Subcontractors employed by Dawnus are reported to have downed tools on work to Kingsway in Swansea © G. Caddick/AFP/Getty Images
Subcontractors employed by Dawnus are reported to have downed tools on work to Kingsway in Swansea © G. Caddick/AFP/Getty Images

'Too early' to know impact on public contracts from Dawnus collapse

Will Green is news editor of Supply Management
18 March 2019

The Welsh Government has said it is “too early” to know what impact the collapse of Dawnus will have on public contracts.

Ken Skates, economy and transport minister, said the government had worked with Dawnus, HSBC and the Development Bank of Wales over many months to “try and prevent this unfortunate decision by the Dawnus board”.

Skates said Dawnus held “a number of live public sector contracts in Wales, including schools, flood defence schemes and infrastructure projects”.

He added: “This is clearly very disappointing news for the company, its workforce and the wider Welsh construction supply chain but we stand ready to do all we can to support the workers and to minimise the impact on the local community and wider economy, particularly in south west Wales.

“It is too early to speculate on what this might mean for any existing public contracts in Wales, but Welsh Government will always seek to recover public funds wherever possible.”

The Specialist Engineering Contractors’ (SEC) Group Wales/Cymru described the situation as “not unlike a Welsh Carillion”. It said Dawnus had “become the lead contractor for many infrastructure and building projects in Wales particularly in the public sector”.

SEC Group has called for public bodies to implement the Welsh Government’s policy on project bank accounts (PBAs), which became effective from the beginning of 2018. PBAs ringfence cash to be used to pay subcontractors in construction supply chains.

Catharine Griffiths-Williams, national executive officer for SEC Group, said: “Nearly all the work carried out by Dawnus was outsourced to SMEs which will now bear the brunt of the losses from the insolvency. Again this highlights the financial fragility of the large construction firms and the consequent risks to their subcontractors which could now lose millions of pounds. The impact on the Welsh economy could be very damaging.”

Administrators Grant Thornton said Dawnus directly employed around 700 people across six regional offices and 44 construction sites.

Alistair Wardell, restructuring partner at Grant Thornton, 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 has meant that the business was not in a position to continue to operate, including completing existing work in progress.

“Whilst the financial difficulties of the group were not a consequence of Brexit, there is no doubt that Brexit uncertainty impacted the ability to rescue the business.”

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