Figures from the Insolvency Service show that in 2015 the construction industry suffered the highest number of insolvencies in England and Wales, with the wholesale and retail trade coming a close second.
The statistics include insolvency appointments for compulsory liquidations, Creditors’ Voluntary Liquidations, administrations, receiverships, and Company Voluntary Arrangements.
Each industry has to deal with its own unique pressures and challenges in today’s economic climate, including a rise in the minimum wage and the introduction of automatic enrolment, to name just two.
Even if companies are able to withstand the additional cash flow burden inflicted by new legislation, they remain under considerable pressure from ‘standard’ business issues. These include the emergence of strong new competition, a market that may be constricting, or the understandable temptation to overtrade.
Here we look at the industry sectors which have struggled during 2015, along with an indication of the number of insolvency appointments in each industry.
The construction industry is currently experiencing the most insolvency appointments in England and Wales, with the total figure in this sector between January and March this year showing little respite at 672.
It’s been suggested that a more collaborative approach might improve the future of this industry, with core contractors and suppliers working closer together to share the inevitable risks.
This would place everyone in a better position within a project, and more likely to achieve the best result for the end-client.
The retail trade saw the most insolvency appointments of this group during 2015. A total of 1,019 insolvencies were experienced in retail, with 796 in wholesale trade. Issues commonly faced by retailers include low footfall, unseasonable weather, and a race to the lowest price simply to remain competitive or to move older stock.
Online sales continue to grow, however, with retailers attempting to meet the new demands placed on them by customers looking for flexibility and an easier way to shop. But this is still an evolving market, which generally holds less profit for retailers.
Office administrative, office support, and other business support activities experienced the highest number of insolvency appointments within this group in 2015, at 1,043. Small local companies in this sector tend to provide specific administrative and support services to public and private sector firms, but can find it difficult to grow due to lack of funding.
An advanced knowledge of their market may not always compensate for lack of available finance, sought to either develop and grow, or simply stay afloat.
The hospitality industry has to cope with payment of the new Living Wage which was introduced in April this year. Many staff in the hospitality sector have traditionally been paid at minimum wage level, so the effects of higher payroll liabilities are likely to be keenly felt.
Margins which are already low will be further narrowed, potentially causing serious problems for this sector in 2016. Employers may need to cut bonuses and other employee benefits in an effort to manage the rising wage bill.
A marked slowdown of economic growth in China is just one of the adverse factors affecting manufacturing in this country. Although British vehicle manufacturing experienced significant growth in 2015, difficult trading conditions badly affected other sectors.
High energy prices and the prevalence of cheap imports made the steel sector a notable example of British manufacturing under pressure. Major producers struggled to stay afloat in 2015, as a strong pound also made it difficult for exporters to maintain previous profit levels.
The professional, scientific and technical sector includes specialist individuals and firms of practitioners generating income from consulting and professional services. The increased payroll cost per employee reflecting their advanced knowledge can cause some businesses in this sector to struggle, particularly if a specific event or series of misfortunes outside of their control causes turnover to fall.
Smaller manufacturers dealing in ‘stand alone’ PCs and laptops have had to cope with a shrinking market as consumer demand for tablets and smart phones takes over. High-profile household names also leave little room for smaller companies to compete, resulting in low profit margins and lack of growth.
Real Business Rescue is a major part of Begbies Traynor Group, the UK’s leading business recovery firm. We provide professional advice to all industry sectors, and with 37 offices around the country can offer a confidential same-day consultation to discuss your situation.
It was not reasonably practicable to rescue the company as a going concern as it was concluded in the pre-appointment period that the company could not avoid formal insolvency given the issue with one of the customers and their claim of £428,000 against Harley for disputed work.Read the Case Study View all Case Studies
Friday 2nd December, 2016 Written by Keith Tully
If your business goods have been seized by a government agency such as HMRC or Border Force, read our guide on seized goods letters for company directors.Learn More…
Thursday 25th August, 2016 Written by Keith Tully
The construction industry remains in crisis this summer as the number of insolvencies continues at the highest level of all UK sectors.Learn More…
17th May 2017 As many as one in four SMEs throughout the UK are reliant to some extent on the services of ‘gig economy’ workers, according to new research on the subject.
11th May 2017 Small companies throughout the UK could be facing a “business support black hole” in the next decade if funding currently allocated to them from the European Union is not replaced after Brexit.
2nd May 2017 The number of company directors who have been banned from leading or forming businesses for five years or longer reached a six-year high during 2015/16, according to the latest figures on the subject.
27th April 2017 A major creditor to Bolton Wanderers has issued a winding up petition against the football club in relation to a £5 million loan given to the organisation last year.
26th April 2017 HM Revenue & Customs (HMRC) officers have raided the offices of two of England’s largest and best known football clubs over issues relating to suspected income tax and national insurance (NI) fraud.
Every day we help companies just like yours turn things around against seemingly impossible odds, regardless of your situation we can help. Find your nearest office today.