Top contractors restructure to face grim 2012

Grim economic news has triggered a further round of redundancies and restructuring at the UK’s biggest contractors, including Balfour Beatty, Morgan Sindall and Bam.

The moves, which will hit the north of England in particular, will lead to the departure of two of Morgan Sindall’s most senior and long-serving staff in a bid to cut back on overheads.

In addition, Balfour Beatty is in consultation with 48 staff in the engineering services division’s North-east region, and half a dozen employees will leave its northern construction division. Bam has begun a redundancy consultation that will lead to 40 people in its Leeds-based North-east business - a fifth of staff - leaving, and a “smaller number” in the Midlands and Western region businesses.

Morgan Sindall’s northern director Danny Murray and southern director Stephen Scard, both of whom report to overall managing director Graham Shennan, will leave the business in order to trim costs. The bosses of the six regional teams who sat under Scard and Murray have now been promoted to the executive team and will report directly in to Shennan.

The firm said that it was always looking for efficiencies, but that the moves weren’t part of a wider restructuring process.

Lend Lease is also understood to be finalising the latest phase of its restructuring programme with a number of senior regional appointments. One construction industry chief executive said: “We’re all adjusting our cost base to deal with the new realities. Most contractors are beefing up in the South but they’re losing staff in the North.”

The changes come as fears of a deeper downturn in the sector increased, despite government attempts to boost housebuilding. This was undermined as a further three-month delay to the £244m Royal Liverpool Hospital was confirmed this week.

Richard Howson, chief operating officer at Carillion, which is bidding for the Royal Liverpool, called on the government to ensure it kept to its procurement timetables. Carillion has already announced plans to cut 600 staff from its UK construction business by a third. “The government needs to be more decisive and clearer on the contracts that it intends to progress,” he said.

Deloitte reported construction insolvencies up 11% in the last quarter and the Construction Products Association reported a fall in sales in the third quarter of 2011. This comes after the ONS reported last month that new construction orders fell to their lowest ever level in the second quarter of 2011.

A Balfour Beatty spokesperson said: “We have put 48 staff under consultation as a result of work coming to an end.” A Bam spokesperson said: “The firm is consulting staff and building operatives in the North-east to make about 40 redundancies.”