The boss of a rival north-east housebuilder and “neighbour” of Stewart Milne Group (SMG) has expressed his dismay over the larger firm’s sudden demise.
Westhill-based Chap Group and SMG have shared the same home town for decades.
This morning, the thriving Aberdeenshire commuter hub woke up to the startling reality that one of its best-known businesses over many years, SMG, had gone under.
SMG’s bank rejected two offers for the business and then pulled the plug on funding.
The group collapsed into administration yesterday, with the immediate loss of 217 jobs.
Hundreds of other sub-contractor jobs are now at risk.
A total of 112 SMG employees are being retained for now.
Meanwhile, Unite the Union is taking legal action over claims SMG failed to properly consult workers about the redundancies.
SMG founder and owner Stewart Milne said he was “devastated”.
Chap managing director Hugh Craigie said: “I was very sorry to hear the news about SMG yesterday.
“SMG and Chap are of a similar age and neighbours at Westhill.
“Accordingly, we have followed, respected and admired their growth and success over the years.
“It is sad that this fantastic success story has ended the way it has.”
Mr Craigie also said he was full of respect for Mr Milne, the entrepreneur who founded SMG in 1975 and grew it far beyond its headquarters just a few miles outside Aberdeen.
The group has built many thousands of homes across the north-east and down to Tayside and Fife, as well as in the central belt and north-west England.
It is a huge shame for Stewart and all his employees that a way forward could not be found for the business.”
Chap’s MD said: “Stewart’s leadership of SMG was clearly key throughout its history.
“But he has also done a great job of raising the profile of Aberdeen, both the city and its football team.
“While not always given the credit and appreciation he deserved for this, I was always appreciative of his support and efforts.
“It is a huge shame for Stewart and all his employees that a way forward could not be found for the business.”
Social media comments about SMG’s demise include one on Facebook from Kintore-based Jim Reid Vehicle Sales & Service, which said: “Such sad news to read the Stewart Milne Group housebuilding firm has entered administration.
“The ripples this will cause through the industry will be significant.”
KDM Electrical, a sub-contractor based in England, said it was “absolutely devastating news,” adding: “Still coming to terms with it all. Can’t believe it. I am so grateful to all the staff there, from the site agents to the senior management, for giving us the opportunity to work for them and build our company up.”
Sub-contractor fears for its future
North Berwick-based Lothian Sealants posted: “Totally gutted by this. I started on my own four years ago and Stewart Milne gave me every opportunity to build my business.
“With (SMG) being our biggest contractor, we have now no doubt lost a huge amount of work.”
On X, formerly Twitter, First Minsister Humza Yousaf said: “This is very concerning news and undoubtedly a huge shock for the workers impacted.
“Pace (Partnership Action for Continuing Employment) will be engaged to support the workforce as best we can at this deeply worrying time.”
And Stephen Flynn, SNP leader at Westminster, said: “Devastating news for all involved with the company. Vitally important that all staff are given immediate suppor.
“Many questions will be posed, and require answering, but workers must be the priority.”
Other views include that of P&J reader Brian McKenzie who, posting on The Press and Journal website, said: “Sadly, the power of the banks and big shareholders has not been engaging in securing the future of the company. Hardworking people always suffer the most.”
Share your views on Stewart Milne Group’s sudden collapse in our comments section at the foot of this article
Aberdeen-based SNP MSPs and MPs have written joint letters to the administrators at Teneo Financial Advisory as well as the Scottish Government seeking an “urgent resolution” to the situation.
Audrey Nicoll, SNP MSP for Aberdeen South and North Kincardine, said: “Stewart Milne Homes has been an iconic Aberdeen institution for almost 50 years.
The impact of Stewart Milne Homes going into administration cannot be understated.”
“Homes built by the company can be found throughout the north-east and beyond.
“This news will be devastating to Stewart Milne employees, their families, customers who are now in limbo with unfinished homes, and local trades and supply chain businesses. The impact of Stewart Milne Homes going into administration cannot be understated.”
Announcing SMG’s collapse yesterday, Teneo highlighted economic uncertainty due to rising interest rates, increasing cost pressure and an associated reduction in consumer confidence as factors.
What does Stewart Milne Group’s bank have to say?
SMG did its banking with Bank of Scotland (BoS)
A spokesperson for Lloyds Banking Group, BoS’s parent company, said: “When a company experiences financial difficulties, we will always try to find a solution that places the business onto a sounder financial footing without the need for any insolvency process.
“Unfortunately, despite several years of support and forbearance, including multiple maturity extensions to the borrowing, this has not been possible in this instance.
“We will now work with the administrators as they consider the best options for the business.”
Meanwhile, Mike Duncan, north-east development manager for the Federation of Small Businesses warned the news of SMG’s collapse would “reverberate through the supply chain and affect hundreds of local sub-contractors”.
Mr Duncan added: “The owners of these smaller businesses will not only find themselves out of pocket, but the knock-on effect will impact their future work plans and their ability to retain their own employees.
“Rightly, a large extent of local support will help Stewart Milne employees who now find themselves without jobs.
“However, if government wants to halt further ramifications damaging the north east’s construction sector, they must step up and help supply chain businesses, too.
The government must do what it can to halt any potential domino effect and reduce the impact on smaller businesses and the self-employed.”
“It is essential that this support can be accessed as quickly as possible. Administration processes take time, but local creditors will need their money to get their own companies through this worrying situation.
“The government must do what it can to halt any potential domino effect and reduce the impact on smaller businesses and the self-employed throughout the construction sector.”
‘Alarming and disheartening’
Scottish Building Federation chairman Euan Clark said: “It is both alarming and disheartening for Scotland to contemplate the reported administration of Stewart Milne, an accomplished and established housebuilder.
“Over numerous decades, the company has been a significant contributor to the country’s economic vitality, with the repercussions of such a loss reverberating throughout the entire supply chain.
“This situation poses a threat to the enduring stability of a fundamental component of future economic prosperity, together with the very real impact on an untold number of affected supply chain employers and employees.”
Union response
Unite the Union represents more than 60 workers at SMG in Scotland.
Sharon Graham, the union’s general-secretary, said the company’s collapse was “grim news”.
She added: “What is totally unacceptable is the workforce were given no prior warning nor has there been any consultation with Unite.
“Unite is now actively exploring all legal avenues in support of our members and it is fully determined to get them justice.”
Where firms fail to follow the correct process, employment tribunals can make “protective” awards worth from 45 days to 90 days of full pay.
Unite industrial officer John Clark added: “The actions of The Stewart Milne group regarding the lack of consultation with the workers is potentially illegal, and it is certainly no way to treat a loyal workforce. We are in the process of contacting all our members to progress protective award claims being lodged against the company.”
The union urged the Scottish Government and local authorities to “urgently” work with it to “explore how the skilled workers can be found suitable alternative employment on public procurement contracts.”
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