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PRO

Flora-tec have said that they will lose £880,000 and shed 10 jobs after the collapse of Carillion.

It's certainly not good news for Flora-tec and those losing their jobs but we can, as an industry, take comfort that the majority of the work awarded to the bloated Carillion will still be undertaken by someone....the good thing is that all of the projects will be distributed amongst smaller more agile, firms. It will take a bit of time for the effects of Carillion's demise to ripple through the industry but I think it's a watershed moment that will literally change the commercial landscaping and maintenance landscape.

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  • PRO

    Carillion: Small firms' support ends in 48 hours

    http://www.bbc.co.uk/news/business-42695661

    Carillion suppliers' help ends in 48 hours
    The construction giant spent £1bn a year with local suppliers, but many will now not be paid.
  • PRO Supplier
    Unfortunately the impact is likely to be wide ranging and possibly detrimental at least in the short term. Wages apart they spent £950 m to suppliers last year, probably many local small businesses. If the terms of trade were 120 days as reported :http://www.bbc.co.uk/news/business-42695661

    Then up to £250m is outstanding to suppliers who will not get paid. This will impact on people in this industry as your suppliers will be amongst those affected and some will disappear. Unfortunately there is no guarantee that another large UK or overseas supplier will not step in where Carillion left off.

    This is a lot of money to come out of the UK economy in general but in part the landscape industry.
    Carillion suppliers' help ends in 48 hours
    The construction giant spent £1bn a year with local suppliers, but many will now not be paid.
    • PRO

      Andy Bradley of flora-tec has just been on lunchtime news saying that his business is now seriously at risk.

      One important question comes to mind....why rely on one source of business so heavily that a whole business can be lost when this reliance goes wrong?

      Carillion suppliers' help ends in 48 hours
      The construction giant spent £1bn a year with local suppliers, but many will now not be paid.
  • PRO Supplier
    ..why rely on one source of business so heavily

    Whilst I agree with you there are two reasons:

    1. Hindsight is a wonderful thing!
    2. As the largest player in the market, and seemingly supported with more government contracts how else does a supplier react. If they keep ordering it is very hard to say no I need to balance my business by getting other new customers when the order is there on the table. Such is the scale of the operation at Carillion that in these difficult times suppliers would have readily accepted the orders until the point of no return. Sadly they will now be st the bottom of a very long list.
    • PRO

      If it had been a crash in fortunes then I'd agree that it's easy in hindsight but Carillion reported profit warnings in the middle of last year:

      "July 10, 2017

      The chief executive of Carillion quit as the group warned on full-year profit and said it was pulling out of three construction markets in the Middle East. The company also said payment problems on four construction contracts nearing or reaching completion had forced it take a provision of 845 million pounds."

      https://uk.reuters.com/article/uk-carillion-restructuring-dates-tim...

      Were so many businesses under the impression that being underwritten by the UK government made Carillion too big to fail?

      Timeline - Carillion collapses under debt pile after profit warnings
      British construction and services company Carillion collapsed on Monday when banks refused to lend it any more money, throwing hundreds of major proj…
  • PRO Supplier
    Agreed but the Government was still awarding them new contracts in spite of deteriorating finances. No winners here, but as a supplier I am sure some would have taken the Governments position as an indication that they could not fail. As always in these situations it is the wide ranging/knock on impact that will hurt the industry most.
    • PRO

      The knock on effect already getting wider:

      "Speedy Hire takes a hit

      Shares in Speedy Hire also fell in morning trading, dropping 5.7 per cent as analysts warned of the impact of Carillion's collapse on the company.

      "In 2017 Speedy renewed a supply contract with Carillion and at the time indicated that in total it could be worth up to £45m over three years," said analysts at Liberum.

      "This would imply annual revenues from Carillion of up to £15m, or 3.8 per cent of our current full year 2019 revenue estimate (£394m), making it is one of the group’s largest clients.

      "As a result, we would see today’s announcement by Carillion that it has entered into compulsory liquidation as an unhelpful development."

      http://www.cityam.com/278789/galliford-try-and-balfour-beatty-both-...

      Carillion: Galliford Try and Balfour Beatty both say they'll be hit
      Shares in two of the UK's largest construction firms fell this morning after they admitted they will take hits running into the tens of millions of p…
  • PRO

    Andy Bradley is the managing director of Flora-tec, which is owed £800,000 by Carillion for landscaping services.

    "The government actively encouraged businesses like mine... to get involved in public sector contracts, to make sure the little guy got a slice of the pie.

    "When Carillion started to get into trouble last year we were considering that we would scale back our involvement with them.

    "However... the government continued to give them billion-pound contract after billion-pound contract and that said to me, as a small supplier, that the government had done their due diligence.

    "We were following the government lead... only to be given a sucker punch.

    "I had to make 10 people redundant yesterday. That's 10 people with mortgages, car loans, all that stuff. It's an absolute disgrace."

    http://www.bbc.co.uk/news/business-42703549

    Carillion directors to be investigated
    The probe follows the collapse of the firm - responsible for running some key public services.
  • I think Carillion is yet another example of businesses not having high enough profit margins to satisfy cash flow. From what I hear some of their operations were working on the finest margins possible (ie 1 or 2%) which is obvious that that would cause cash flow problems.

    As for some of the contractors who are worried about going under because of the demise of Carillion, if they had used good business sense and only taken up-to 5% of their turnover from Carillion, they could have weathered the storm. But if a business has more than 25% of its revenue coming from a single supplier, and the supplier goes to the wall, the results will be catastrophic. 

    In every business school this rule is taught (don't go over 5%), so how many of the sub contracting companies employ staff that went to Business School???

  • I can see some of the smaller sub contractors going bust as carillion have a 120 week payment policy, with there staff costs and materials I think it is likely

    usually HMCE get there money first, and they have already said other contractors will only get 1p in the £ if they are lucky. It will affect thousands of folk especially in the short term   

     

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