1. Construction in Crisis _ Time for a Reconstruction #065
The ongoing economic crisis continues to take its toll on the construction industry with
the sad news that a high profile UK company that was more than 100 years old has
gone into administration.
KPMG have been appointed as administrators of London-based Holloway White
Allom, which recently completed a refurbishment of the Victoria & Albert Museum, for
which it won a conservation award.
The company, founded in 1882 by Thomas and Henry Holloway, was responsible for
the refurbishment of the Bank of England in the 1930s and had previously been
involved in the construction of Admiralty Buildings on Horse Guards Parade, the Old
Bailey in the early 1900s and the fountains in Trafalgar Square.
Its civil engineering projects included many famous London bridges including
Hampton Court Bridge, Wandsworth Bridge and Chelsea Bridge.
KPMG has made no comment but it is understood that although the company was
undergoing a turnaround and restructure, following a cash injection earlier in the year
from private equity firm Privet Capital in return for a majority stake in the company, it
was forced into administration by late payment for one large project.
This latest high profile casualty comes as the construction industry faces increasing
pressure. Output on public housing down by 5.3% and other public projects were
down by 7.5% during the three months to August 2011 compared with the same
period last year, according to the ONS (Office of National Statistics). The sector
accounts for 6-8% of GDP and has been one of the worst hit by the 2008 economic
crisis.
According to accountancy firm Deloitte the number of property and construction
companies that went into administration in Q3 2011 rose by 11% to 117 compared to
105 in the same period last year.
However, some sectors of the industry are faring better than others. Bellway, for
example, this week posted a 50% annual increase in pre-tax profits, which it attributed
to higher sales, better margins and tighter cost control. The smaller construction
companies that focus particularly on repair and refurbishment are also surviving well.
Commercial construction activity has increased for the 19th month in a row,
according to according to Markit, the purchasing managers’ index, but new orders
for public housing and public works have continued to decline.
Similarly companies specialising in aspects of construction, such as installation of
heating and ventilation systems and plumbing, are continuing to see growth but sales
of construction products such as steel and cement have gone into negative territory
according to the Construction Products Association.
Those companies that took steps to restructure their business to focus on what is likely
to survive in a declining market and to deal with indebtedness early in the recession
have done well.
This suggests that those companies with a bad debt, as allegedly happened to
Holloway White Allom, or over-indebtedness due to historical loans should consider

2. restructuring their businesses before they run out of cash. It is not too late for them, but
they are likely to require a restructuring adviser to help them.