The collapse of ISG last week has sent shockwaves through the industry, provoking fears of how the ripple effects will impact clients and the wider supply chain.
Inevitably, the failure of the business has prompted comparisons with the ill-fated construction giant, Carillion, which went bust in January 2018.
David Crosthwaite, chief economist at BCIS, said the failure of ISG is “likely to have serious knock-on effects” for the sector.
“This is the largest business failure since Carillion and the ramifications will no doubt be serious,” he added. “ISG directly employed circa 2,200 employees who are now out of a job.
“Further impacts will be felt throughout the supply chain as sub-contractors and suppliers are left unpaid. Cashflow is critical for construction businesses, and as soon as there are negative impacts on cashflow then it doesn’t take much for those businesses to fail.
“So, I suspect that insolvency numbers will rise as a result of the ISG failure.
“In addition, there will also be a raft of projects, at various stages of completion, that will be left unfinished and which clients will need to replace with a new contract as soon as possible to avoid compounding any losses.”
ISGs directors filed for administration on Friday, 20 September, with the High Court of Justice appointing Timothy Vance, Alan Michael Hudson, and Dan Edkins as joint administrators. for ISG’s subsidiaries.
These are ISG Central Services, ISG Interior Services Group, ISG Fit Out, ISG Engineering Services, ISG UK Retail, ISG Construction, and ISG Jackson.
All ISG’s UK operations ceased on Friday with immediate effect, according to a statement on Eys website: “As a result no further work will be undertaken on existing UK contracts, including for construction, fit-out, and engineering,” it added.
Following a meeting with key construction trade bodies, education and skills providers, and the Department for Business & Trade, to discuss how the industry should respond to the administration, the Construction Leadership Council (CLC) issued a statement.
“Our sympathies are with everyone across the industry who is directly or indirectly affected by the administration of ISG, and the CLC’s objective is to ensure that individuals and organisations impacted are given the appropriate support and guidance, and that as far as possible the effect on the wider sector is limited,” the CLC said.
“The CLC is collating detailed guidance available for those impacted and in the interim, we would advise everyone in the industry to ensure that they are managing any impact on their businesses within the terms of existing contracts, ensure that where possible payments are made promptly to suppliers and to await further information. If companies are in particular financial distress, we would encourage them to contact their relevant industry body.
“For the apprentices and graduates who are directly employed by ISG, Build UK and the CITB have established a working group to ensure that placements can be found for as many people as possible.”
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