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[News] Carillion crisis - taxpayer bailout?









Beach Hut

Beach Hut

Brighton Bhuna Boy
Jul 5, 2003
72,307
Living In a Box
Carillion are definitely on the brink
 




beorhthelm

beorhthelm

A. Virgo, Football Genius
Jul 21, 2003
36,002
i wonder if the unions understand what happens to a company when their contracts, sources of revenue, are removed?
 




Two Professors

Two Professors

Two Mad Professors
Jul 13, 2009
7,617
Multicultural Brum
Carillion has been dying for years,with people like the Richardsons pecking away at the healthy bits.Think their last real chance of survival ended when the merger with Balfour Beatty got rejected.When your chairman's name is Phillip Green (not the BHS one) it doesn't help!
 








Gritt23

Gritt23

New member
Jul 7, 2003
14,902
Meopham, Kent.
Titanic said:
Another example of 'too big to fail'?

Will we never learn?
Click to expand...

Learn what? Learn what the concept of "too big to fail" actually means?

As someone who has worked in Construction for a decade, Carillion are a massive player, and if they were to fail the damage that does to the sector, and the economy as a whole would be massive. Sites all over the country would stop instantly, their employees would be redundant, their sub-contractpors wouldn't get paid. That is a whole raft of smaller companies who will see damaging financial hits which could in turn push them into bankruptcy. So that next tier would have casualties, numerous companies, who they themselves employ 100s of people. Then in turn the companies they sub down to again.

Add to that plant companies and numerous material suppliers who are supplying the multitude of Carillion sites would also take a massive hit on those contracts. The immediate impact across the industry would be very damaging, but it is then how everyone acts after a big failure like that. Suppliers would tighten credit terms, banks would become more reluctant to lend to the industry, clients would require more bonds to be taken out, and that cost would filter all the way down as well. All of these knock-on effects would also bring casualties, as it makes cashflow harder with everyone being in a race to get paid quicker, while banks reduce lending.

How much does Construction affect the whole economy? Well, it's roughly 6.5% of GDP and employment in the UK.

Yes, in my view, Carillion is "too big to fail", the Government will need to step in and ensure they don't go pop, as it will be too damaging for the industry, the economy as a whole, and that affects us all.
 


C

CHAPPERS

DISCO SPENG
Jul 5, 2003
45,087
Gritt23 said:
Learn what? Learn what the concept of "too big to fail" actually means?

As someone who has worked in Construction for a decade, Carillion are a massive player, and if they were to fail the damage that does to the sector, and the economy as a whole would be massive. Sites all over the country would stop instantly, their employees would be redundant, their sub-contractpors wouldn't get paid. That is a whole raft of smaller companies who will see damaging financial hits which could in turn push them into bankruptcy. So that next tier would have casualties, numerous companies, who they themselves employ 100s of people. Then in turn the companies they sub down to again.

Add to that plant companies and numerous material suppliers who are supplying the multitude of Carillion sites would also take a massive hit on those contracts. The immediate impact across the industry would be very damaging, but it is then how everyone acts after a big failure like that. Suppliers would tighten credit terms, banks would become more reluctant to lend to the industry, clients would require more bonds to be taken out, and that cost would filter all the way down as well. All of these knock-on effects would also bring casualties, as it makes cashflow harder with everyone being in a race to get paid quicker, while banks reduce lending.

How much does Construction affect the whole economy? Well, it's roughly 6.5% of GDP and employment in the UK.

Yes, in my view, Carillion is "too big to fail", the Government will need to step in and ensure they don't go pop, as it will be too damaging for the industry, the economy as a whole, and that affects us all.
Click to expand...

So we're going to end up footing the bill, basically?
 


Titanic

Titanic

Super Moderator
Helpful Moderator
Jul 5, 2003
39,900
West Sussex
Gritt23 said:
Learn what? Learn what the concept of "too big to fail" actually means?

As someone who has worked in Construction for a decade, Carillion are a massive player, and if they were to fail the damage that does to the sector, and the economy as a whole would be massive. Sites all over the country would stop instantly, their employees would be redundant, their sub-contractpors wouldn't get paid. That is a whole raft of smaller companies who will see damaging financial hits which could in turn push them into bankruptcy. So that next tier would have casualties, numerous companies, who they themselves employ 100s of people. Then in turn the companies they sub down to again.

Add to that plant companies and numerous material suppliers who are supplying the multitude of Carillion sites would also take a massive hit on those contracts. The immediate impact across the industry would be very damaging, but it is then how everyone acts after a big failure like that. Suppliers would tighten credit terms, banks would become more reluctant to lend to the industry, clients would require more bonds to be taken out, and that cost would filter all the way down as well. All of these knock-on effects would also bring casualties, as it makes cashflow harder with everyone being in a race to get paid quicker, while banks reduce lending.

How much does Construction affect the whole economy? Well, it's roughly 6.5% of GDP and employment in the UK.

Yes, in my view, Carillion is "too big to fail", the Government will need to step in and ensure they don't go pop, as it will be too damaging for the industry, the economy as a whole, and that affects us all.
Click to expand...

So it does sound like we haven't learned from the banks. Having single companies risking a huge chunk of our economic well-being is a bad idea.

With the banks, they have chosen to micro-manage the banks reserves / liabilities and to regulate them to allow for multiple failures and massive economic downturns.

Perhaps the government need to insist on similar financial and regulatory stability for all of their major contractors?
 






Pretty pink fairy

Pretty pink fairy

Banned
Jan 30, 2008
31,981
bunch of ***** treating their staff like shit by all accounts, Lewes and ford Prison maintenance will be affected???
regards
DR
 


Gritt23

Gritt23

New member
Jul 7, 2003
14,902
Meopham, Kent.
CHAPPERS said:
So we're going to end up footing the bill, basically?
Click to expand...

Depends on your perspective. Not quite sure what bill we will end up footing, however the bail out happens, but I do expect the Government do bail them out.

If it's done as a "loan" then the Government will get this back, as I would presume it will done within the HS2 contracts, which I believe Carillion have lined up. Perhaps an early payment deal on those contracts, but that wouldn't mean the Government pay more, just earlier to help them through their current strife.

Or if it's done with the Government buying up shares in Carillion, then they are doing it at an incredibly low price. Buy low, reciver teh company and sell high, is a recipe for financial success, not "footing a bill."
 




C

CHAPPERS

DISCO SPENG
Jul 5, 2003
45,087
Gritt23 said:
Depends on your perspective. Not quite sure what bill we will end up footing, however the bail out happens, but I do expect the Government do bail them out.

If it's done as a "loan" then the Government will get this back, as I would presume it will done within the HS2 contracts, which I believe Carillion have lined up. Perhaps an early payment deal on those contracts, but that wouldn't mean the Government pay more, just earlier to help them through their current strife.

Or if it's done with the Government buying up shares in Carillion, then they are doing it at an incredibly low price. Buy low, reciver teh company and sell high, is a recipe for financial success, not "footing a bill."
Click to expand...

Thanks, I'm a bit dim so nice to have it explained.

What about the pension deficit?
 


looney

looney

Banned
Jul 7, 2003
15,652
What happened to the good old days when companies that were "to big" got referred to the monopolies commission and sorted out/

My attitude to the company would be good efffing ridance. One way or another its due for scrap value and some of its directors need some time in Prison.
 


beorhthelm

beorhthelm

A. Virgo, Football Genius
Jul 21, 2003
36,002
Ernest said:
Private companies make profit they keep it. Private companies make losses and the state bails them out like the banks. That is how capitalism works, trebles all round for the fat cat bosses !!!!
Click to expand...

not quite. private companies make losses and investor lose their money, but unions and others plead special action for the employees. i've never heard of investors being bailed out, even with the banks the major bond holders and shareholders took a bath. government stepped in to protect the public, thats what you want shirely?
 


Triggaaar

Triggaaar

Well-known member
Oct 24, 2005
53,055
Goldstone
Ernest said:
Private companies make profit they keep it. Private companies make losses and the state bails them out like the banks. That is how capitalism works, trebles all round for the fat cat bosses !!!!
Click to expand...
I'll drink to that :drink:
 








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