Grant Thornton named administrator for 'Welsh Carillion' Dawnus

Following the collapse of Cardiff-headquartered outsourcing firm Dawnus Group, the firm has been compared to failed contractor Carillion, while 700 workers have lost their jobs. Grant Thornton has been installed as administrator to the collapsed firm to oversee the sale of its remaining assets.

Dawnus Group, a major construction firm based in Swansea with 6 regional offices and 44 construction sites, has confirmed it is under administration, resulting in 700 people losing their jobs. The group operated throughout the UK, from six regional offices and 44 construction sites.

Alistair Wardell, Matthew Richards and Philip Stephenson of Grant Thornton UK were appointed joint administrators of the UK operations of Dawnus in the middle of March 2019. Their appointment covers all the branches of the Dawnus Group, with the exception of the international operations of the network, Dawnus International, Dawnus Sierra Leone or Dawnus Liberia.

According to the administrators, the group succumbed to pressures resulting from a broader downturn in the construction industry. Construction played host to some 3,940 insolvencies throughout 2018, as even while demand for new homes across the UK boomed, it was plagued by Brexit pressures and an economy plagued by sluggish productivity.  They added that while the financial difficulties of the group were not a direct consequence of Brexit, there is “no doubt” that the enduring uncertainty surrounding the UK’s withdrawal from the EU – just days before its final deadline – had impacted the ability to rescue the business.

Grant Thornton restructuring Partner Alistair Wardell said, “The Dawnus Group has struggled with a wide variety of challenges and despite significant efforts to turn the business around, unfortunately it has not been possible to rescue the group. As a consequence, the future cash flows have meant that the business was not in a position to continue to operate, including completing existing work in progress… Our priority is to work with management to ensure that any impact on customers, employees and creditors, including subcontractors, is minimised.”

Cardiff-based Dawnus has been described in some quarters as ‘the Welsh Carillion.’ When a keystone company goes belly-up in this manner, it often has a ripple effect on the broader supply chain, as seen with Carillion. Members of the National Assembly of Wales were quick to note that initial analysis of supply chain creditors indicates that there are in the region of 455 Welsh suppliers which will be affected.

‘Welsh Carillion’

Joyce Watson, AM for Labour in Mid & West Wales, asked for a statement from the Welsh Government, saying, “...When a large company like Dawnus does go into administration, it puts smaller, local businesses at risk, potentially having a devastating impact on those local economies. We know that they directly employ 700 people – and that’s a large number in and of itself – but there is a much larger potential number within the locality, as I’ve just described. These are not just numbers of people, but real families being affected by this collapse.”

Watson then listed a number of public sector projects affected by the news, including four school projects and a new road in Fishguard. Welsh Economy Minister Ken Skates told the Assembly that the Welsh Government stood ready to help employees, but stated that he made “no apology” for providing the company with support in regard to the many public contracts it had won in the lead up to its collapse.

Not everyone was entirely pessimistic in the fallout of Dawnus’ collapse, however. While employees now face an anxious period of adjustment, and a scramble to find gainful employment to keep their heads above water, Lyndon Wood, CEO, Moorhouse Group, suggested there was a silver lining for them.

Wood said, “This is a very difficult time for all employees of the Dawnus Group. If there is a positive to be taken out of this it is probably that these highly-skilled tradespeople now have the opportunity to become self-employed and further increase their earnings. Recent reports state that post-Brexit Britain could see a slumber in the skilled labour force – highly-skilled tradespeople such as Dawnus Group employees now have the potential to fill that gap.”

According to the Office of National Statistics, the average annual salary of an electrician in the UK is £30,765 per year, while a plumber earns £29,136. By becoming self-employed, at present, experienced electricians can earn up to £35,000, while plumbers could charge up to £90 an hour, and potentially make £1,000 each week.

While Moorhouse’s CEO might point to the potential money self-employed workers could make in the present economy, however, this neglects the potential impact Brexit will have on the jobs market. Professionals operating in the gig economy feel more vulnerable than their directly employed counterparts in the lead-up to Brexit. Without any permanent contract to secure rights to benefits – including a redundancy package – contractors and those who are self-employed feel much more negative about Brexit this year than in 2018. When asked ‘How do you think Brexit will affect your current employment?’, a recent survey found an increase of pessimism by more than 50% amongst contractors expecting a negative impact than in 2018, and a 33% increase in those who are self-employed expecting a negative impact.