At first, it felt like a wobble. Payments that had arrived reliably on time for decades were now edging past 30 days. Then beyond 45 days. Then 60. Subcontractors received assurances that this was just a \u201cblip\u201d. But suddenly, last September, one of the biggest contractors in the UK shut up shop.<\/p>\n
When ISG collapsed, thousands of businesses up and down the country were left out of pocket. Tony, a director of a construction company in ISG\u2019s supply chain, was one of many to be severely hit. To protect \u201cWe\u2019re fairly robust \u2013 but we lost 25 per cent of our staff,\u201d Tony says of the fallout, adding that his firm depended on the ISG job to get through times when work contracts were thin on the ground. \u201c[It] was our \u2018winter carrier\u2019.\u201d<\/p>\n His words echo the reality on the ground, as told to CN<\/em> by several business owners. From multinationals to sole traders, more than 2,700 creditors were owed a total of \u00a3307.9m by ISG\u2019s main subsidiaries, its directors reported to administrators at EY after the group went under.<\/p>\n \u201cFor us, it was a big shock to the system. ISG was a major client \u2013 it was a big dent to our order book when it went under\u201d<\/p><\/blockquote>\n Some companies were owed what amounted to a substantial proportion of their turnover, sometimes more than 10 per cent \u2013 occasionally a lot more, CN\u2019s<\/em> analysis of the data reveals. The firms impacted range from clients and subcontractors to material suppliers, trade specialists and architects, and stretched to businesses outside of the construction sector as well.<\/p>\n Tony\u2019s company has since recovered to full staffing capacity, he says. His business held on. But the same cannot be said for everyone.<\/p>\n A year down the line, CN<\/em> takes a look at the impact of ISG\u2019s collapse.<\/p>\n We spoke to subcontractors who had worked with ISG for decades. For many, it was a major client, delivering substantial portions of their business. \u201cWe had been trading with ISG for probably the last 30 years,\u201d says one director, who we are calling Jamie. His firm, a drywall specialist based in the south of England, regularly got between 40 and 50 per cent of its work from the tier-one contractor. When ISG went down, the subcontractor was forced to let go between 100 and 125 sole traders. \u201cSo for us, it was a big shock to the system. ISG was a major client for us \u2013 it was a big dent to our order book when it went under,\u201d he says. According to administrator reports, Jamie\u2019s firm was owed millions of pounds.<\/p>\n In the months leading up to ISG\u2019s collapse, it continued to receive a constant supply of public contracts, the directors of firms subcontracted to ISG tell CN<\/em>. They say this reassured them that the firm was able to keep trading, and trading well.<\/p>\n \u201cIn the West Midlands, [ISG] was on a lot of high-profile, high-value projects,\u201d says Tony, whose firm is based in the region. He points in particular to a \u00a332.5m job to refurbish the Birmingham City Council House, as well as a \u00a361m refurb of HMP Birmingham.<\/p>\n \u201cA lot of people will be struggling on for a long time, taking on additional borrowing\u201d<\/p><\/blockquote>\n His business had struggled to secure credit insurance on its ISG jobs for 18 months before the latter went into administration, but such a scenario was not unique to ISG. However, the tier one contractor\u2019s size, coupled with the quality of its client list, lulled Tony into a false sense of security. \u201cYou\u2019d say to yourself: local authorities and the government have given ISG these multimillion-pound contracts and obviously done a lot more due diligence than we have, and have decided that it is financially secure to continue to give it this work,\u201d he recalls.<\/p>\n Jamie, too, says his firm no longer felt it necessary to perform due diligence checks on ISG after more than 30 years of contracting together. \u201cThat relationship was so strong, we didn\u2019t really go down that route, to be honest,\u201d he admits.<\/p>\n The pressure was on last year as well, as work dried up around the general election in July, causing uncertainty about the pipeline of future projects.<\/p>\n \u201cWhen [work is thin on the ground and] you\u2019ve got a considerable-sized job coming through, you probably take more of a risk with it than you necessarily would normally,\u201d Tony says.<\/p>\n ISG\u2019s debts stretch beyond the UK to firms based in Germany, the US, Belgium, Spain, the Republic of Ireland, Sweden and the Netherlands, the analysis by CN<\/em> shows. A firm of this scale permeates the fabric of society. Charities, small holiday destinations and photographers are all listed among the creditors, as well as cafes, childcare providers and coffee suppliers. Milk & More, the century-old milk-delivery \u201cYou\u2019d say to yourself: the government has given ISG multimillion-pound contracts and done a lot more due diligence than we have \u2013 and decided that it\u2019s financially secure\u201d<\/p><\/blockquote>\n Local authorities and NHS trusts also felt the pinch. Together, 15 councils across the UK were owed about \u00a3650,000. The Royal Marsden NHS Foundation Trust in London was owed \u00a3350,000; it is not clear for what, and the trust declined to comment. ISG also owed Microsoft about \u00a31.7m, but the software giant also declined to say what it was for.<\/p>\n The documents do not reveal how old the debts are, except for a single entry recorded in the ISG Retail accounts. The \u00a3460,000 debt is marked \u2018pre-2022\u2019, and specifies only that ISG owed the money to \u201cvarious\u201d firms.<\/p>\n Pictured below, CN <\/em>has visualised the location of every firm based in the UK to which ISG said it owed money; the larger the dot, the more money each business was owed. Despite the vastness of the debt, administrators at EY say ISG\u2019s figure of \u00a3309m was severely undercounted. In December, EY estimated ISG owed \u00a3885m to the supply chain. To put that into perspective, more than three-quarters of the biggest construction firms in the UK do not make that in a year, according to revenue tallies in the latest CN100 ranking.<\/p>\n
\nhis business\u2019 reputation, he spoke to Construction News<\/em> anonymously.<\/p>\nUncertain pipeline<\/h3>\n
\nfirm, was owed \u00a3163. A small bed and breakfast in Scotland has yet to receive the \u00a38,480 it is due.<\/p>\nDebts mapped<\/h3>\n