The Specialist Engineering Contractors’ (SEC) Group has warned that the collapse of Britain’s oldest building company, Durtnell & Sons, is further confirmation of the financial crisis hitting the industry
Last week Durtnell & Sons, owned by the same family for almost 430 years, went into insolvency. Durtnell will become just another statistic in a wave of insolvencies impacting the construction industry, making it the sector with the highest number of insolvencies.
Whenever construction firms go into insolvency, the retentions withheld from their supply chain are invariably lost. An examination of Durtnell’s March 2019 accounts shows that retentions totalling £630,000 are owed to Durtnell, but the bulk of those retentions would have been deducted from their supply chain payments.
Additionally, the low level of retentions for their Brighton project (only £10k for a £21m project) suggests that Durtnell & Sons owe substantially more to their supply chain.
At the top of the industry, the extremely weak balance sheets of the largest UK contractors are creating a ‘ticking time-bomb’. Trade credit insurers are now withdrawing cover from many of these companies leaving their supply chains wholly exposed, according to SEC Group.
Rudi Klein, the SEC Group CEO said: “Whilst it is extremely sad to lose such a long-established firm, there is now concern for Durtnell’s sub-contractors.
“The retention monies belong to the businesses – mostly SMEs – in Durtnell’s supply chain and for the most part would have represented their profit margins. The Government must now act to adopt Peter Aldous Bill, already in Parliament, that protect these monies from upstream insolvencies.”