Following the collapse of Carillion this week Phil Pluck, GGF Group Chief Executive raises his concerns.
“As the assessment of the true damage continues following the collapse of Carillion, it does raise some fundamental issues in terms of protecting both smaller companies caught up in the collapsing supply chains and the jobs that may be lost as a result.
The Glass and Glazing Federation (GGF) has sympathy with local government and other bodies tasked with delivering major build projects on ever decreasing Government funding. This creates a race to the bottom in terms of procurement practice in that more and more major contracts are awarded based on the lowest price.
This is a poor, short term approach which causes companies throughout the supply chain to operate at almost impossible margins. The companies that the GGF represents operate to the highest standards of manufacture, supply and installation. As a result of short term procurement practices and Government’s fixation with cost savings, a clear risk has been built into major construction projects.
GGF Members aim to be – and many are – the best in the world in their given sector and collectively the membership represents over 30,000 jobs in the UK alone. A cost cutting approach to the awarding of contracts puts at risk build quality, safety and jobs. In doing so, no legal protection is afforded to those in the supply chain that are now the victims of the Carillion Collapse. This in turn could result in further company failures and consequent losses of jobs and talent.
A knee-jerk reaction comprised of Government rescue packages to selected companies is of no reassurance to GGF Member companies and does not allow them to plan for long term sustainability. A lasting negative effect on Government tax revenue would be the result.
I urge the Government to assess the long term damage that short term cost savings creates and to take heed that Carillion may not be the last company to collapse as a result. There are other major supply chains also operating at near impossible margins.”
GGF Group Chief Executive