ISG: Construction giant collapse sees 2,200 jobs cut
Thousands of workers have been laid off following the collapse of ISG's UK operations into administration, an international construction giant.
According to a statement released on Friday by the joint administrators at EY, approximately 2,200 employees have been laid off effective immediately.
The company, which is owned by the American firm Cathexis, had faced financial difficulties for a while.
Efforts to finalize a rescue agreement were unsuccessful, and 200 staff members will remain on board to help the administrators manage the closure of the company, which is responsible for over £1 billion in government contracts.
ISG's private sector clientele in the UK includes notable companies like Apple, Barclays, and Google.
In an email that received a lot of attention, CEO Zoe Price informed all ISG employees on Thursday, "You might have come across news articles mentioning that ISG has entered administration in the UK."
It is with regret that I can confirm this information is indeed accurate.
"I didn't intend for you to learn about this like this, and it shouldn’t have come out this way," she said.
Ms. Price stated that employees would receive their wages on Monday as usual. She explained that the ongoing situation is a result of "legacy issues" tied to "significant unprofitable contracts" that were obtained between 2018 and 2020.
"Switching out these projects has greatly impacted our cash flow. Despite being profitable this year, our past decisions have brought us to a situation where we can no longer keep trading," she stated.
Ms. Price mentioned that considerable efforts had been devoted to locating a buyer for the company, but unfortunately, these attempts did not yield any results.
On Friday, EY mentioned that none of the prospective buyers who expressed interest demonstrated that they possessed sufficient funds to support the operations and ensure their sustainability moving forward.
"We want to be transparent with our employees, suppliers, and customers that we were unable to finalize a sale because the prospective buyer failed to sufficiently prove, despite our repeated requests, that they had the necessary funds to reinvest in the business and ensure its financial stability," they stated.
All eight divisions of ISG's UK operations, including its engineering and retail sectors, have entered administration.
The organization, currently engaged in various government contracts, has laid off most of its 2,400 staff in the UK effective immediately, resulting in a complete halt to all ongoing projects.
According to data analysts at Barbour ABI, ISG is participating in 69 government projects worth over £1 billion. This includes renovation work on prisons for the Ministry of Justice.
It was also responsible for designing the velodrome used during the London Olympics in 2012.
Ed Griffiths, the lead analyst at Barbour ABI, stated that the ongoing projects, such as the £300 million expansion of the Grendon and Springhill prisons in Buckinghamshire, represent only a small fraction of what's ahead.
"The impact will be very concerning for the many subcontractors affected," he stated.
However, a representative from the government stated that they have already put comprehensive backup plans into action, and the relevant departments are actively working to guarantee that the locations are safe and secure.
