CHARLOTTE COX
THE damage caused to more than 100 Greater Manchester by the collapse of Carillion could last years, business leaders have warned.
These companies, which employ more than 5,000 staff in total, were in contracts with the industry giant on 130 construction projects, either recently completed, in progress or about to start.
Further along the chain, they are likely to have had suppliers and experts warn the shockwaves will reverberate ‘all the way down to the white van man.’
It means Carillion’s liquidation last week, after talks to drive down its £900m debt failed, has triggered massive uncertainty in Greater Manchester.
Experts say some firms in the region have already ‘suffered greatly’ as a result.
Although the government confirmed last Wednesday that the majority of public and private sector contracts will continue, the reassurance does NOT apply to construction schemes - which, according to the government’s Insolvency Service, have been ‘paused.’
‘Over 90 per cent’ of Carillion’s private non-construction customers have indicated they want the firm to carry on providing services until new suppliers can be found and will provide funding to keep employees on.
This will provide some immediate security – but it still leaves 10pc of those contracts hanging in the balance.
And with construction sites paused, some of the 30,000 smaller firms work- ing with Carillion nationally may have to start laying off staff or be lumbered with useless materials once destined for a now-abandoned building site.
Robert Downes, of Manchester’s Federation of Small Business, fears smaller firms will be more vulnerable to the repercussions.
With less cash reserves or assets to fall back on, they are vulnerable to the loss of major contracts or unpaid debts.
The Greater Manchester Chamber of Commerce estimates that at least 110 firms, employing more than 5,000 people, were working with Carillion in the region. Their services would have ranged from electrical work, to scaffolding, to subcontracted construction.
Dr Scott Bambrick, a business expert at Manchester Metropolitan University, added: “This trickles down all the way to the white van man and the trickle-down effect will reverberate to all corners of the country. Construction sites are closing all over the country. A lot may be mothballed, a lot may start up again.
“But in the meantime, the contractors for Carillion have materials and staff that are no longer needed.”
He added: “The building sites may open up again in the next weeks or months, but in the meantime you’ll probably find there are businesses who have suffered greatly and may go out of business.”