The industry is still shaking, and will be for many months to come, following the collapse of the UK’s second-biggest contractor.
Carillion had a turnover of £5.2bn in 2016 but did very little of its work in-house. Instead, it employed thousands of SMEs as subcontractors to actually carry out its operations. Within the membership of the Federation of Master Builders, there are firms that have lost hundreds of thousands of pounds and worse still, companies that have gone out of business entirely because of Carillion’s collapse.
As bad as this seems now, the extent of the damage to the supply chain is still unclear and it may take several weeks for the full picture to emerge.
Ray of hope
While there are dark days ahead, there may some hope for the thousands of tradespeople who have found themselves unemployed in the aftermath of Carillion’s collapse. The acute skills crisis in our industry means there is no shortage of work.
Indeed, the FMB’s latest State of Trade Survey revealed that two-thirds of construction SMEs are struggling to hire bricklayers. This increased by nearly 10 per cent in just three months, which points to a rapid worsening of an already dire situation.
It is therefore likely that experienced workers hit by the liquidation will be snapped up quickly by other employers. The FMB is working with the Department for Work and Pensions and the CITB to match up ex-Carillion workers with SMES that are recruiting skilled workers.
“SMEs train two-thirds of all apprentices, meaning an increase to their workloads will also boost their ability to offer apprenticeships”
But what are the lessons we can learn from this seismic event? For starters, the government should look to lessen its over-reliance on major contractors. It should break larger contracts down into smaller jobs, which would open up public sector deals directly to SMEs and spread the risk.
The benefits of working with SMEs are numerous: they train two-thirds of all apprentices, meaning an increase to their workloads will also boost their ability to offer apprenticeships.
For local authorities, procuring their products and services from local firms will help the economic benefit stay within the community rather than being siphoned off elsewhere. Small local companies also tend to have a lower carbon footprint as they are more likely to purchase products and materials from local suppliers, reducing the need for long distance transportation.
There is much for the government and the industry to reflect on. But for now, our priority must be to ensure that Carillion’s 1,400 apprentices and trainees are rehomed with new employers and that the experienced workers in their supply chain who may find themselves without work are find work elsewhere.
Given the construction skills shortage, it would be a crime to allow even one of these individuals to slip through the industry’s fingers.
Brian Berry is chief executive of the FMB