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Civil engineering firms hit hard as construction insolvencies soar

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The number of civil engineering businesses that became insolvent in 2018 increased by 25%, according to a new study.

In total 3,156 companies within the construction sector were declared insolvent in 2018, up 13% from 2017, according to solicitor Nocklods. It is the highest level of insolvencies recorded since 2015.

While the research shows strong demand from first time buyers has supported house builders, civil engineering businesses were deemed to be “struggling”.

Sixty civil engineering businesses specialising in the construction of roads, railways and utilities became insolvent in 2018, a 25% increase on 2017 when 48 such business became insolvent, according to the research.

The report identifies the knock-on effect of Carillion’s collapse, and major infrastructure projects, such as Crossrail, nearing completion as causes of the down turn.

Nockolds head of construction Charlotte Barker said: “The shockwaves from the collapse of Carillion are still reverberating around the construction sector supply chain. Many businesses were dependent on Carillion for a significant proportion of their revenues and some have gone to the wall as a result.”

“Large construction companies are usually able to squeeze the margins of smaller contractors and subcontractors in the supply chain. This leaves them with very little wriggle room in the event of an insolvency higher up the supply chain.

She adds: “Uncertainty around Brexit and concerns over the economy are dampening commitment to major new infrastructure projects. At the same time mega projects, such as Crossrail, are nearing completion, which is impacting demand in the civil engineering subsector.” 

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