Around 100 employees are facing job losses as Hull-based offsite construction firm ESS Modular falls into administration. The decision comes after the company suffered substantial financial losses.
Insolvency experts from EY-Parthenon have been appointed to handle the administration of ESS Modular and its subsidiary, Spatial Initiative Limited.
ESS Modular has ceased operations immediately, and insolvency experts from EY-Parthenon’s Turnaround & Restructuring Strategy team have been appointed. The firm encountered significant financial challenges due to losses on legacy contracts, which resulted in liquidity problems.
Approximately 100 workers employed by ESS Modular and Spatial Initiative Limited are expected to be made redundant. EY is providing support and advice to the affected employees.
ESS Modular and Spatial Initiative Limited, acquired in 2020, are linked to the failed contractor ISG via their shared parent company, Cathexis. The latest financial reports show substantial operating losses and mounting net liabilities.
Administrators highlighted acute market uncertainties and extraordinary levels of inflation. Project delays, increased overhead costs, and supply chain issues were significant hurdles for the company.
In 2023, ESS Modular aimed to transition into a new strategy and complete legacy projects. Despite various cost-saving measures and increased UK manufacturing capacity, the firm struggled to sustain its operations.
The Defence Infrastructure Organisation chose ESS Modular to supply accommodation for the Royal Navy, Royal Air Force, Army, and Strategic Command forces.
The administration process follows continued shareholder funding support but an unsuccessful effort to secure additional necessary cash.
The collapse of ESS Modular highlights the significant challenges faced by the offsite construction industry amidst economic uncertainties.
While efforts were made to sustain the business, mounting financial pressures and market conditions led to the company’s unfortunate downfall.