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The Downfall Of Carillion - The Impact On Small Businesses

Discussion in 'Business News' started by MarkB, Jan 19, 2018.

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  1. MarkB

    MarkB Administrator Staff Member

    This article by the BBC shows the rise and fall of Carillion:-

    http://www.bbc.co.uk/news/uk-42731762

    Are governments doing enough to help small businesses owed money by Carillion? Why did the UK government continue to award multi-billion pound contracts when everyone knew the company was in trouble?

    We would welcome your views.....
     
  2. selfemployed

    selfemployed Super Moderator

    The UK government were foolish to say the least when they continued awarding contracts to the company even though they knew they were in trouble. However, they were also right to refuse a bailout of the company when the banks walked away. Interesting to see how politicians work - Sunday night before the collapse the Labour Party were all over the TV saying it was shocking that tax payers were going to bailout a public company. However, on Monday morning when the government said they werent going to bail the company out, all of a sudden Labour are calling for the government to use public money to prop them up. You could not make it up lol
     
  3. MarkB

    MarkB Administrator Staff Member

    It looks as though the UK government has put pressure on Carillion's lenders to put aside £225 million to help businesses impacted by the collapse of Carillion. However, yet another of these government led task forces has also been put in place to advise on helping effected business despite the fact they seem to take an age to make any decisions. Companies impacted by the collapse of Carillion need money now, not next week, next month or next year, now!
     
  4. Wigwam Tog

    Wigwam Tog Ayrshire Web Design

    i don't think we can rely on the government to help anyone, especially in the short term.

    It has never been easy for sub-contractors to thrive, or even survive, in the construction industry, but some pre-tender research could save a lot of anguish and disaster.

    I recommend that all sub-contractors do their due diligence before tendering for contracts. Check out the main contractor thoroughly. Talk to other sub-contractors and see what their payment records are like (many main contractors accept 30 day sub contracts but when it comes to actually making payments take 90 days or even more). If there have been recent profit warnings or heavy drops in share prices, or you don't like what you find in your research, it may be prudent not to tender when asked to do so.
     
    Businessman and Scott Kinnear like this.
  5. selfemployed

    selfemployed Super Moderator

    I was reading about a landscape gardener owed £800k by Carillion. He took the fact the UK government was still dishing our contracts to Carillion that the company was going to be ok - in his words "Surely the government had done their due diligence?".

    While he has a point, the simple fact is that we all need to do our own research and make our own minds up. Depending on the actions of third parties to make a decision takes the power away from you and can put you in the lap of the gods at times. Personally I think the UK government was wrong to continue dishing out contracts to Carillion - apparently to improve cashflow and the chances of survival - but nobody in government ever seems to carry the can.
     
    Businessman likes this.
  6. Scott Kinnear

    Scott Kinnear Super Moderator Staff Member

    It really annoys me this whole Carillion story.

    I have said it on Linkedin before, after a sub-contractor lost tens of thousands of pounds in another big job.

    I think the way the construction industry is run is an absolute sham! My cousins started up away back in 2010, and they were doing subcon work, they were never ever paid on time. These higher up the chain companies hold on to the money for as long as they can drag it out, the people running them are a disgrace. Corruption

    I think any Construction Projects - The funds should be given to an independent body who releases the money across the supply chain in due time.

    I struggle to understand why Carillion Management who have left or are in the process of leaving, can be getting 10s to 100s of thousands of pounds pay-offs if there is no money? If there really is money, then they should be honouring responsibilities across the board, not lining individuals pockets. Government handouts and bailouts is shocking. they are now blatantly saying in the news that small businesses who have suffered will be offered loans, in which - if they default on paying - the public will have to pay.

    As for small businesses - I think people get out their depth, its good to have ambitions, however, to risk your own home etc building up credit on supplies for a project you have no control over, is madness.

    I was offered to do the Landscaping for a new housing project a few years back, I said I would on condition they paid me two weeks deposit and fortnightly, on time, if they were a day late, I wanted interest on the amount, if they didn't pay after the third week, work would stop.
    They did not take up my conditions. I dont see it as me losing a big contract I see as safeguarding my business, and albeit part-time now, Its still running six years later.
     
    MarkB and Businessman like this.
  7. MarkB

    MarkB Administrator Staff Member

    I totally agree with your comments although it does show that all business owners need to do their own due dillegence and protect their businessess even if this does mean turning down potentially risky contracts. The problem is that in the good times the sky is blue and the birds are singing, everyone is making a turn and business is booming. However, it just takes one lose link in the chain to bring the whole thing crashing down.

    I was talking to a friend of mine the other day about personal pensions and the fact there are regulations which stop/restrict you investing in your own business. While I appreciate there is a need to stop people withdrawing funds from their pension via the back door, many people will have a big hole in their pensions if they invested in Carillion, a previous Blue Chip stock. Personally I have more faith in myself to manage MY pension funds than I do in the regulators telling me whats stocks I can and cannot invest in with pension fund money.
     
    Scott Kinnear and Businessman like this.
  8. Businessman

    Businessman Member

    The whole Carillion story - and that of other companies like it - is of something utterly corrupt, dishonest and absolutely destined to fail.

    It was (is) the hiving off of government functions and responsibilities to cronies of the few; asset-strippers basically. The diversion of public funds and public resource to the well-connected few. Carillion was a sham made of the titular shells of once-great enterprise. Not, by any means or measure specialists to whom 'out of scope' tasks were delegated, simply a great fraud. The evidence of this is plain... If it costs 'X' amount of money to provide a service, and you add the extra overheads of profit, shareholder demands, and grossly inflated executive salaries; than clearly it can only cost more. And/or the service will be denuded.

    Carillion, and its cohorts are juggernauts deliberately being driven at full pelt off a cliff edge - that was always their destination.

    For about the past 18 or so years, I've been deliberately pitching at the micro/SME market. Partly because I prefer dealing with real people as opposed to corporate drones. But partly because these huge firms are absolutely toxic in terms of getting payment out of them, dealing sensibly with them and ultimately what they actually do.

    An Electrician acquaintance recently commented on Carillion Management... "Axe-wielding mental midgets", for whom he had refused to work for quite some time. And he's not alone. The whole operation was rotten to the core.

    Referencing Scott's post, I too have quite 'draconian' payment and collection terms. And yes, they do put those who imagine themselves to be 'blue chip corporate' types off - that's actually the point of them! I just don't want customers like that, I've seen too many people go to the wall that way.
     
    Scott Kinnear likes this.
  9. MarkB

    MarkB Administrator Staff Member

    I was a stockbroker in my early years and saw the development of issues such as Carillion from another angle. The simple truth is that the markets do not lie, when a share price is falling for "no apprarent reason" you can be your bottom dollar that the clever money is getting out and shorting the stock for a reason. Carillion, and to a lesser extent at the moment Capita, started dying many months before the end came. The idea that you can throw a whole host of different services into one company and some how benefit from economies of scale etc is flawed when each service is a separate company with duplictaed overheads and staffs costs. The fact that the UK government even considered awarding yet more contracts to Carillion while it was dying, in order to support the company and appease their bankers, was a scandal in itself.

    While business is business, whether small, medium or large in size, you tend to find more give and take when an owner has a genuine long term working interest in the company.
     
    Businessman likes this.
  10. Scott Kinnear

    Scott Kinnear Super Moderator Staff Member

    Mark/Matt

    I must say we are all singing from the same song sheet here.

    Its sickening that behind all these dodgy companies failing, theres a corrupt government quango behind them.
    RBS as well, they hit the wall and got government/public money bailout, and now they are away to put twos up to their customers, by shutting small town banks where people and local small businesses rely on them. I think it is still far too early to say most of the public bank through apps on their phones and computers. Maybe another 10 to 20 years they can say that, but their is still a generation that have not got going with technology. My mum prefers to go into her bank, and there are a lot more like her.

    I think they are being ignorant to the elderly and small towns businesses who rely on the bank being open.
     
    Businessman and selfemployed like this.
  11. selfemployed

    selfemployed Super Moderator

    The idea of merging banking services with postal services is not a bad last resort for some areas in theory but in practice:-

    There is a lack of privacy in these dual service outlets
    It does not compare with banking services available at banks

    If it was a like for like service and cut costs then it would possibly be a no brainer but it simply doesnt work.
     
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  12. Businessman

    Businessman Member

    Striking a chord starts with three notes mate. Different directions and perspectives, but all of this was always a bad idea.
     
    selfemployed and Scott Kinnear like this.
  13. Scott Kinnear

    Scott Kinnear Super Moderator Staff Member

    I heard that mentioned today on the Radio, they said that too, no privacy and no loyalty to that bank brand.

    I need to go into the town centre to go to my bank, I use my post office to put money in my business account, although I do think its a risk, they seem a bit third party, if something dodgy happened, would the post office take responsibility or be proactive in helping solve it like a bank would?
     
  14. selfemployed

    selfemployed Super Moderator

    Totally agree Scott - I used to bank my business takings at our local bank and bit by bit they started to turn the screw. You could only bank so many bags of money a day and they charge you for every deposit. For years now they have been threatening to end "free banking" when in reality banking has never been free. Aside from the little add on charges, the banks use our funds to supply loans on massive profit margins to other customers while we get paltry - if any - interest on our funds. Many people dont realise that with little or no interest earned on current bank accounts today, the real value of that money is being eroded by inflation.
     
    Scott Kinnear and Businessman like this.
  15. Scott Kinnear

    Scott Kinnear Super Moderator Staff Member

    I have banked with Barclays since I started up in 2012, I have been meaning to change banks, they have never helped me once. not for my business or personal account. I really need to get focused and change banks. even now they keep sending Standing Order's before my wages are in, I have called the Telephone Banking twice over the last year or so, and they still never fixed things. it keeps putting my account into a negative, even the payee don't expect it until around the 3rd of the month. What part of not on the 28th or 29th 30th or 31st do they not understand. Honestly... Some Companies and Organisations... You just cant get the staff... :rolleyes:
     
  16. selfemployed

    selfemployed Super Moderator

    Here is a funny story you lol

    Many years ago when I lived at home I used to bank with Barclays. My mam once took a cheque to the bank to pay into my bank account for me - this was the days when everyone knew everyone. Despite the fact the cheque was payable to me and my initials are in no way similar to my mam's, they paid the cheque into her account in error. A few days later I was left stranded about 30 miles from home with no money as the cheque had been cleared in my mams account and not mine. When I rang the bank their comment was "Is there a dispute between your mam and you?" - I said no, and they said "Thats fine then , we will just transfer it to your account" and they did nothing else lol
     
  17. Scott Kinnear

    Scott Kinnear Super Moderator Staff Member

    Haha :D I must say the people in the branch are nice enough, I just don't get in often, all my money is cash in hand, unless I am going in town to buy clothes I don't go into town. I put money in through my post office because its handy.