Carillion's health and the industry's safety

For nineteen years Carillion has been a titan of the UK construction and services industries.

Even people who didn’t know the company, knew its work. Carillion has had a hand in many of the UK’s most prestigious projects: The redevelopment of Manchester Airport, the construction of the new Midland hospital in Birmingham, the expansion of Liverpool’s Anfield Stadium, the building of Tate Modern and the development of High Speeds 1 and 2 to name just a few.

Yet the bigger the company, the harder its fall. On the 15th of January Carillion announced that it was entering liquidation, informing the London Stock Exchange that it had “no choice but to take steps to enter into compulsory liquidation with immediate effect”.

This collapse has sent shockwaves throughout the UK economy and grabbed headlines in every national paper and television news programme. Carillion had its fingers in so many pies, and was involved in so many Joint Ventures, that its obliteration has shaken just about every industry and sector in the country.

It’s “race to the bottom” approach to bidding for new business has attracted much of the attention, but there are other lessons to be learned as well. Health and Safety might not be hurting in the way construction, facilities management and some others are, but there are still repercussions.

Health and Safety

The company was around for less than two decades, but it had plenty of dealings with Health and Safety’s powers that be. It was fined in early 2016 for breaches of health and safety laws which led to the death of a railway worker. Three years prior to that it was punished for placing roadwork signs in unsafe locations after a motorcyclist crashed into one and was left permanently paralysed. It has also been fined more than once for falls from height.

Then there was the case of Dave Smith. Smith was headline news after he revealed that he had been blacklisted by the construction giant. After complaining about health and safety practices, as well as asbestos concerns, on Carillion sites, he found himself unable to get employment after years in the sector. Smith is now concerned that the collapse of the company means he will never see those who wronged him face justice.

Still, one assumes Smith isn’t feeling too much schadenfreude, after all Carillion employed around 43,000 people many of whom will now be looking for new jobs and, even worse, wondering what they will do about their promised pensions. Then there are the knock-on effects. Balfour Beatty have already prepared themselves for a £45m hit thanks to the projects they were collaborating on with Carillion.

Of course wasn't all bad news. Carillion was recognised more than once for its health and safety successes. In 2016 it won an International Safety Award from the British Safety Council, becoming one of just 30 organisations to receive a distinction in the awards. The year before it secured a Gold Medal from the Royal Society for the Prevention of Accidents in recognition of nine consecutive Gold Awards. 

The knock-on effect

There also concerns that other companies could head the same way as Carillion. Outsourcing goliath Capita has run up a net debt of over a billion pounds and has a pensions deficit approaching £400m. Experts are blaming Capita’s aggressive acquisition, designed to drive growth, for the company’s problems.

There are hundreds of people employed in Capita’s health and safety consultancy practice, which offers fire safety, legionnaires, asbestos and CDM consultancy. Fortunately for them, the above experts think that Capita’s service-based contracts, and bigger emphasis on the private sector, are a safer bet than Carillion’s construction equivalents.

Business Model

In the wake of the Carillion catastrophe, and amidst the danger of a domino effect, experts and unions are arguing that the business model employed by Carillion must be avoided going forward.

The contractor had managed to claim a succession of government contracts in the past six months despite issuing a profit warning in July 2017, followed by another in September. It had also Carillion had also won government guarantees to help it win work in the Middle East region.

In 2013 the company was forced to defend itself against allegations it was mistreating migrant workers in Qatar, where stadiums are being built ahead of the 2022 football world cup. In November of that year the GMB union reported that Carillion had declined a meeting in Qatar with a delegation from the International Trades Union Congress to discuss provisions for its subcontracted labour there.

Carillion's financial collapse might have grabbed the headlines since the turn of the year, but once the dust settles the company might serve as an example of how not to operate in a great many areas.