Carillion

Well, this is interesting. I've seen commentators today say that Carillion's failure is not Brexit related, But that's not what Carillion were saying a year ago...

Carillion blames Whitehall upheaval after Brexit vote for orders fall
Government business slowed after EU referendum result triggered spending hiatus, says support services company

7th Dec 2016

www.theguardian.com/business/2016/dec/07/carillion-blames-whitehall-upheaval-after-brexit-vote-for-orders-fall-government-eu-referendum

Carillion were not in a Brexit sensitive industry sector . Yes, they had overseas contracts, but mainly large ones where the time frame from planning a project to tendering may be years, from tendering to contract award a year at least. So contacts needing signing in 2017 started their slow and ponderous journey to award 3 or 4 years before the Brexit vote.

Much of the work they did for the government was maintenance and service; schools and hospitals and looking after the MoD estate. If the award of new contracts are delayed, existing contracts are extended - Carillion, were already big in this field so what they lost on the swings they won on the roundabouts.

Blaming Brexit, is an easy sloppy way of making excuses for bad management and Corporate greed and does not stand up to scrutiny.

Much of the work they did for the government was maintenance and service;
Not just here and but in non-European countries too:

Carillion is a trusted provider of Integrated Facilities Management to over 150,000 properties across the UK, Canada and the Middle East.

That might be true Maizie but I would say the whole business model is more of a problem.

Carillion seems to have just taken over what should be the role of the government and then outsourced all the real work. I don't have a problem with smaller firms being employed to do building works, etc.. I am certainly not for bringing everything back in house just because of an ethos. On the other hand I do think hospital cleaning and running prisons should not be outsourced.

It's almost as if the government has paid someone to take over the responsibilities they put themselves up to carry out on our behalf. I don't remember voting for Carillion!

There is greed in the public sector too; more calls from Bath University Court for the vice-chancellor to go with immediate effect, rather than hanging on drawing her enormous salary, living expenses and living in her grace and favour expensive home for months.

Having remembered Kids Club, Atos springs to mind too. It isn't just about money and paying less than a job is worth it is the off-loading of responsibility that is getting me.

Yes exactly Jalima those massive (shameful) salaries given to (or commanded by) some university chancellors paid for by the tuition fees/debts of their students (and their sponsors) .

Time for bed - goodnight all.

I don't think this is a watershed moment. It should be, but in the last 7 years we were told several times that this was a watershed moment.

The most recent is obviously the Grenfell fire. Six months down the line some households didn't even get the money promised to help them with the cost of Christmas. The council has admitted it was at fault. Whoop dee doo.

10 households from the tower and 8 from the surrounding area did not receive the money. The council told families and individuals still in hotels or serviced apartments they would get £140 per person to ease December's financial pressures. More than 440 additional Christmas food payments of £140 were made. So in addition to the those 18 households, I assume more than 440 people are still waiting to be rehoused.

Two days after the disaster, the Prime Minister promised families would be rehoused within three weeks. OK that was never going to happen. But in November, the council said every survivor would be able to move into a new home before Christmas. Yet the week before Christmas four out of five families made homeless were still waiting for permanent accommodation, and almost half faced Christmas in a hotel.

Do I think the collapse of Carillion is a watershed moment? Yes, I do. But I won't hold my breath waiting for the government to think that. Too many 'associates' might lose money or be in trouble.

I said last week results of thousands of jobs were at risk. Let's see what happens at the next general election. Who needs austerity when unemployment is about to affect a couple of million people in the UK. Not to worry though. We'll be out of the EU soon and masters of our own destiny. You couldn't make it up.

She's the highest paid vice-chancellor in the country on £468,000 pa, has £20,000 'living expenses', a grace and favour home in The Crescent, a housekeeper (paid for) but needed to borrow £30,000 for a car.

There are some very angry students in Bath.

Carillion were not in a Brexit sensitive industry sector

I stand corrected, MOnica, but, I'm just wondering if the fall in the value of the pound, plus inflation, contributed to pressure on costs which were already cut to the bone.

There is definitely greed in the public sector. BUT that's the consequence of the running the public sector like a private sector business, a free market. I would be the first to admit there's corruption in the public sector and always has been.

Waste and inefficiency too. It's still there, but how much of it is in the processes necessary to run departments like businesses? How much of it is in the process of outsourcing work and managing the contracts?

The problem with the principle of a small State or limited government is that's not what we have in the UK. We have a large State and it's being dismantled in a disjointed and inefficient way because the Conservative government tries to do as much as possible in the time it is in power. Eventually Labour gets back into power and tries to fill the holes and the cycle starts again. There is never a blank page, just the reinvention of the wheel.

I'm in a really bad mood tonight and know I'm ranting, but part of the Carillion problem was it got into trouble in Canada and then lost a lot of the contracts it had there. Ironically it was because of underperformance. Then the market got wind of the downturn of the company's luck and started undermining the company on the stock market by looking for small quick turnovers on share prices. The share price became unstable and a combination of circumstances including the value of the pound (which was partly to do with Brexit), eventually resulted in the share price plummeting.

Any change in financial circumstances and the building industry is affected.
Lost count of the number of times we moved around the country when there was a downturn in building and companies started paying architects off. You never wanted to be the last one to be made redundant because by then there would not be any work left.

Sorry to sound like an expert on that. At one time my husband had two part time jobs in different cities because of a downturn in the building industry.
At one time he worked for Wimpeys. Then he worked for Taylor Woodrow, which later became Taylor Wimpey.
Neither Taylor Woodrow nor Taylor Wimpey seem to have seen the need to diversify from construction, of either housing or civil engineering.
Maybe that's why they are surviving better than Carillion.

The building industry is certainly cyclic, but a lot of Carillion's work was for the government and was to do with the supply of services, not construction. There is also a lag between the downturn and the drop in orders, as existing contracts are completed and no new work comes in.

The monthly construction index published by the Office for National Statistics shows a steady rise in construction output over a long period until November 17. and it rose again in December, so I can see no negative Brexit effect.

The papers today did say that they are still trying to get the Qataris to pay them £200 million due on a contract completed some time ago. A lot of money, but when your debts are £1.5bn!

The papers today did say that they are still trying to get the Qataris to pay them £200 million due on a contract completed some time ago.
This is how Carillion worked too, though - notoriously late payers to those who did work for them.

Yes Jalima typically 120-180 days.

Having said that most large companies pay small companies very late. Apparently we should be grateful we get paid at all.

and bow and scrape if you get paid in full, I understand.

Wilma your post is interesting, and goes some way to showing how the markets can undermine and bring a large company to its knees, taking all the loyal workforce with it.

Jalima it could only happen because they did not have a sound financial base. There's an excellent article in the Financial Times

No viable business to sell

Having said that most large companies pay small companies very late. Apparently we should be grateful we get paid at all

The Labour manifesto proposed to address that problem, gillybob but you completely pooh poohed it at the time.

While I have, as I said earlier, great appreciation of the vital role played by SMEs in the UK economy I can't help feeling that some of you seem to enjoy wallowing in a feeling of perpetual victimhood...

Exactly how could the Labour Party (or any party ) force a big company to pay on time MazieD ? We are already legally allowed to charge interest on late payment (assuming of course that we don't want of need any more work from the company).

I can't help feeling that some of you seem to enjoy wallowing in a feeling of perpetual victimhood...

I am disgusted in this comment MazieD which i personally think sums up why we feel the way we do. have you owned/run a small business I wonder?

Until "we" (small businesses) are treat with the respect we deserve by everyone, nothing will change. Of course when it comes to paying our Employers NI, wages, pensions, employee rights, insurances etc. we are exactly the same as a bigger enterprise (with the exception that maybe a bigger company can get out of paying some tax) but when it comes to access to funding, grants, favourable banking, interest rates on loans, public and government respect we are completely overlooked. Backbone of the UK economy? More like the big toe.

I am disgusted in this comment MazieD which i personally think sums up why we feel the way we do. have you owned/run a small business I wonder?

I rather thought you would be and I do apologise for that, but off you go again

Exactly how could the Labour Party (or any party ) force a big company to pay on time MazieD

Legislation? Regulation? Help with legal fees? Deprivation of tax reliefs? I'm sure that, Parliament being sovereign, as it is, a determined government could come up with some pretty persuasive, legally enforceable, methods.

But this fatalism is just unproductive. Big Business gets its way by threatening and determinedly lobbying; what do SMEs do?

I will say, for the third time, that I think that SMEs are poorly treated even though they are absolutely vital to our economy. (They always have been) I know it's not worth much, but I am on your side...

Gillybob, what would happen if Nissan decided to move its factory from Sunderland to Sweden or the Netherland?

Wilma. If the fundamentals are good, companies are not brought down that easily. Investors could see the company was on its uppers and any share shenanigans were the result of them feasting on a dying animal.

Carillion tried to buy out Balfour Beatty in 2014.
Fortunately, Balfour Beatty did not agree, otherwise the mess would be even greater. Balfour Beatty has had to put information on its website about the contracts it shares with Carillion, roads and roundabouts, not beds in hospitals or school catering.

I know that Carillion has a lot of work in government services. The point is it shouldn't have. It should have stuck to construction. Then it might not be in this mess.

Carillion had agreed last month to sell its healthcare business to Serco.
Great!