Wise Up Wednesday: Construction Dies While The Worthies Bicker!
Thousands of businesses have suffered, the banks have taken a massive hit, and even the general public sat up and took notice when Carillion went to the wall.
Carillions demise not only drew criticism for their director’s; “recklessness hubris and greed”, it has also cost you, me and every other taxpayer our share of the £70 million paid to liquidators and lawyers! Not to mention the increased cost of a whole raft of taxpayer funded projects.
The Worthies Trot Out The Same Mantra
What does all this say about our fragile economy, or a government that continues to let work to the big players despite their precarious financial position?
Yet month-after-month, year-after-year, the worthies trot out the same mantra, that everything is fine; “construction is a world class business; the pride of Britain”.
But now some of the worthies are bickering; “the leaders are serious about changing the way they do business” cries one, “not so, that’s the ultimate insult cries another”.Whilst the most learned of worthies repeats his stale old calls to “ban retention.”
And no point expecting the elected worthies to step in and actually do something useful. They are far too busy bickering over wreaths and burkas and making an almighty mess of things.
The Facts Paint A Very Bleak Picture
Last year a major survey by StreeetwiseSubbie found that 73.65% of Specialist Contractor’s contracts were subject to disputes ‘frequently or occasionally’. Which means that almost the entire industry is affected by disputes!
It’s a fact that Contractors (who are the main conduit for the money in the supply chain) work on wafer thin margins. It’s also a fact that construction is a risky business and it doesn’t take much to go wrong before those wafer thin margins become huge financial chasms instead.
But it’s not the Contractors that take the hit! Because, some unscrupulous Contractors claw that money back by taking it from their Specialist Contractors. And I do mean “taking it”. Rest assured that you the Specialist Contractors foot the bill, through no fault of your own, because you are vulnerable to such ruthless treatment.
Construction Is Dying One Firm At A Time
The Contractor’s aggressive QS’s have no moral compass. It’s just a game, they are paid to do a job, and that job is to screw the Subbies!
It may suit the Contractors if they don’t pay, but it causes major impact on the Specialist Contractor’s business, leaving them with little capital to run their business, let alone invest in training or the future of the industry.
And so, Specialist Contractors are forced out of business one by one and quietly but surely the industry dies. Thousands have already died, and more will follow if this vile cancer is allowed to continue unabated.
Only yesterday it was announced that £25 million turnover civils specialist GPL Group (Manchester) Limited has gone into administration. putting 60 jobs at risk.
It’s A Proven Fact
It’s a fact that construction is gradually destroying the very companies that are actually capable of getting the job done! The total number of construction insolvencies in England and Wales rose 12.4% year on year in the second quarter of 2018, according to official figures.
The total of construction insolvencies for the first half of 2018 now stands at 1,476, up from 1,352 in the same period a year before – an increase of 9.1%.
Construction is gradually being destroyed because certain Contractors don’t care about another Subbie going to the wall. They relish it, because they get to keep their cash! And because no one dares to make the link between this ruthless treatment and people’s lives, and the overall state of the industry, then the vicious circle of destruction continues unabated.
Stop Before It’s Too Late
Payment abuse is destroying the UK construction industry, and over 95% of respondents think that neither the Trade Associations nor the government are doing enough to solve the problem.
So, the time has come for Specialist Contractors to take a stand and to:
- drop their ‘victim’ mentality
- refuse to work for poor or negative margins
- believe in themselves as the backbone of the industry
- say “No” to the Contractor’s onerous terms
- stand together as never before at grass roots level
- demand a better fairer and sustainable future
- read “The Streetwise Subbie”
Let’s stop bickering and work together to find a way to solve the contractual, payment and a myriad of other problems that are destroying the industry one firm at a time.
I want to hear to hear from everyone (worthy or otherwise) who wants to get behind a campaign for effective action to fix the problem once and for all.
After all, to quote from Rod Sweet’s 2018 Canary in the coal mine article about construction post Carillion ; “the industry and its biggest client [UK government] could be compared to a group of canoeists, in the water, clinging to their capsized craft. Carillion may have gone under but the rest seem safe, for now, as the river carries them toward the waterfall.”
I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought, and if you haven’t yet taken action now might be a good time to pick up the phone and give us a call.
I sincerely hope to speak with you soon.
 Rod Sweet (2018) Canary in the coal mine: What Carillion’s collapse reveals about construction’s productivity conundrum, Construction Research and Innovation, 9:1, 3-8, DOI: 10.1080/20450249.2018.1447062
P.S. Please remember if you have a problem, take action sooner rather than later. If you’re not sure what to do or just want a second opinion, please give us a call on 01773 712116, or email firstname.lastname@example.org