One analyst commented: “After Laing’s decision to cut 850 jobs, all contractors are going to start slashing costs like mad. There is going to be blood on the streets.”
One of the directors to go was Stewart Atkinson, building and civil engineering managing director, who had been in the job only 10 months. The other was business development director Colin Hill.
Chief executive John Armitt will take over the operational roles carried out by Atkinson. Armitt said the move was intended to cut costs. “Laing has set itself a 3.5% overhead target. We are all under the same pressures now. I decided to step back into the boiler room rather than move upstairs to be a non-exec.”
Atkinson, 51, is understood to have earned £120 000 a year as managing director of the building and civils arms, which merged this February.
Analysts say Costain’s move is further evidence of growing pressure for firms to strip out unnecessary layers of management.
One said: “In an industry where overheads of 5% have been the norm for more than a decade, everyone is now under pressure to respond to Laing’s attempt to reduce its overheads to 3.5%. The whole industry will have to cut overheads substantially and firms will be targeting 3% to be competitive.”
In a further bid to cut costs, Armitt has been recruiting local workers in Costain’s African operations to avoid the high costs of employing expatriates. Costain has also cut 120 jobs from its process engineering division over the last 12 months.
In another attempt to reduce overheads, the new international director – expected to be current South-east Asian director Alistair Handford – will be based at Costain’s UK head office rather than, as before, in Hong Kong. Armitt said Costain must reduce costs by bringing more international staff back to the UK office. Current international boss Peter Adams will become group business development and estimating director from 1 January, in effect replacing Hill.
