Steven Ross and Allan Kelly of business advisory firm FRP were appointed as joint administrators on Tuesday 21st February 2023.
The fall of Killingworth-based Metnor comes just eight days after neighbouring construction business Tolent, based just across the Tyne in Gateshead, was also placed in administration.
Metnor Construction was founded in 2002 and was a principal contractor on private and public sector construction projects, including private residential schemes, healthcare, student accommodation, hotel and leisure, and commercial projects.
Latest accounts for Metnor Construction show a turnover of £62.6m in the year to 31st December 2021 and a pre-tax profit of £942,000.
Having made a loss of £2.4m the previous year on turnover of £48.3m it had reason to believe that the business had turned a corner. Just last summer chief executive Chris Cant said that the order book was strong and he was optimistic for the business. [See our previous report here.]
He said at that time: “Continuing supply chain issues and soaring prices of course remain at large, but due to our robust tendering procedures we’ve been able to deliver projects on time and on budget."
However, it did not last. According to the administrators, the business had suffered "significant financial challenges" in recent months because of contract losses and pressure on profit margins from rising input, labour and raw material prices and supply issues against fixed-price contracts.
All 80 staff of the business were made redundant last week and the business ceased to trade. The administrators are now focused on winding down the business, realising assets and engaging with creditors.
FRP partner Steve Ross said: “Rapid inflation is causing havoc on the profit margins of businesses across the economy. Metnor Construction was a long-established and major main North East building contractor that has delivered on significant projects across the UK but wasn’t immune to the impact of rising costs, which ultimately led to its insolvency.
“Regrettably, the business is unable to continue trading and sustain the workforce. We’re working with impacted staff to make applications to the Redundancy Payments Services and maximise recoveries from the assets.”
The Metnor Group also has a mechanical & electrical contracting group, Norstead, which turns over around £20m a year. It is unaffected by the collapse of Metnor Construction, as is the group parent company.
Got a story? Email news@theconstructionindex.co.uk
