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Recession to spread into civils

Civil engineering is set to catch housebuilding's cold, industry analysts warned this week.

Construction industry analysis firm Plimsoll predicted that 13,000 contracting jobs and 196 companies were at risk in the coming year.
Plimsoll quizzed 1,500 civil engineering contractors, and concluded that 12,996 staff could be lost.

Housebuilders are already shedding staff, and piling contractors are the first area of civil engineering to be hit hard.

Piling contractor Roger Bullivant confirmed it had put proposals to cut jobs to its staff, but the results of this consultation were unavailable as NCE went to press.

A second contractor, Piling Solutions, has entered administration.

Senior Plimsoll analyst David Pattison said further redundancies were inevitable as struggling companies tried to get a grip on costs.

"The 196 companies we have identified as in danger need to act now if they are to survive," he warned.

"It is very important they review their entire business cost base and act now to significantly reduce their outgoings.

"While job losses are undoubtedly bad news for any company, such decisive action may be called for to guarantee the ultimate survival of the business – even if this means the business is 30% or 50% smaller than it was."

Further evidence of a downturn in the property sector came this week from Leeds, where Carillion halted work at developer KW Linfoot's "Leeds Shards" building.

Foundation work has just finished and a British Property Federation spokesman said: "Once the building is finished, all of the office and retail space will incur rates while it is empty.

"There's no point going ahead with a building where the residential parts can't be sold because of the state of the property market. If you don’t sell the commercial aspects off quickly you will be liable for rates. That’s not a recipe for good business."

"It is something that will increasingly happen, not just in Leeds but across the country," he said.
Construction plant manufacturer JCB was this week the latest big name in the industry to announce job losses. It is shedding 500 staff, following a 20% reduction in its production forecast for this year.

"We do not expect to see a recovery until late 2009 at the earliest," said JCB group chief executive Matthew Taylor. Stalling demand for plant is the clearest indicator yet of the slowing market.

And rising fuel costs are also making plant more expensive to run, according to figures released by the Civil Engineering Contractors Association (CECA) this week. It said that increased fuel costs would lead to increases in day rates for plant hire, from 7.5% for petrol and diesel plant, to 25% for LPG and 40% for plant using paraffin fuel.

"This is a substantial increase and contractors need to be aware of the amendments to the rates for plant, which reflect the costs that they have to absorb,” said CECA technical officer John Wilson.

500
the number of staff JCB is laying off after a 20% reduction in its production forecast

13,000
contracting jobs predicted to be at risk in the coming year

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