Subcontractors expecting six-figure losses as local firms count cost of Tolent implosion

Subcontractors in the North-east have been left assessing the financial impact of yesterday’s collapse of Gateshead-based contractor Tolent, with some believed to be owed six-figure sums.

Administrators for the 40-year-old firm have made more than 300 staff redundant after it sank into administration along with five of its operating subsidiaries.

The demise of the business, one of the country’s best-known regional contractors, left subcontractors scrambling to offload now surplus plant and equipment and work out how much they are owed.

Dominic Snowdon, of Durham firm Snowdon and Wallace Groundworks, was working on a job for Tolent in Shildon, County Durham, building 15 bungalows.

He said his firm was looking for more work after losing “not only a lengthy job but also a sizeable amount of cash”.

“It’s a big blow to not just myself but the rest of the supply chain and the region as a whole,” he told Building, explaining that the administration had left his firm £30,000 out of pocket – an amount he said he “very much doubts” he will see anything of.

Snowdon had heard rumours that the firm was in trouble a few weeks ago but was reassured by the site manager on the Shildon job that “everything was OK”.

He said he was lucky to have been working for a newly formed Tolent subsidiary and was therefore only supplying labour and plant on the scheme.

“Had I been supplying the materials, I would have been gone. I would have lost everything,” he added.

Administrator Interpath Advisory said Tolent had faced significant challenges in recent years including “rising costs of raw materials, supply chain issues, material and labour shortages and the collapse of a number of developers, contractors and supply chain partners”.

Snowdon said material prices were partly to blame but also highlighted the government’s decision to scrap red diesel as an aggravating factor.

“You’ve gone from paying 70p a litre for red diesel to £1.70 a litre for white diesel – that has a massive impact across the board,” he said.

Snowdon said his firm would “pull through” but that the mood in the region was “a bit sombre”, claiming some subcontractors are owed in excess of £100,000.

According to the administrators, losses on one particular project – the £85.5m Milburngate development in Durham – had a “profound impact on the [Tolent’s] working capital”.

One ex-Tolent staffer told Building blame for the “truly awful” situation rested on the “stupid” decision to carry out the mixed-use scheme, which it began in 2019, in the first place. “Taking on a job too big [Milburngate] has killed a great company and put a lot of good people out of work,” he said.

Neal Robinson, managing director at Billingham M&E firm Geoffrey Robinson, said the administration was “a surprise” but there were warning signs last autumn with an expected payment last November not being made.

“Because we were so close to practical completion on both our main schemes with them, we didn’t hold the commercial view and allowed them time which looking back was the wrong thing to do,” he said.

Robinson said the firm’s top line would be hit but that its cash reserves would allow it to “weather the storm”, adding that it would look to pick up “quality new staff” made redundant by Tolent’s collapse.

Asked whether Tolent staff were likely to have a hard time finding work in the region, he said: “I would like to think that because the North-east is about to kick off with some fairly serious projects, most people will get a fix.

“There has been a huge increase in salary expectations across the region on the back of British Volt kicking off and this might just calm that market, which is another factor affecting smaller companies that just can’t sustain these large salary expectation increases.”

Weston Malone, managing director at Gosforth mechanical services firm H Malone & Sons, said the loss of Tolent was “terrible news”.

“Tolent have been a particularly good client of ours, we have delivered a number of high-profile schemes together over many years and have got to know their people very well. Really sad to see it end this way for them,” he said.

“Although we have been affected, we take it on the chin and move on, we have a strong order book with some fantastic clients who have been in touch to check on us and offer their support.”

Andrew Rickaby, director at Wearvalley Groundworks and Civils, said Tolent’s demise was “a big lump to swallow” and “a huge hit to our company”, as he looked to offload vans and excavators which his firm no longer has use for.

Other subcontractors and suppliers in the region were quick to offer their support, with John Hounam, director at County Durham specialist Instaseal, saying: “It’s devastating seeing so many [LinkedIn] posts from good people now looking for work and the knock-on effect this will have the subcontractors.”

Sunderland-based regeneration specialist Re:gen has offered guaranteed interviews to anyone recently made redundant in the region’s construction sector, listing a range of vacancies from joiners and plasterers to legal counsel.