Scotland could lose all its small building firms over the next six months, the chairman of collapsed construction company Applecross has warned. Graham Aggett, whose company fell into the hands of receivers last week, claimed that other small firms would become victims of the credit crunch, with only major players surviving the recession. Bruce Cartwright and Graham Frost of PricewaterhouseCoopers were appointed joint receivers of the company on Friday. Aggett's comments come as one industry source condemned Bank of Scotland for pulling the plug on the 30-year-old firm.
Meanwhile, a leading Edinburgh financial adviser has called on bankers to do more to support the struggling housebuilding industry. Reflecting on the collapse of his company, now in the hands of receivers PriceWaterhouseCoopers, Aggett commented: "I think the next six months are going to be extremely hard for so many small businesses. "Unless they have a very strong amount of capital behind them, it will be almost impossible to survive." He added: "In the housebuilding sector, we will end up with just the big players left and the small players will disappear. It is sad, but that's how I feel it will go."
Applecross founded in 1979 by Colin Cumberland and Graham Aggett, employed 45 people and grew organically for 20 years, but borrowed £70 million from BoS, part of HBOS, in 2006 to fund ambitious expansion plans. It is not the first Scottish housebuilder to collapse as a result of the recession. Edinburgh-based Gregor Shore and FM Developments were placed into administration in the past six months. The collapse of these firms has sparked growing anger. An industry source yesterday slammed BoS's conduct over the Applecross receivership. The source said: "To say that HBOS had been supportive could not be any further from the truth. The bank has taken the decision to flush Applecross in the hope that their mishandling will be disguised in their self-made maelstrom."
Meanwhile, independent financial adviser Alex Mackie called for banks to do more to help struggling construction firms. Mackie, who runs Edinburgh Risk Management, said that the banking system was to blame for the downfall of Applecross. In a letter to The Scotsman today he says: "This was a local well-managed, well-established quality, forward-looking firm who have fallen foul of the reckless actions of a handful of world casino gamblers working for the banks.
"We will never know who they are but their actions have impacted directly on the ability of people to borrow and further retain their jobs. In turn, the latter become the customers in the market place Applecross satisfied." But Aggett maintained that the company's main banker, Bank of Scotland, had been as supportive as possible. He said yesterday: "They did their best to support us and we have all been trying hard to rescue the business for the past few months. "Their whole world has got tighter and tighter by the day and they just can't continue to support businesses which have no other options left."
Applecross had a turnover of around £17million when the housing market peaked in 2007, with properties averaging £430,000. It had joint ventures with Forth Ports at its 266-acre Leith Docks regeneration project, and also 5 joint ventures with Blackrock.
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