors. If you want access to professional solutions that work, then please give us a call on 01773 712116, or email email@example.com today.