Kier to regroup and launch £250m social housing drive

Kier is planning a major restructure in response to the downturn in its private housing business.

John Dodds, chief executive (pictured), said the credit crunch had left the housing market in the worst state he had known during his 30-year career at Kier and the company needed to respond.

He said: “Four or five weeks ago we saw there was a significant change in the market. We have to react, but that also means it’s exciting times for the company.”

Kier’s experience confirms research from the Home Builders Federation, which found that reservation levels had fallen by two-thirds in recent weeks.

Dodds declined to say whether Kier would scale back its private housing business, which accounts for a quarter of the company’s profit, but said the new-look company would increase social housing turnover from £100m to £250m over the next two years.

We have to react, but that also means it’s exciting times for the company

John Dodds

He said: “With social housing you’re talking about a workflow of £5bn per year.”

The company has not decided the details of the restructure, but it will not involve acquisitions. Dodds said: “Kier has been roughly this shape for a long time. The restructure will bring the big business units closer together. Lines of communication will strengthen and we are reviewing the reporting structures.”

Jan Crosby, a construction specialist at KPMG, said the move into social housing made sense and that more companies would follow. “Social housing will continue to have a massive level of spend associated with it, whether there’s a Labour or a Tory government. The bottom line is that you’re talking about voters.”

He added: “Local authorities and registered social landlords are increasingly looking for multidisciplinary players. There aren’t too many companies out there like Kier with development, contracting and housebuilding businesses that have those sorts of overarching skills.”

A full interview with John Dodds will appear next week