Another well known family name looks like becoming history this week. In an echo of the famous sale of Laing to O’Rourke in 2002, Hills Electrical was taken over by one of its rivals for the nominal sum of a pound.

The reasons are the usual ones: it grew too quickly and took on too many troublesome contracts; in this case, it was schoolwork that did the damage. It’s an unfortunate end for a company that has built a reputation for high quality work on a string of iconic buildings. On a more positive note, it has now been absorbed into Southern Electric Contracting, a FTSE 50 company, without too much disruption to its work or, hopefully, its workforce.

The demise of Hills is likely to heighten concerns about the stability of specialist firms that have their stride broken by the market. On the one hand, work has been, and still is, plentiful. But how many firms have been tempted by that to take on jobs that they can’t properly resource? It only takes a few difficult contracts to turn an apparently manageable position into an impossible one. The situation could become even more critical once the cooling of the market feeds into work on site. Although that could remove the urge to make one bid too many, it will mean it’s harder to keep the money coming in.

And as the wolf arrives at the door, partnering could well go out of the window, as clients start looking for lower-cost bids. We’ve already witnessed that in the housebuilding sector. This may, as we reported last week, be mitigated by the tendency among contractors such as Wates and Costain to get closer to a fewer number of suppliers, partly to avoid the perceived risks of downstream insolvency. Suppliers, too, would do well to move closer to contractors, if they haven’t already. In this climate it pays to have a confidant to offer advice if money is looking patchy. And don’t be afraid to say no. In this game, profits amount to nothing if cash stops flowing.

The man in charge of everything

If anyone can make a success of the Homes and Communities Agency, Sir Bob Kerslake is probably the one. Armed with 800 staff and a budget on a par with the NHS and Building Schools for the Future combined, he has the job of housing and regenerating an entire country. So he’s a figure everyone will be watching with fascination. He comes with a reputation as a deal maker and a problem solver. Just as well, because the in-tray gets fuller by the day, as a flick through this issue shows. Housing associations are in turmoil over regulation (page 32); the Thames Gateway has become choked by regeneration bodies; Caroline Flint is threatening to reform housing benefit and then there’s the tiny problem of new homes delivery: housing starts for the beginning of this year have slumped by nearly 40%. We wish him all the luck in the world …

Denise Chevin, editor

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