Subcontractors furious as Costain, Wates and Morgan Ashurst cut supplier lists

Main contractors are culling the number of specialists they work with to reduce the risk of supplier insolvency, causing fears that those left out will be made more vulnerable.

Wates has cut its supplier list from 4,000 to 3,000 and intends to reduce this to 1,500 by 2012. Eighty per cent of its spend is with 500 suppliers. Morgan Ashurst, the construction management arm of Morgan Sindall, has reduced its suppliers from 3,000 to 500 in the past year and plans further cuts.

Andrew Laird, group commercial director at Wates, said specialists would face tough tests to remain on its list of preferred suppliers, but those that passed would enjoy improved payment terms, earlier involvement in projects and more predictable workloads.

He said the move was aimed at improving efficiency and fostering innovation in construction techniques.

Costain’s programme to cut specialist contractors from 18,000 to between 2,000 and 3,000 by the end of 2008 has been given new impetus.

Chris Squires, the contractor’s procurement director, said: “I’m worried about insolvencies in the specialist market and I want to weed out small, fly-by-night organisations. We want to work with fewer, quality contractors.”

Specialist contractors have reacted angrily to the news.

Rudi Klein, chief executive of the Specialist Engineering Contractors’ Group, said: “If this means smaller firms will miss out, this is a massive concern.”

Specialists are also complaining about main contractors’ conditions for including them on preferred lists, ranging from health and safety to sustainability.