The Construction Leadership Council (CLC) has urged contractors to pay promptly as the collapse of ISG threatens to wreak havoc along supply chains.
In a statement issued on Friday (20 September), the body revealed it had held an emergency meeting with its sponsor, the Department for Business and Trade, to discuss “how the industry should respond” to its sixth-largest company filing for administration.
The CLC “urged everyone in the industry to ensure […] that where possible payments are made promptly to suppliers and to await further information”. It added that firms should to manage the impact of ISG’s demise “within the terms of existing contracts”.
It added that it is now collating detailed guidance for affected companies and employees, but said that firms in “particular financial distress” should “contact their relevant industry body directly”.
“Our sympathies are with everyone across the industry who is directly or indirectly affected by the administration of ISG,” it added.
“[Our] 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 statement comes amid concerns that suppliers will be pushed into financial distress or insolvency as a result of missing payments from ISG.
ISG is roughly half the size of Carillion, which left 30,000 small businesses out of pocket by an average of £140,000 and directly caused 380 downstream insolvencies, according to figures cited in the House of Commons.
ISG’s downfall comes as construction insolvencies continue to soar, with 4,401 construction building companies going under in the year to April 2024 as the impact of the Covid pandemic, inflation and fixed-price contracts continues to undermine profitability.
Trade body Build UK has also established a working group that it hopes will find new placements for as many ISG apprentices and graduates as possible.
In a statement, Build UK chief executive Suzannah Nicol said: “There will be a significant impact on those just starting out on their career in construction, and this is where we are looking to make an immediate impact and are encouraging any businesses to get in touch that may be in a position to help one or more of ISG’s apprentices, graduates or trainees secure another role in the industry.
“We also want to hear from any specialist contractors employing apprentices that may be at risk of losing their job as a result of ISG’s demise and also from any ISG apprentice, graduate or trainee that has been affected. They can get in touch with us at info@builduk.org.”