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Civil engineering consultants and contractors face bleak 2009

Thousands of civil engineering consultants and contractors are facing redundancy because of the impending economic recession and a cut back in projects.

In a week of bad news for civil engineers, Transport for London (TfL) axed £3bn of new projects in the capital.

TfL commissioner Peter Hendy said he expected: "several hundred of its thousand consultants in engineering and planning" to lose their jobs – some in TfL through duplication of work with Metronet, and others who were working to develop the axed schemes.

Elsewhere, Faber Maunsell, owned by US giant Aecom, is one consultant considering job cuts, according to unofficial company sources.

It is alleged that staff will be 'redeployed' to different areas of the business, and there could be some redundancies. Offices will be merged as part of an ongoing efficiency drive.

Managing director Ken Dalton, who has been visiting offices to keep staff informed about the effect on the business of the economic downturn, said the reports were "inaccurate".

"Leases on Faber Maunsell's offices at Beckenham and Redhill have been aligned to end in 2010. The firm has been intending to merge the two offices for some time and bring them together in a new, single location in south London."

"Redundancies are the last thing we would ever want to do.

"The market place in the private sector in the UK is more difficult. What we are doing is using the fact we are part of the global Aecom business to reallocate some staff to other opportunities within the Aecom world. We are working in Libya, Dubai, Abu Dhabi, Hong Kong and Australia.

"In some cases people are being seconded short term; in others they are there as a bridgehead to bring work back," he said.

Meanwhile analyst Plimsoll warned that civils contractors would be cutting 7,000 jobs in 2009.

"As sales decline companies will need to work hard to maintain their competitiveness – estimates suggest 7,000 jobs could be under threat as business come under pressure to reduce costs in line with sales.

"More than 330 companies are currently on the watch list for this exact scenario," says the report.

A report from investment bank KBC Peel Hunt, confirms the trend. Author Geoff Allum said: "If consulting engineers' sales were to drop by an average of around 7%, in line with our forecasts, it is likely that their utilisation rates will fall [from very high levels currently], causing some forced redundancies and lower rates for their services."

Allum said redundancies were inevitable. "In stress-testing our forecasts, it has become clear that even in such a low capital intensive business as consulting, reducing costs in line with any decline in sales makes a huge diff erence to profitability."

Chief Executive of the Association for Consultancy and Engineering (ACE) Nelson Ogunshakin said the downturn could spark consolidation in the market: "While ACE cannot comment on the decisions of individual firms, we are confident that the decisions taken will be based on the long term interests of the industry. It is important to note that while there are opportunities out there, some firms will consider joint ventures, secondments and partnerships as a way of optimising their available resources.

"It is important that resources are not lost to the industry as these will be needed when the market picks up in the future. One of ACE's key roles is to ensure that we have a sustainable industry for the long term and we will be doing all we can to encourage firms to optimise resources," he said.

Read AECOM's group results here.

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