Capitalism.

[perrykneeham]

Carillion's f**k*d, by the look of it.

www.bbc.co.uk/news/business-42666275

This episode with Carillion has played into a nagging doubt that I have about our free market economy: that is, at what point does the necessity of providing a divvy for shareholders become more important than running a sustainable company?

It's a worry and it seems to me that more and more companies use this supernova model.

[mids]

Nationalise it. It's the only way.

[Deleted]

If the shareholders are paid in accordance with the firm's success surely there's no problem there? And with a backlog of work, why are banks reticent to lend more? Don't make sense.

[perrykneeham]

Well, that's the problem. Shareholders demand a divvy which is often out of proportion to both their "interest" and the actual profitability of the company. This imperative of the stock market rather than the actual market means the companies are often under pressure to produce a divvy at the cost of reinvestment leading to pared-down resources and inadequate staffing in terms of both quantity and quality with a natural viscious cycle of underperformance as a result. This, in turn leads to cover-ups and false reporting as everyone tries to keepbthe plates spinning for as long as they can until the whole thing goes to shite.

Paradoxically, companies with full order books are often the dodgiest as they have no reserves and will under-bid to win work which provides turnover but which will never make a profit. "Buying contract" is a common cheap trick often played by carpet-bagging bullshitters masquerading as Captains of Industry.

[perrykneeham]

Want an example?

[mids]

No. Oh all right then go on.

[perrykneeham]

Right, sod yah then! I won't bother with my juicy example.

I've got to cook breakfast anyway. Then walk the dogs. Then go into Brighton to get bummed.

[wetkingcanute]

ah I wondered what those three Billboards outside Kemptown saying "No!! Not Baloo - we can't take it anymore!" were.

[perrykneeham]

It's not the homos that bother me about Kemptown: it's the racists and they're always singing that bloody song.

[wetkingcanute]

They're not Racists - they just want someone to bet on the Bay.

[wetkingcanute]

One of the many things that piss me off about the Carillion fcuk up is their Under Bidding on projects - just to take them away from good firms that could have done a good job and made a profit.

[hammerhead]

Jan 13, 2018 9:07:28 GMT perrykneeham said:

Want an example?

Yes please, 'cos I don't know much about this stuff.

I've worked for companies who were clearly under-bidding to keep up the turnover, until the directors had syphoned off enough to stay rich, but they were small fry compared to Carillion.

In some sectors you couldn't get away with this. For example domestic energy suppliers by law have to prove they have sold to consumers roughly the amount of energy they purchased wholesale. If they aren't they get fined and it's obvious the company isn't performing well.

In theory it shouldn't be too difficult to ensure companies, in whatever sector, prove sustainability, but it isn't happening.

[flatandy]

This certainly is a problem with capitalism in delivering large products, or even worse, maintenance contracts, to the public sector.

Anything where there's not a proper competitive market is problematic, but one where you're bidding low prices for contracts is worse, with the likely outcomes that you're either going to under-deliver or not have enough money to deliver.

[jimboky]

Anything where there's not a proper competitive market is problematic, but one where you're bidding low prices for contracts is worse, with the likely outcomes that you're either going to under-deliver or not have enough money to deliver.


if you have true capitalism, there will naturally be a competitive market, companies who low bid contracts will soon disappear, those who fail to deliver will not collect and disappear, and be excluded from the companies able to bid for the jobs.

this happens without government managing everything, when government gets involved it is the company who contributes the most to the politician that gets the job,

[Deleted]

We used to bid for contracts, but never go below a break-even point unless it was a sheer prestige job when getting and completing the work would lead to more positive advertising and further contracts. But you needed to be sound financially to do that, especially when you might wait months for payment. Dunno. Carillion sounds like a prime example of dangerous management: in France they'd be investigated.

[wetkingcanute]

So Carillion have gone into Receivership.

The utter incompetence of this Government in awarding them such major contracts when there were very clear signs that the company was fcuked is almost beyond belief.



click to enlarge and have a butchers!

[nobody]

I think some think they were to big to fail.

They should learn the lessons of history.


I’m sure the Remoaners will find somewhere to lay the blame.

[wetkingcanute]

"Carillion knew in July of 2017 that it was facing a difficult trading conditions. it approached the government to secure new contracts in the hope it would bolster their position, and give them breathing space with their creditors. The government awarded those contracts knowing the financial difficulties, and that the lenders were already "calling in" their loans.

Both are culpable. Carillion deferred looking for new buyers last year, believing the new contracts would be their saviour, and the government played fast and loose with public funds when there were other companies who could have managed the contracts."


"The collapse of key government contractor Carillion should "put the private sector itself in the dock", says Lord Adonis, the government's former infrastructure tsar.

Carillion was awarded £2bn of government contracts last year, despite issuing warnings that it would suffer a major slump in profits.

The ministers who issued those contracts "closed their eyes to the big risk" at Carillion, Lord Adonis says.

They effectively "propped up the company", and it shows "the state is far too ready to contract with private companies," he added."

[mids]

I blame the EU.

[flatandy]

So, a monstrous Tory f**k-up, based on the f**k*d up idea of giving government contracts to low-cost private sector bidders who under-charge for services and then assume that the government will bail them out when they can't afford to provide services. And assume that the government has no recourse when they deliver really crappy services. It turns out Carrillion were right - the government did try to bail them out (all while they were paying themselves big juicy divvies), and let them get away with delivering utter crap. But even so, Carillion were so useless that they still managed to go bust.