Business

200 jobs could go as building giant Lagan puts four subsidiaries into administration

Ongoing work at the Ulster University campus in Belfast, in which Lagan Construction Group is a partner with Portuguese firm Somague. Photo: Mal McCann

ONE of the north's biggest and longest-established building and civil engineering firms says it is "regrettable" that is had to place four of its 30 subsidiary companies into administration, threatening the jobs of a quarter of its 800 staff.

Lagan Construction Group confirmed that Lagan Construction Group Holdings Ltd, Lagan Construction Group Ltd, Lagan Building Contractors Ltd and Lagan Water Ltd are all impacted by the shock move, forced on it because of what are believed to be significant delays and disputes involving several of its projects.

And although it insists some of the 200 jobs could be transferred to joint venture partners or relocated to existing divisions within the group, there are real fears that, given the state of the construction industry and wider economy, many if not all of those workers will be plunged on to the dole.

In a statement the company - which can trace its origins back more than half a century - said it had been significantly impacted by a number of factors within its civils and building divisions.

These, it said, included delays in the commencement of new projects, protracted contractual disputes on some existing major projects and instability caused by a joint venture partner in Britain.

Chairman Michael Lagan said it was “with great sadness and reluctance" that the administrators were called in on Tuesday.

He said: "We have had long standing relationships with many of sub-contractors and suppliers and hope the process of administration will be smooth and that disruption to both projects and jobs will be minimal.”

It is understood the other 26 companies within Lagan Construction Group are continuing to trade as normal.

Lagan Construction Group Ltd is a partner with Portuguese firm Somague in building Ulster University's long-delayed £250m Belfast campus development.

The university says it will now consult with the administrator and Somague and continue to progress the project.

In a statement it said: "When appointing the Lagan Somague joint venture, the university ensured these companies were jointly responsible for completion of the project on time and to budget.

"Under that arrangement, Somague Engenharia SA are now responsible for completion of the project including payment of all subcontractors.

"The university further ensured, at the outset, that the respective parent companies provided written guarantees to ultimately ensure delivery of the project."

Industry body the Construction Employers Federation said: “Given the huge contribution that Lagan have made to Northern Ireland's economy and society since their establishment, this announcement is extremely regrettable.

"They have been a pillar of our construction industry for decades and it is our express hope that a solution can be found."

CEF added: “As we have long said, the industry has faced a challenging period in respect of its sustainability.

"From issues related to low margins on works, to insufficient pipelines of activity, to the current political and budgetary challenges within Northern Ireland, there are significant tests which go much beyond today's news.

"These must be matters of concern to anyone who wishes to see a healthy and vibrant Northern Irish construction industry given its critical role in delivering jobs, economic development and growth.”

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