OVERCAPACITY IN the foundations market is thought to have triggered Interserve's announcement that it is to shut down its subsidiary Westpile at the end of November.
The foundation contractor looks likely to close unless suitable bidder is found by Interserve.
As GE went to press, the group said interest had been shown but would not reveal any details.
Potential buyers will have to move quickly as new tenders have been halted and a six month 'wind down' period enforced.
However, industry experts predict certain areas will be picked off, with the firm's CFA piling section proving most appealing.
Interserve cited 'a highly cyclical and capital-intensive nature of piling operations' as the reason behind closing the foundation contractor which has a turnover of £20M. '[Westpile] does not offer prospects for sustained profit and cashflow generation in the medium to long term, ' it added.
An Interserve spokesman described Westpile's profits as 'marginal' and the proposed closure will mean an exceptional charge of £5.8M to the parent company which had a turnover of over £1.1bn in 2002.
Unless a buyer appears, the head office in Uxbridge, Middlesex will be closed, along with the precast pile factory in Hoveringham, Nottinghamshire.
Around 100 people work for Westpile but Interserve expects to retain more than half of these by moving them into other areas of the business.
'We looked at putting Westpile on the market, but thought that announcing the company for sale could destabilise things and encourage staff to leave, ' added the spokesman. 'We are still open to negotiations, and await offers.'
Westpile has been a familiar face in the piling industry since it was established in 1924 (see box).
It was best known for its driven piling systems - principally the Westpile Shell Pile. However in the last decade it has moved into more diverse range of piling systems.
'Potentially losing this member company is a great shame, ' said Federation of Piling Specialists chairman Terry Bolsher. 'It shows the aggressiveness in modern business and is a sad reflection on competition within this market. I do not think it will push up profit levels for other companies. There is still a lot of competition with a steady stream of young firms.'
The latest announcement marks a turbulent six months in the sector. Keller Ground Engineering pulled out of large diameter bored piling due to low profit margins in September (GE November 03). And Carillion sold Expanded Piling to Laing O'Rourke at the end of May last year for £6.3M to target 'higher added value projects'.
Industry figures seemed unsurprised by the move.
'We've been saying for a while that consolidation is inevitable, ' said Chris Thomas, business development manager at Bachy Soletanche. 'There are basically too many companies going for too few projects.'
And Mike Putnam, chairman of Cementation Skanska added:
'Interserve has long been moving into support services.
Westpile does not fit this particular strategy.'
Ongoing Westpile projects were due to be finished before Christmas. This includes the 1,450 piles being installed on the Morfa Stadium in Swansea. The £700,000 driven pile project will form the foundations for the 20,000 capacity Swansea City Football Club and a new regional rugby team Neath-Swansea Ospreys.
Rise and fall 1924 Cylindrical Shell Pile System sold to West's Gas Improvement Company to form West's Rotinoff Piling & Construction Company.
1937 Nearly 800 shell piles driven to 15m for Guilford Cathedral. Loaded to 50t, with Queen Mary pulling the rope to drive the last pile.
1942 Firm drops Rotinoff name.
1948 Installation of 18,000 shell piles for Llanelli Steelworks for the Steel Company of Wales, at a rate of about 1,000 to 1,500 piles a month.
1951 Installation of foundations on Fawley oil refinery near Southampton, then the largest refinery outside the US.
1958Westpile launches Century Pile, a 0.6m diameter shell pile named for its capability of carrying a load of 100t after being driven to 30m.
1960s Thamesmead housing estate in London requires 250,000 piles using about 30 rigs.
1973 Parent company West Group International buys Economic Foundations from Robert McAlpine and incorporates it into West's Piling & Construction.
1979 West Group International acquires Dowsett Piling & Foundations, believed to have introduced CFA piling using grout in the UK.
1986West Group International bought by Tilbury Douglas, which merges the two foundation contractors to form Westpile.
1990 CFA blossoms from the building boom of the late 1980s and early 1990s.
1990s Shell pile suffers in the recession because it was slow and involved high mobilisation costs. Westpile moves into the rotary bored market.
1998 Continued development of CFA, with investment in new equipment, including a new Cased Flight Auger Pile system.
2001 Tilbury Douglas changes name to Interserve.
2003 Interserve announces Westpile is to close.