More than 70 small construction companies have gone bust in the past month, in an indication of the growing impact the credit crunch is having on SMEs in the sector.
Notices in the London Gazette, the official UK journal for corporate failures, reveal that 76 individuals or companies have been wound up, gone bankrupt or become insolvent in March. The figures also show that 10 electrical contractors declared financial difficulties in the past week alone.
Ian Johnson, managing director of electrical engineer Eric Johnson of Northwich, based in Cheshire, said: “The credit crunch is happening. People are taking big jobs on and underquoting them to get work and they’ve got people who won’t pay. In the next 12 months I think we’ll see a vast increase in companies going to the wall.”
Two of Northwich’s regional competitors announced creditors’ meetings in the same week. Concept Electrical Design of Nantwich Road in Stanthorne, Cheshire, became insolvent on 18 March and Williams Electrical Contractors of Derby Road, Bootle, became insolvent on 27 March.
The 160-year old Ipswich firm Warners M&E went into administration on 11 March citing “problems in the construction industry”.
Last month, the £70m-turnover family business Hills Electrical & Mechanical was sold to Southern Electric Contracting for just £1.