A HIGH PROFILE construction boss said the collapse of housebuilder Southdale and the loss of 30 North-East jobs was a "bitter blow" for the industry that risks recovery in the industry.

The West Yorkshire-based firm, which has offices in Newton Aycliffe, County Durham, went bust this week after suffering several loss-making projects.

Rival builder Kier has stepped in to take on some Southdale contracts under a deal that will see 128 staff, working at Southdale's Halifax and Warrington offices, offered jobs. The remaining 87 staff and apprentices, including the firm's North-East workforce, have been made redundant by administrators from AlixPartners Services who said Southdale failed because of "severe cash flow problems".

At the end of last year Southdale agreed a lease on new offices in Parsons Court, on Aycliffe Business Park, to enable it to grow staff numbers from 30 to 50. At the time Craig Knowles, the firm's operations director for the North-East, said: “We have plans for sustainable growth in the North- East, and that includes a significant increase in staffing and a broadening of the geographical area in which we operate."

Southdale first moved into the North-East in 2010 and has conducted projects for a range of registered landlords across the region, largely across County Durham and the Tees Valley. It recently announced it was using more than £11m of new work across the region to create opportunities for local supply chain companies and subcontractors, and to create jobs and apprenticeships. Its sudden collapse has drawn comparisons with GB Group which entered administration last month, leaving debts that dragged other suppliers into jeopardy.

John Dickson, Owen Pugh Chairman, said: “This is another bitter blow for the construction supply chain in the North-East. After the collapse of GB Building Solutions, there will be sub-contractors and suppliers across the region who are facing difficult times. At Owen Pugh, we are fine but there is no doubt that losses like these slow the pace of growth, reducing our ability to invest and create sustainable jobs.”

When asked what can be done about such problems, Mr Dickson said that these events are endemic in the construction industry and it is difficult to see how they can be avoided altogether, however he called for clients, particularly from the public sector, to take some responsibility to ensure that they place work with contractors who have the financial and managerial strength to complete the project, particularly when appointing main contractors from outside of the region.

“The public sector in particular has a duty to exercise due diligence when it comes to investigating a company’s payment history, and if a company falls short, they should be removed from preferred suppliers registers.

“Once again, the local and regional supply chain is picking up the tab for the incompetence and poor administration of contractors from elsewhere.” he said.

*See Wednesday's Northern Echo for a feature on North-East construction chief Douglas Kell.