CALLS FOR INDUSTRY TO REFORM AFTER CARLILLION COLLAPSE

Article Source: IMechE

​The collapse of construction giant Carillion is a “wake-up call” for the engineering industry, according to experts.

Thousands of engineering jobs in the UK could be at risk after the UK’s second-largest construction company went into liquidation.

The group, which employs 43,000 people worldwide, has a number of government contracts including work on the HS2 high-speed railway, and NHS and MoD maintenance projects. The company’s chairman Philip Green said it was a “very sad day” for the workers, suppliers and customers.

Nick Baveystock, director general of the Institution of Civil Engineers, said employees should be the priority. “However,” he told PE, “it is clearly a wake-up call when the second largest contractor in the UK, with numerous government contracts, can go into liquidation.”

He said there was a need to assess and review current business models and relationships and make sure they are “fit for purpose and secure for the future”. He added: “Immediate concerns over contracts and asset delivery will undoubtedly dominate the agenda in the short term, but government and the industry should not lose sight of the longer-term issues and design a system that is not only sustainable, but also capable of delivering the best for the British public.”

Those comments were echoed by others, including Mathew Riley, managing director of Ramboll and chair of the Association for Consultancy and Engineering. “If ever we needed more evidence and examples of the need for industry reform, this is it,” he said. “Carillion are a good company with a long heritage but are the victim of an industry business model that doesn’t work. It was an accident waiting to happen.”

Riley blamed the public-sector procurement model, which encourages risk to be transferred through the supply chain. “For an industry that operates on wafer-thin margins, to take on more risk, particularly for high-value contracts, was always a dangerous strategy,” he said. “We need a more sustainable business model moving forward, and the government need to play a more active role in helping the industry to perform.”


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