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Still Heading For The Bottom

Tough times show no sign of letting up in the lighter end of the piling market. Adrian Greeman reports.

Contractor May Gurney’s decision to pull out of the piling market has underlined the fact that prospects for many specialist foundation contractors remain bleak.

“After all” said one competitor this week, “if May Gurney can’t do it, then who can?”.

The contractor’s largely CFA pile operation, while not large, had a good reputation for controlling overheads.

But if the work is not there it is not there and at the smaller end of the market at least there is still little movement.

Housing, light commercial development and light industrial work is still in the doldrums and unlikely to move unless bank credit is substantially eased, say most industry commentators.

Many contractors report falls of between 40% and 60% in turnover since the credit crunch began.

Overall the Federation of Piling Specialists reports a continuing 40% drop in orders, even when workloads are factored in for members doing heavy civil engineering, where government commitments to projects like Crossrail and the Thames

Tideway Improvements are helping sustain a market.

The effects have nevertheless been severe for most; jobs have been shed and in many cases wages and salaries either frozen or reduced.

Aarsleff Piling director Terry Bolsher says conditions remain “pretty dire, especially for the private sector which has not seen the benefit of government stimulus.”

Even where a few housing contractors are testing the water, he says, “they do not pile the whole site as they used to but only enough for a few show houses.”

He says, prices have been squeezed over the last 18 months to less that half the pre-crash levels.

“I hope it is levelling off now but there is still too much capacity out there chasing too little work.”

Half of his staff and operatives have gone in that period through natural wastage and redundancy, despite efforts to share the burden by working a four-day week and making corresponding cuts of 20% in wages and salaries.

He is hoping a recent £6.7M investment in a brand new factory for the jointed precast concrete piles that are the company’s speciality will help Aarslef Piling’s position.

The factory can make piles significantly more efficiently than before and he hopes this will give his firm a vital competitive edge.

Van Elle piling manager Mick Mason says the plunge in the market has tailed off but adds that there is no clear indication that it has finished.

His firm had seen turnover drop from £47M in the year to the end of 2008 to £37M last year and a likely £32M at most for 2010. Staff numbers are just over half the 400 the firm employed two years ago.

Van Elle also specialises in restricted access work he said, which has helped sustain it.

“But we are definitely not in rotary piling where there has been something,” says Mason.

Even for the bigger contractors and those in heavy civil engineering, the picture is far from rosy.

“We have suffered redundancies and lost good and long serving people” says Keller UK managing director Jim De Waele. “I hope it is levelling off now but there is still too much capacity out there chasing too little work.” The big projects are coming, he says, but they are few in number and largely London-based.

“We have been able to sell some rigs within the group for example but the options for that have limits. This is an international problem and divisions in Europe and the US have also struggled.”

Bachy Soletanche business development manager Paul Hodgson is hopeful that some of the pressure on the sector will be eased as these infrastructure projects come through “though that will not be until April,” he adds.

There is also a glimmer of activity in the big office buildings sector he says though much of that is limited to London.

Bachy and other bigger firms have also benefitted from being part of bigger groups and with overseas connections.

“We have been able to sell some rigs within the group for example but the options for that have limits. This is an international problem and divisions in Europe and the US have also struggled.”

Bachy has also diversified and has recently moved into soil nailing work, with a big contract on the M1. “It was a bit of a learning curve but we have the experience now.”

And in conditions as they are “any turnover is good turnover,” he says.

De Waele too has been able to redeploy equipment in Poland where, for the moment, the market is holding up on the back of European Union funding.

It also has work in Australia where the minerals sector has given the overall economy a boost, and the Far East.

One exception is Bauer UK which only entered the market in 2007 and so has not carried the burden of previous workload. Having a big European parent has helped it too.

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