Carillion will start losing bids, margins will fall and so will the share price
Market forces will have their day (Anger at Carillion’s 120-day payment terms, 28 March, page 10). Subcontractors will add 10% to their price before bidding and start to shun Carillion. Carillion will start losing bids, margins will fall and so will the share price. It will pay expensive consultants to undertake a review and conclude that 120-day terms need to be amended.
I have yet to hear Chuka Umunna [who has raised concerns about Carillion’s proposed change to its payment terms] ever answer a direct question with an answer related to the question asked. He conveniently forgets to mention that clients have bankrolled major contractors for years. In fact, it was Labour who set up all the PFI projects in which the industry got margins it had never experienced before. I saw with my own eyes a hospital where the contractor made 20% margin - this happened on Labour’s watch.
Patrick Murdock, via www.building.co.uk