Lambert Contracts Ltd is the latest in a series of Scottish construction companies to announce that it has entered administration.
In this article, we will introduce you to the company and reasons given for entering administration. Then, we will conclude by discussing wider implications for the construction sector.
Who is Lambert Contracts Ltd?
Originally founded in 1985, Lambert Contracts Ltd conducted a wide variety of construction work, specialising in:
- Insurance reinstatement
- Fire damage
- Property maintenance
- Installation/repair work
The company's business model involved utilising high numbers of labour-only subcontractors in order to keep costs to a minimum.
This model proved successful for much of the company's past. The firm held offices in both Aberdeen and Paisley, employing 85 staff in total. For the year ending 30 April 2017, Lambert Contracts Ltd recorded a total turnover of £14.7 million.
Derek Forsyth, head of recovery at administrator Campbell Dallas, described Lambert Contracts Ltd as: "a well-known name in Scotland’s construction sector with an excellent reputation for the quality of its client base and project."
Why has Lambert Contracts Ltd entered administration?
Mr Forsyth went on to explain the reasons for the firm's collapse:
“Although the company has a large turnover, it had been suffering from cash flow problems and, despite best efforts to raise additional funding, administration was the only option."
Mr Forsyth was subsequently drafted in as joint administrator alongside Blair Milne, also of Campbell Dallas. The administrators have made it clear that they intend to appraise all available options in order to ensure the best possible outcome for creditors and staff alike.
“Unfortunately, 77 staff have been made redundant with immediate effect with the balance of eight staff being retained in the short term to assist with the wind-down of the business," Forsyth said.
“We will do our utmost to provide as much support as we can to the employees. We will also be looking to sell any assets to generate value for creditors and would urge interested parties to contact us as soon as possible.”
What does this news indicate about the construction sector?
Lambert Contracts Ltd is the latest in a series of Scottish construction companies to close in recent weeks.
On Friday, Crummock – a construction company formerly based in Bonnyrigg – announced it had entered receivership. This move resulted in redundancy for almost 300 employees in total.
The very same day, Langholm-based T Graham & Son (a building contractor) entered liquidation, resulting in 30 employees losing their jobs.
All three of these instances are part of a wider trend affecting the UK construction sector. The industry has been beset by a host of issues in recent times, such as the collapse of Carillion and increased costs.
The latest reading of the construction index, The IHS Markit/CIPS UK Construction PMI, came in at 52.5 in May 2018, unchanged from the previous month and above market expectations of 52 this has pointed to a moderate increase in total activity, as commercial activity growth accelerated to a three-month high while both residential and civil engineering activity expanded at softer rates. New orders fell slightly in May amid political and economic uncertainty, subdued retail sector conditions and fragile business confidence. In addition, optimism towards future growth prospects eased to a seven-month low and employment rose the least in four months. On the price front, input cost inflation was the highest since February.