Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Why is Lakesmere Group in administration?

Daniel Kemp

The collapse of Lakesmere Group, the UK’s biggest building envelope specialist, has stunned the industry today.

The firm is a well-respected business and has worked for the UK’s biggest contractors on a string of prestigious projects in recent years, including Crossrail and the re-roofing of the Olympic Stadium.

However, rumblings began to emerge this week that all may not have been well as comments from staff appeared on social media.

CN has learned that Lakesmere staff were told at 5pm yesterday that the group had fallen into administration, despite attempts by the company’s leaders to secure a deal. A total of 109 redundancies have been confirmed. Staff were left shocked by the news.

It has been striking to see rival firms expressing sympathy for the contractor’s plight today, as well as offering to talk to any staff who have suddenly found themselves unemployed.

CN understands the redundancies have mostly come in the support and administration side of the business, along with some site staff. This has left the “bare bones” of the contractor’s project teams in place to keep contracts ticking over while the company’s future is resolved, according to one source. 

What’s happening with Lakesmere’s subsidiaries?

McMullen Facades, the group’s wholly owned subsidiary based in Northern Ireland, is still trading with no redundancies, and a buyer is being sought for that part of the business. Likewise, the firm’s international subsidiaries continue to trade from offices in the Middle East and Asia.

Administrators Deloitte blamed “a number of unprofitable contracts” for Lakesmere’s collapse, which CN understands have mainly come in the UK market.

But it would not be a surprise if the Middle Eastern region played a role, given the notorious difficulty in getting paid on time in that part of the world. 

Sources have told CN the collapse is a culmination of multiple issues, with late payment both in the UK and overseas contributing to the problem.

What Lakesmere’s boss said

I sat down with group chief executive Ted McMullen in September last year, not long after he had taken over the role following previous boss Mark Davey’s move upstairs to chairman under a management buyout (although he was still managing the international business at the time).

Mr McMullen was in a good mood, chatty and open, and willing to talk about most topics. He said that the bottom line and profit were “of paramount importance” and that he wanted the company to remain flexible as it approached the challenges of Brexit.

He said: “We will achieve growth next year; it’s practically in the bag. In 2018, we’ll see what happens – but I certainly wouldn’t expect a drop in turnover.”

“CN has been made aware of certain projects which may have been causing problems and more news will emerge in the coming days”

And while he emphasised that the company would not chase turnover to achieve that growth, he did say that it would be “lean and mean in order to get the job if we need to”. 

We also discussed the threat of problem contracts, which of course have now been blamed for the group’s collapse, and what he said seems striking now.

He said it was “easy in hindsight” to identify the projects that are going to cause problems – but that Lakesmere carried out post-contract reviews on every significant job to identify why margins had varied, whether in a positive or negative direction.

He went on: “Then we try to introduce systems and procedures to prevent a recurrence, or to lower our price if we’ve made good margin on something that’s too high and makes us less competitive.”

But, he told me, at the end of the day: “Shit happens on some jobs.”

CN has been made aware of certain projects which may have been causing problems and more news will emerge in the coming days as tier one contractors and clients look to shore up projects – while the firm’s own supply chain will also be very concerned.

For now though, it’s a sad day to see a company of Lakesmere’s stature collapse. 

If you have been affected by Lakesmere Group’s administration, email cnedit@emap.com

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.