星空传媒

Just one year ago, Shaylor Group was riding high. Stephen Shaylor, chief executive of the company founded by his father Fred in 1968, stood shoulder to shoulder with Prince Harry to announce the start of construction on a museum at the Silverstone race track in Northamptonshire. 

The Midlands-based group was also working on jobs ranging from a major refurb of the music venue Wolverhampton Civic Hall, to a residential development in east London, and building a Doubletree by Hilton hotel in Birmingham.

Yet in little more than 12 months, the family firm鈥檚 reputation has been ruined, perhaps irreparably, in a dramatic fall from grace.

Shaylor Group鈥檚 sudden collapse last month, with more than 200 staff losing their jobs overnight, was the latest in a lengthening line of construction companies going under. 

But the manner in which staff were told, amid allegations of greed by directors, has prompted fury among staff and subcontractors, who are owed at least 拢18.8m.

So, where did it all go wrong for the Shaylor Group? And should this be a cautionary tale for SMEs in the construction industry?

星空传媒 has spoken to a number of former employees and subcontractors, some of whom are close to the company鈥檚 board of directors.

The warning signs were visible in 2012, when Shaylor Construction went into administration and left a number of subcontractors out of pocket, including Tim Bartlett. 

His firm, TJB Metal Design, was owed 拢50,000. 鈥淚 should have said 鈥楴o, I鈥檓 not doing any more, I鈥檓 pulling the guys off site until I鈥檓 paid鈥�,鈥� he said. 鈥淢y advice to others is to stand your ground, and if you feel something鈥檚 iffy, don鈥檛 do any further work because at least that鈥檚 damage limitation.鈥� 

In 2013 Fred Shaylor died, and his two sons Stephen and Richie continued to run the company, later joined as directors by their sister Lana.

Turnover more than tripled between 2013 鈥� when it stood at 拢43.5m 鈥� and 2018, when it was 拢141.8m. And the number of staff rose from 132 to 244 in this time, as the firm took on larger jobs and secured places on major government frameworks.

鈥淭hey were paying accelerated costs and phenomenal amounts of money just to keep big jobs going鈥�

Rich Pugh, former QS at Shaylor Group

Too much, too soon?

But some claim the pace of change was too great. A former employee, speaking under condition of anonymity, said: 鈥淭he Shaylors expanded too aggressively and bit off more than they could chew, and went into areas they weren鈥檛 experts in. They stepped away from their bread and butter, which was big refurb jobs.鈥�

The Shaylor Group鈥檚 most recent accounts, to last September, present a positive picture, with turnover at 拢141.8m 鈥� only slightly down from 拢143.8m in 2017 鈥� and pre-tax profit up at 拢7.6m. However, there was a sharp drop in cash in hand and at the bank from 拢14.7m to 拢8.6m from 2017 to 2018.

The group鈥檚 six executive directors split 拢1.3m between them, with the highest-paid director being paid 拢340,000 鈥� up from 拢259,000 the year before. The accounts show that 拢8.7m had been paid out in dividends in 2017.

鈥淓veryone that wasn鈥檛 a Shaylor was kept in the dark. the father made the business, the sons destroyed it鈥�

Former manager, Shaylor Group

In October 2018, the Shaylor Group changed from being a Plc to a limited company and a new company was created, Shaylor Group EOT Limited, which involved a loan from Allied Irish Bank.   

Shaylor Management Services Limited, a subsidiary of the Shaylor Group, owes Allied Irish Bank 拢14.5m. 

星空传媒 contacted Shaylor for comment but to date no response has been forthcoming. 

Cracks started to show late last year, when subcontractors were being paid later and later. And in some cases not at all.

Rich Pugh, who was a project quantity surveyor at the firm, told 星空传媒: 鈥淲e weren鈥檛 paying subcontractors from late last year and there was an awful lot of money taken out of the business and that鈥檚 what caused the damage.鈥� 

The firm wanted to have big jobs to make the order book look good and attract potential buyers, he said. 鈥淭hey were paying accelerated costs and phenomenal amounts of money just to keep big jobs going.鈥�

The company had been hit by 鈥渕assive penalties鈥� on projects that overran, he added. On one job alone, a student accommodation project in Reading, it was hit with liquidated damages of around 拢80,000 a week, Pugh claimed. 

In April, directors brought in restructuring specialist FRP Advisory to review cash flow. Just weeks later it was also tasked with reviewing contingency options. The firm has since been appointed as the company鈥檚 administrators.

Things finally came to a head three weeks ago, when staff were sent home from work on Friday 14 June and told to expect an announcement the following week. Instead, they were informed of the firm鈥檚 collapse, and the loss of their jobs, via email on Father鈥檚 Day, Sunday 16 June 鈥� three days before they were due to be paid.

The email, sent by PA Sharon Goodwin on behalf of the board of directors, blamed project delays, payment disputes, and the failure of key subcontractors for a 鈥渟evere impact on the group鈥檚 cash flow鈥�. 

Anger at the group鈥檚 collapse was exacerbated after it emerged that Shaylor employees at university had not had their fees paid. 

These trainees are among more than 200 people, some of whom have spent their entire working lives working for the family-run business, facing an uncertain future.

The firm鈥檚 former employees are owed at least 拢1.8m in redundancy, pay, and pension contributions.

Subcontractors burned

Subcontractors have also been hit hard, with a number said to have already gone out of business as a result of the company鈥檚 collapse. 

星空传媒 understands that at least 拢17m is owed to subcontractors 鈥� a figure that could rise to around 拢26m.

One long-standing subcontractor said: 鈥淥ver the last 12 months it鈥檚 been very difficult to get money out of them. I took them on their word that we鈥檇 get paid, we鈥檝e all believed the lies. They owe us a six-figure sum. Fortunately we have a pot in our retained profit but that鈥檚 10 years鈥� hard work which should have been there for our retirement just blown out of the window.鈥�

According to a former employee, while the firm鈥檚 late founder Fred was 鈥渁lways straight with people鈥�, his sons 鈥渉ave basically trashed the reputation of the company鈥�.

The company鈥檚 collapse had 鈥渘othing to do with the market, it was the crap jobs we were taking at low margins鈥�, the source added.

Richie Brown, who worked as an assistant site manager for the firm between 2011 and 2016, insisted the Shaylors were 鈥済ood people鈥� and said: 鈥淭hey would not have wanted this to happen but things go wrong in business.鈥�

However, one former manager said: 鈥淔red would be turning in his grave, he really would.

I think it was blind greed and mismanagement that caused this [鈥�] everyone that wasn鈥檛 a Shaylor was kept in the dark. The father made the business, the sons destroyed it.鈥�

Whatever the true reasons for the demise of the Shaylor Group, it seems to be part of a wider problem. Construction had more firms falling into insolvency than any other sector last year, with almost 3,000 going under 鈥� the highest number in six years, according to the latest government data.

The company鈥檚 collapse is indicative of an industry where wafer-thin margins leave little or no room for manoeuvre if 鈥� and when 鈥� projects fall into difficulties. 鈥淚t is not a sign of a healthy market,鈥� according to Martin Hewes of consultant Hewes Associates.  

And when firms go under, the jobs they were doing for clients are disrupted.  

Take the Silverstone project. The collapse of the Shaylor Group means the opening of the new museum has been delayed until September at the earliest, meaning it will not be visited by hundreds of thousands of fans due to descend next weekend. 

And it鈥檚 unlikely that Stephen Shaylor and Prince Harry will be sharing a platform again any time soon.