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Carillion: Wolverhampton-based construction giant enters liquidation as council launches city taskforce

By Simon Penfold | Wolverhampton | News | Published:

Carillion has gone into compulsory liquidation leaving the fate of hundreds of workers at its Wolverhampton base uncertain.

Workers make their way into Carillion's head office in Wolverhampton today with the construction giant's future uncertain

Last ditch efforts over the weekend, involving talks between the the company, its lenders and the Government, failed to secure a rescue deal.

The result is that a company with its roots in Wolverhampton going back more than a century will now be broken up.

Less than a year after announcing revenues of over £5 billion the company has crashed in spectacular style, leaving a city in shock.

Wolverhampton council this afternoon announced a city taskforce in response to the Carillion crisis.

More background and anaylsis on the collapse of Carillion

The fate of its 19.500-strong UK workforce, including around 400 at its city centre headquarters on the Ring Road St Marks in Wolverhampton, hangs in the balance.

Many will be hoping they can be switched to new companies that take over the scores of contracts the company has for work on road, rail and Government departments.

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Carillion workers' fears over redundancy

There are fears that thousands face probable redundancy.

It is unclear what the immediate impact will be on projects such as the Midland Metropolitan Hospital at Smethwick, which Carillion has been building for the Sandwell and West Birmingham Hospitals Trust.

Health chiefs have said the project is not at risk but the collapse of Carillion will almost certainly add to the year-long delays already affecting the work.

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There was 'no comment' from scores of staff arriving for work at Carillion House in Wolverhampton today, but the shock on many faces was clear to some.

A few seemed close to tears at the unexpected news of the company's liquidation.

Staff at the headquarters may be more directly in the firing line, as those working on contracts elsewhere stand a chance of transferring to new companies taking over the work.

WATCH Staff made their way to work at Carillion's headquarters in Wolverhampton to discover more about the future for the company

But many arriving today were stony faced, with some confirming they had been told by the company not to comment to waiting reporters.

One man said simply that he was 'very disappointed' while another commented: "It's not very good."

One woman said: "We don't know anything yet" and another confirmed: "We don't know what will happen."

Carillion has existed for just two decades, since its creation in 1999, but its roots lie in the city's historic Tarmac business.

Its collapse will affect 28,000 pensioners who worked for Carillion and Tarmac, with the company's schemes now set to end up in the Pension Protection Fund, the Government's so-called lifeboat.

It will almost certainly mean lower pension payouts for affected workers in the years to come.

It is an uncertain future for Carillion

What is the outlook for Carillion's apprentices?

Urgent moves are being made to help up to 1,400 apprentices currently training with Carillion.

The construction industry's training body says it is immediately taking steps to secure the future of the trainees.

A project team is being set up by the CITB, working with the Government and employers in the construction industry, to make a priority of retaining and redeploying these apprentices.

The CITB said it was currently devising an in principle package of support, including grants and apprenticeship transfer incentives, to encourage construction employers to enable these apprentices to join their existing workforce.

Sarah Beale, chief executive at the Construction Industry Training Board (CITB), said: “The news of Carillion entering insolvency is clearly a significant blow to the UK construction sector.

"While this will present the sector with a number of challenges, CITB’s priority is to do all it can to ensure that Carillion apprentices can continue their training so their skills are not lost.

“We have established a project team to work with the apprentices and will be offering in principle grant and apprenticeship transfer incentives to our employer base in order to retain these learners.

“We will be working closely with the ESFA, the Official Receiver and our network of college providers so that every possible support is in place to help these apprentices continue their training.

“We will be liaising with the Official Receiver with a view to contacting the apprentices as soon as possible.”

The training said the direct impact of Carillion's liquidation would be its immediate priority "but it will also quickly turn its attention to the wider effects on Carillion’s extensive supply chain".

What has Carillion said today?

Announcing the end just before 7am today, company chairman Philip Green said: "This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

"Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by (chief executive) Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

"In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.

"We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers."

What will the future hold for Carillion?

City in shock over Carillion demise as taskforce launched

Wolverhampton council convened an emergency cross agency Carillion city taskforce meeting this afternoon to discuss a plan of action.

The council said it wanted want to reassure Carillion employees, suppliers and contractors of the support available.

The authority said: "There are many issues which still require clarity and we will be identifying and working through them with our city and regional partners, such as the West Midlands Combined Authority, Black Country Chamber of Commerce, Department for Work and Pensions, and Black Country LEP, over the coming hours and days.

"We will also be closely monitoring the national position and liaising with colleagues in government."

Wolverhampton council deputy leader, Councillor Peter Bilson, added: "This is sad news for our city.

"Carillion is a global brand that has had a strong association with Wolverhampton for decades."

Councillor Wendy Thompson, Conservative leader on Labour controlled Wolverhampton City Council, said of the Carillion collapse: "This is terrible news and a very sad day for the city.

"Around 450 people work at the company HQ and these people will now be very worried about their future. Hopefully the liquidators will be able to sell off assets and jobs will be saved.

"The question everybody will be asking is how could this happen? Were the finance people flagging up their concerns and were the management listening?

"Had they been under estimating the cost of the big projects when bidding for them? Where were the auditors and risk management. What happened to the safeguards that should have been in place?

"This is terrible for the economy of Wolverhampton and there is now the danger of another large building standing empty in the middle of the city."

'We must support Carillion workers and sub-contractors'

The leader of the Black Country's biggest business organisation is called for an MG Rover-style taskforce to be set up to aid workers and sub-contractors affected by the Carillion liquidation.

Corin Crane, chief executive of the Black Country Chamber of Commerce, said: "Our biggest concern is the jobs in the supply chain. There could be four or five times as many as in the company itself.

"And there are a number of local schools where Carillion provides meals and maintenance. We don't known how they will be affected.

"We are trying to get business and council leaders together to try and establish how many Carillion contracts there are and the extent of the impact on their suppliers.

"There has been talk of short term Government funding for some public sector work, but Carillion sub contractors work on 120 day payment terms, so many may not have yet been paid for the work they have already done. We don't know what impact this is going to have on them or on their payments.

"Ideally we need the kind of taskforce we had with MG Rover, which proved such a success in protecting jobs and businesses in the wake of the car company's collapse.

"I will be hoping to talk to Andy Street (the West Midlands Metro Mayor) later today to talk about setting up a taskforce."

Mr Crane added: "No one was expecting this on Friday. We all assumed some kind of company would carry on. No-one expected liquidation this morning."

Simon Penfold

By Simon Penfold
Business Editor - @SPenfold_star

Business Editor based at the Express & Star's head office in Wolverhampton, looking for stories big & small.

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