Irishenco, the construction company involved in the Rathcoole-Saggart road project in Co Dublin has collapsed, with 250 workers dismissed, following cash-flow difficulties.
All staff, including middle management, were let go without pay, yesterday, despite the fact the company has major contracts under way.
As well as the Naas Road works, the company is heavily involved in a drainage scheme in Wexford and has built the two major Dublin toll roads, the Eastlink on the docks, and the Westlink on the M50.
It was unclear last night whether the company would opt for either liquidation or receivership.
Management was unavailable for comment, but an office receptionist said: "The company is in liquidation and the directors are at a meeting."
Irishenco is 50 per cent owned by Mr Mehdi Kashani, an Iranian businessman. Other shareholders are believed to include senior executives associated with the company.
Mr Eric Fleming, secretary of the construction industry's group of unions, said: "This is a company with a long track record in Ireland. And it shouldn't have been allowed to happen."
It had been known for some time that Irishenco was in difficulty, said Mr Fleming, yet politicians had steadfastly ignored the predicament of the 250 full-time and 200 part-time workers involved. Industry sources confirmed the company also employed a significant number of sub-contractors.
Mr Fleming said that Irishenco's insurance companies had withdrawn cover from the workforce because of its financial difficulties.
He understood the directors had appealed to the company's bankers, Anglo-Irish Bank, in relation to these cash-flow difficulties, without success. "The workers have received not a penny from middle management right down," he added.
Within the industry, consulting engineers and architects praised the quality of the company's work. Mr Terry Hobdell, chairman of ISME's construction sector, said the company's collapse highlighted the inadequacy of controls in the Irish construction contract system.
"Irishenco and the majority of civil engineering firms are involved in contracts with huge State funding commitments.
"Any outsider would assume that basic questions as to whether the prices at which they took these jobs and whether they were making a profit would be asked."
Instead, in tender after tender contractors went in "at ridiculously low prices", with companies even planning on a negative return in some cases in order to sustain cash flow, he said.
This very often left the sub-contractor, who commonly supplied the working capital, unpaid and in effect "carrying the can for losses in the industry".
Sub-contractors extended credit for up to 90 days on average, said Mr Hobdell, whose own firm was owed money by Irishenco.
Figures released by the Central Statistics Office yesterday showed that employment in private firms in the construction industry rose by 8.9 per cent in the 12 months up to May.
