Published On: Wed, Jan 31st, 2018

What will Carillion’s collapse mean for the training sector?

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Rear view of supervisors walking at construction site

The construction industry is going through a bit of a shake-up at the moment, with Carillion’s collapse right at its centre. Carillion went into liquidation, prompting fears over thousands of job losses, as the company has 43,000 staff around the world, with 20,000 just in the UK.

There are many questions surrounding the full impact of Carillion’s fall, from pension fears to political and financial costs. But there is one particular aspect that is close to our hearts: the ramifications of Carillion’s current troubles for training.

Training is crucial to businesses and their employees, as it ensures the necessary qualifications for the job, as well as good health and safety practises.

And the government understands the importance of training for the future of the industry, as they have agreed that there is a lack of skills in the construction sector and that all employees should receive the appropriate training. However, after the government and lenders failed to reach a deal to save Carillion, those who were in training and those who provided training are now unsure of their situation.

WHAT WILL HAPPEN TO APPRENTICES?

Carillion’s apprentices are being sent home after the company’s collapse, and, seeing as the company has around 1,400 apprentices, many young people are now questioning their future – and many of them are even losing access to their work and tools.

Kyle Fitzsimmons, an apprentice at Carillion, was interviewed by the BBC and explained how he was working at the training centre and was suddenly told to leave with not much of an explanation. Another apprentice, Jay Smith, has been told that his training centre in Birmingham needs to come up with the necessary money to pay its debts or will have to close or be sold.

The Construction Industries Training Board wants to make sure that these and other apprentices in the same situation can continue their training so that their skills aren’t lost. For many young men and women looking to improve their skill set in the construction industry – and with many others looking forward to working for Carillion – there is no denying that their training and future in the sector is uncertain at the moment.

And, without the proper training, young people can’t get the skills they need (and that the UK economy could also benefit from), so the construction industry will continue in dire need of skilled workers.

IMPACT ON OTHER COMPANIES AND THE SUPPLY CHAIN

Because of the status Carillion occupied as the UK’s second-biggest construction company, they had approximately 450 government contracts, including the HS2 railway contract. The fear arising from this is that other businesses in the construction industry may also be affected by a domino-like effect.

This also means that the impact of Carillion’s collapse on its (considerably large) supply chain will be felt as well. From suppliers to workers and clients, thousands of SMEs that worked with the construction giant will be affected, including training companies.

We might not do any training work on behalf of Carillion, but there are many other businesses out there who do, and who now worry about what will happen. Subcontractors that carried out work for the construction giant are concerned about whether they will be paid – if not, possible redundancies and, in some cases, even the collapse of their own business, are on the horizon.

And this is not just a possibility, but a certainty.

Andy Bradley, the MD of Flora-tec, already had to make 10 people redundant, as Carillion owes his business £800,000. In his words, “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.”

Smaller businesses feel anything but ‘strong and stable’ right now, as more job losses are on the way after their contracts with Carillion are either not paid or will have to be stopped. Carillion owes money to thousands of companies, a number between 25,000 and 35,000, which means countless jobs (and businesses) are on the line.

Despite this, and while both workers and apprentices are being turned around and told to go home, PwC, who is overseeing Carillion’s liquidation, says that “unless told otherwise, all employees, agents and subcontractors are being asked to continue to work as normal and they will be paid for the work they do during the liquidations.”

This may not sit well with companies that rely on contracts from Carillion. They already may end up insolvent too and carrying on working on contracts without absolute certainty of payment is not likely to make people happy.

It’s impossible to be completely sure of anything at the moment, of course, with the uncertainty that clouds this ongoing case. However, it’s impossible not to wonder what is going to happen to those with Carillion contracts.

But there is no doubt that the ripples of this collapse will be felt. Projects that were so certain before now hang in the balance, including the West Wales Bypass, Airport City in Greater Manchester, and the University of Manchester’s Owens Park (a student resident project).

By reaching so far into the public sector, Carillion’s fall now put thousands of livelihoods in danger. This means everyone who has dealings with them, including companies that provide training to the many pies the Wolverhampton-based giant has its fingers in.

This all begs the question: if a company such as Carillion can collapse, what prevents others from being at risk of the same?

 

This article was written by the Managing Director of Boss Training, Andrew Murphy. Feel free to contact us in regard to any queries you may have, and we’ll be more than happy to help.  Tel: 01422 358184

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