ISG: Construction giant collapse sees 2,200 jobs cut

Thousands of people have lost their jobs after the UK operations of the international construction giant ISG collapsed into administration.

Some 2,200 workers have been made redundant with immediate effect, joint administrators EY said in a statement on Friday.

The business, owned by the US firm Cathexis, had been struggling financially for some time.

Attempts to secure a rescue deal failed, while 200 employees will be kept on to assist the administrators in winding down the business, which holds more than £1bn worth of government contracts.

Apple, Barclays and Google are also among ISG’s private sector clients in the UK.

In a widely-reported email sent by chief executive Zoe Price to all ISG staff on Thursday, she said: “Some of you may have seen reports in the media that ISG has filed for administration here in the UK.

“With sadness, I can confirm that this is factually correct.

“This was not the way I wanted you to find out and the news should not have leaked in this way,” she added.

Ms Price said staff would be paid on Monday, as normal, and that the current situation had arisen due to “legacy issues” relating to “large loss-making contracts” secured between 2018 and 2020.

“Trading out these projects has had a significant effect on our liquidity. So even though we have been profitable this year, our legacy has led us to a point where we have been unable to continue trading,” she wrote.

Ms Price said “significant efforts” had been made to find a buyer for the business but that these had been unsuccessful.

EY also said on Friday that no potential buyers that had come forward were able to show they had enough money to finance the operations and keep them afloat in the future.

“We wish to be clear to employees, suppliers, and customers that it was not possible to conclude a sale as the potential purchaser could not, despite repeated requests of them to do so, adequately demonstrate that they had the funding needed to recapitalise the business and keep it solvent,” they said.

The eight arms of ISG’s UK business, including its engineering and retail branches, have all been placed in administration.

The group, which was in the middle of work on numerous government contracts, has made the majority of its 2,400 UK employees redundant with immediate effect and work on all projects has stopped.

ISG is involved in 69 government projects totalling more than £1bn, including work on prison refurbishment for the Ministry of Justice, according to data analysts Barbour ABI.

It also made the velodrome for the 2012 London Olympics.

Barbour ABI’s chief analyst Ed Griffiths said the live projects, including a £300m extension to the Grendon and Springhill prisons in Buckinghamshire, were “just the tip of the iceberg”.

“The ripple effect will be extremely worrying for the hundreds of subcontractors involved,” he said.

But a government spokesperson said it had already implemented detailed contingency plans, and affected departments were working to ensure sites were safe and secure.