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Slowdown in housebuilding threat to geotechnics

Piling contractors were last month facing bankruptcy and redundancies as the dramatic slowdown in the private housing market threatens to plunge the industry into crisis.
Contractor Roger Bullivant said it was consulting its 1000-plus staff about possible redundancies, although it denied reports that as many as 150 staff could lose their jobs.

Other piling firms feeling the pinch include Piling Solutions, which has entered administration and will go into liquidation unless a buyer is found. And Simplex Foundations, which employs 100 people and has a geotechnical turnover of £19M, is understood to have closed its precast concrete pile factory.

The findings of the Geotechnical Services File 2008 (see analysis opposite), published with this month’s GE, show that the industry is concerned about more troubled times ahead.

One-quarter of respondents to this year’s survey of over 300 firms, said they feared the potential effects of the credit crunch over the coming months, with most linking this to a slump in the number of housing developments getting off the ground.

In the midst of gloom in parts of the piling world, there are reports that developers are reluctant to start new housing projects and a growing number (including giants Taylor Wimpey, Barratt Developments and Persimmon) have also announced redundancies.
Despite being ranked top earner (with £113.16M for geotechnical turnover last year) in this year’s file, Roger Bullivant said in a statement that the dramatic fall in the number of house starts had left the firm facing the prospect of having to cut staff.

Its announcement will send shivers down the spines of contractors involved in the later stages of housing development.

“Due to a significant downturn in the market, many house-builders have had to postpone works on sites,” said the Bullivant statement. “Despite our efforts over recent weeks, our costs have not changed significantly. We are intending to commence a process of consultation with employee representatives to consider if redundancies can be avoided and, if that is not possible, reduce the number of redundancies and mitigate the impact of them.”

At Suffolk-based contractor Piling Solutions, 30 of its 50 staff have already been dismissed by Ipswich-based administrator Ensors. Its administrator for Piling Solutions Steven Law said the contractor’s French parent company Spie Fondations had been soaking up losses but had had enough. “The short to medium-term view was that it’s not going to get much better, therefore Spie was being asked to put more money into the business,” he said.

Law added that the contractor would finish work on two outstanding contracts after which the 20 remaining staff were likely to be laid off unless a buyer for the company could be found.

“Whether they will be kept on depends on whether the company can be sold,” he said. “There have been lots of expressions of interest, but it is difficult to sell a business in construction. It seems to have a lot of experience in terms of personnel and the company appears to have had a good name in the industry.”

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