The Insolvency Service’s official insolvency statistics came out today revealing a loss of 868 construction firms in the last quarter alone, a total of 5460 construction firms out of business since January 2011 and 6146 since September 2010.
The only good news was that the number of firms out of business was 6.06% lower than in Quarter One.
What was significant was the 12% rise in the number of construction companies forced into compulsory liquidations compared to a drop of 13.9% across all other business sectors; construction and property firms also made up 23% of the total number of all businesses in England and Wales forced into compulsory liquidation.
In comparison the number of voluntary liquidations dropped by 15% but still make up 15.6% of companies across all sectors in England and Wales voluntarily entering liquidation.
Alan Harris, director at specialist construction risk management firm, CR Management, said: “The construction industry continues to jog along the rough and uneven road to recovery which now looks to be a long way off. As a consequence a number of main contractors that we are working with are looking again at their structures with a view to making further efficiency cuts in order to compete in the current and projected market and more will follow suit, although for some they will have left it too late
“Over the past quarter it has been noticeable that the companies becoming insolvent are of a larger size and hence are having a greater impact on the market. In particular a number of mechanical and electrical contractors have ceased trading putting increasing pressure on main contractors to find replacement subcontractors who will guarantee the original work. This also puts increasing pressure on programme times leading to the possibility of projects falling behind and all of the cost ramifications this carries.”