Carillion

Andy_L

GreatApe wrote: »

If I book my plumber to do work next week and my plumber goes bust tomorrow what have I lost?

Depends if you've had to pay him anything in advance or not.

GreatApe

Andy_L wrote: »

Depends if you've had to pay him anything in advance or not.

Very few businesses pay in advance it's usually 30 days in arrears if not more

I doubt very much the government paid billions in advance to Carillion for anything

economic

GreatApe wrote: »

Then they are over reaching themselves.
Its a risk they are taking they can't complain when it doesn't work out.
You could even make the argument that the small companies going bust is a good thing. Those who did not price risk correctly and stole businesses from the competition should feel some pain.

Overall I'm not sure what everyone is so worked up about.
Literally thousands of companies go bust each week and thousands of new ones are created each week
It is what allows free markets to work and prosper. The alternative is state industry and commence. As an ex British steel employee i can tell you that is much worse. We had 30,000 men at our site and needed only about 1/10th as many. People would literally come in and sleep and go home. 27,000 people turning up to do nothing thanks to the power of the unions.

It isn't even a real jobs loss. Almost all the jobs will be replaced. The dinner ladies or office cleaners working for carillon will be rehired pretty much instantly. Even big projects like HS2 are in no danger the jobs are created by the demand for goods and services. This company going bust doesn't impact the demand for goods and services so overall demand for work/jobs is more or less the same.

Exactly. The construction industry where companies like Carillion and Kier belong, work on minuscule profit margins. Its not surprising at all that in this environment a company in this sector would go bust. Its a good thing. Competition is generally what drives margins lower and this means a cheaper product for the end consumer (as long as the quality is the same of course).

However to maintain the profit margins, companies like Carillion would need to reduce its cost base i.e. become more efficient and use technology/innovation to deliver the product more cost effectively. the problem is if you can not reduce the cost base enough to maintain profit margins which is what happened here and in an ultra competitive industry Carillion are forced to take more risk (due to low margins) to gain market share.

Carillion got what it deserved - it took more risk (more projects) which was highly miscalculated. The government also miscalculated the risk of taking on Carillion and it too gets what it deserves (delayed delivery of infrastructure).

This is not to say competition is a bad thing, on the contrary its good on the whole as it means cheaper products for the same quality. Cairllion going "bust" means that the industry can try increase profit margins to a more stable/ less risky level for the normal course of business, through increasing revenues given the downfall of a player (Carillion) that distorted the industry's pricing mechanism.

Glen_Clark

antrobus wrote: »

You clearly don't understand what liquidation means. Once a company hits that wall, nothing gets paid. Which is what the IS said. And what the government said; "any payments to directors beyond liquidation date have been stopped". The IS is only going to pay them if it wants them to turn up and do some work.

Just like everybody else.

Then according to you the Financial Times doesn't understand what liquidation means either. Do I need to repost my earlier quote from there?

Glen_Clark

DiggerUK wrote: »

Only if you don’t mention Mr. Blair, Mr. Straw, Mr. Vaz, Mr. McTernan, Uncle Tom Cobley and all..._

That was way back in the year 8BC (Before Corbyn)

Glen_Clark

GreatApe wrote: »

If I book my plumber to do work next week and my plumber goes bust tomorrow what have I lost?

If I then go ahead and book a different plumber to do the job is that a 'bailout'?

Now that is silly.
You can't sensibly compare that with the £billion contracts Carillion are in the middle of.

Glen_Clark

antrobus wrote: »

So what?

What point are you trying to make?

Press Bias

Glen_Clark

antrobus wrote: »

Banks are now subject to reasonably competent regulation. Are you saying that building contractors should be regulated in a similar manner?

Road Hauliers have to employ a qualified person who is personally liable, (eg going to jail) if the company breaks the law. Like Builders do when there are safety breaches. Banks had lower standards of regulation than this, but were bailed out. Unlike Road Hauliers and Builders who are going bust all the time.

antrobus wrote: »

What "£billion contracts" now have to be bailed out?

Carillion's

antrobus

Glen_Clark wrote: »

Then according to you the Financial Times doesn't understand what liquidation means either. Do I need to repost my earlier quote from there?

You have misunderstood what the FT said.

Companies become insolvent when they can't pay their debts. Money due to the former CEO would just be another debt they could not pay.

If the former CEO felt he was owed money he could make a claim just like anybody else.

antrobus

Glen_Clark wrote: »

Road Hauliers have to employ a qualified person who is personally liable, (eg going to jail) if the company breaks the law. Like Builders do when there are safety breaches. Banks had lower standards of regulation than this, but were bailed out. Unlike Road Hauliers and Builders who are going bust all the time.

Carillion's

Banking regulation means capital adequacy. We now have (what I believe to be) reasonably well capitalised banks. Are you suggesting that building contractors should be subject to capital adequacy?

We clearly did not have well capitalised banks back in 2008. But why remind everyone of what a mess that Bungler Brown created?