Wednesday, 19 December 2012
Construction companies face a difficult 2013
The construction industry has always been exposed to downturns due to the time lag between inception and completion of projects and the need for working capital. Also many are reliant on public sector contracts. 2012 started as a bad year and the fall in output in construction was to blamed for the negative GDP figures.
Despite the recent collapses of Speymill's contracting arm and Swift Horsman which has resulted in 600 redundancies there is more optimism about 2013. This is mainly due to the hope of more public sector contracts.
The construction industry is a vital component of the UK economy and it directly and indirectly employees many people and it should be preserved where possible.
So what can be done for struggling construction businesses?
In construction the smallest mistake culminating in a cost overrun could be critical. A business may no longer be viable going forward so so liquidation might be the only option.
If a business is fundamentally viable then a company voluntary arrangement could be the answer
One particular building company we rescued had an overdraft of £150k with RBS. This bank is known for blocking pre-pack administrations where the business is sold to the encumbents. So after a meeting with KSA Group a rescue plan was put together.
For details of how this building company was rescued please read our case study; CVA Rescues Building Company in the North East