Bankruptcy threatens Danish harbour projects

Pihl & Søn are one of Denmark’s oldest contracting companies, with a history dating back to 1887. Starting in the 1950s the company expanded rapidly, including increasing involvement in international projects. At the time of the bankruptcy the company’s website stated they were then currently working in 15 different countries. The global nature of Pihl’s operation is illustrated with their subsidiary companies, including offices in the UK, USA, Iceland, Greenland and The Faeroe Islands.

Three main causes behind Pihl’s financial difficulties were reported in their 2012 annual report. Firstly, they state the company had “for a number of years expanded far too aggressively in Denmark and abroad”. Secondly, they recognised as income substantial claims against third parties and, thirdly, the company incurred costs that had not been provided for relating to post-completion work on a number of projects.

Explaining further, they state that their expansion took place without sufficient balance in the contract terms and without having sufficiently verified the credit quality of the foreign customers and sub-contractors and without making sure that the qualities of the work processes and the risk management procedures were sufficient to support the increase in activity level. It is clear that this well established and proud company was faced with a complex tangle of problems which finally overtook them.

It is reported that several major construction projects at Aarhus harbour are threatened along with contracts at Copenhagen harbour and the canal bridges at Vejle. In Copenhagen, Pihl’s bankruptcy will also have an effect on the bridge over the inner harbour.

Pihl & Søn were also active in the energy sector, including the offshore wind industry. The headquarters of Vestas in Aarhus was among the list of shoreside contracts completed, while recently they participated in the foundation works for 49 offshore wind turbines at Lillgrund in the Swedish part of the Oresund and the foundation for a large offshore transformer platform in Danish waters.

By Peter Barker