More than 2,000 jobs axed as UK prison builder ISG collapses
Over 2,000 positions have been eliminated, and numerous government construction initiatives may be halted as ISG, a major contractor in the UK, has gone into administration.
In the most significant downfall of a UK construction firm since Carillion, administrators from EY announced on Friday that ISG has abruptly stopped all operations, leading to the shutdown of all its work sites.
It was confirmed that nearly all of the 2,400 employees working in the UK will lose their jobs right away, with just 200 workers remaining to help the administrators.
ISG is currently engaged in 69 active central government initiatives. Among these are various projects aimed at expanding the capacity of prisons in the UK by an additional 20,000 spaces, as part of the Ministry of Justice's strategy. The company is also collaborating on projects for the Department for Work and Pensions, along with multiple school construction efforts.
The Cabinet Office stated that it has put in place comprehensive backup plans, and various departments are collaborating to guarantee that locations are secure and protected.
ISG ranks as the sixth-largest construction firm in the UK in terms of revenue, generating £2.2 billion. In 2018, Carillion, which was the UK's second-largest contractor, went bankrupt, leaving suppliers with debts totaling £7 billion.
EY announced that it has been assigned as the administrator for ISG’s eight trading brands, and ISG’s entire construction services division in the UK has stopped operations immediately.
It was reported that the UK company has been facing serious cash flow issues lately, and due to the state of the market, they were unable to secure either a sale or find extra financing.
In an email sent to employees on Thursday, as initially reported by Construction Enquirer, ISG's CEO, Zoe Price, expressed her regrets and explained that the company's cash flow has been impacted by several unprofitable contracts won between 2018 and 2020.
She mentioned, “Exchanging these projects has really impacted our cash flow. Although we've made a profit this year, our past decisions have brought us to a situation where we can't keep trading.”
In addition to shutting down its offices and construction sites, subcontractors have been temporarily sidelined from their jobs.
According to information from construction analyst Barbour ABI, ISG is currently engaged in government construction projects totaling £1.8 billion. This encompasses 22 ongoing projects with the Ministry of Justice, which feature several prison initiatives, including a £300 million expansion of Spring Hill in Buckinghamshire.
This follows shortly after the government released 1,700 prisoners ahead of schedule to alleviate overcrowding issues.
ISG has also secured agreements with prominent private clients including Apple, Google, and Barclays.
Earlier this year, there were news reports indicating that the company was struggling with cash flow issues. As a result, both CEO Matt Blowers and Finance Director Karen Booth left the organization in February and March, respectively.
In July, it announced that it had identified a possible buyer, as the investment company Antipodean Holdings entered talks regarding a potential acquisition.
Antipodean Holdings announced on Friday that they were prepared to finalize an agreement to protect jobs and were dedicated to reaching that agreement until communication from ISG ceased on September 12.
In response to this, the management stated: “We want to make it clear to our employees, suppliers, and customers that we were unable to finalize a sale. The prospective buyer could not sufficiently prove, despite our repeated requests, that they had the necessary funds to invest in the business and ensure its financial stability.”
It was also mentioned that the directors considered the option of refinancing the company, but they were unable to finalize the process.
