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Balfour Beatty consults on redundancies at specialist arms

Exclusive: Balfour Beatty is planning to merge the location and management of its ground engineering, living places and Balvac business units and is consulting on redundancies.

Construction News understands that a single management team will oversee the Balfour Beatty Ground Engineering, Balfour Beatty Living Places and Balvac businesses, in a move designed to cut costs after the business failed to hit revenue targets.

In a proposal seen by CN, Balfour states that the move was a response to trading difficulties, including BBGE turnover decreasing from £96m in 2016 to a forecast £58m for 2018, with new orders currently at less than 50 per cent of its target for 2019.

The proposal states that the business is legally required to start the consultation process 30 days before the first redundancy, meaning that according to government guidelines, between 20 and 99 redundancies are likely to be made.

The company said it would minimise redundancies by “replacing agency workers and redeploying people across Balfour Beatty wherever possible”.

Individual redundancy meetings are due to start the week before Christmas on 17 December, according to the internal document.

It said that BBGE had been unsuccessful on “a number of large bids” and been hit by projects including HS2 being pushed back.

Its Rotary business had seen turnover drop from around £30m to an estimated £19m for 2018, and that ground investigation turnover was £1.5m off budget for the same period.

According to the contractor’s proposal, “the current high level of staff numbers in BBGE will not be supported by the forecast workload predicted in 2019”.

The proposed new management structure would see Steve Helliwell as managing director of the combined business unit.

Senior BBGE staff are understood to have already departed the business, including finance director Ken White.

Among the roles listed as ‘at risk’ are director, work-winning, administration and supervisor roles.

A number of new roles will be created to reflect the merged divisions, including a head of rotary piling, preconstruction director and senior commercial manager for BBGE.

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The three divisions will have a single work-winning team that will be located at a new office in Basingstoke.

The group is also proposing bringing the BBGE, BBLP and Balvac teams into one location in Derby.

CN reported in September that Balfour Beatty had started consulting over redundancies for staff working on its Whitechapel Crossrail site.

The company announced this week it had paid off a £253m convertible bond and had cut debts by 45 per cent for the last 12 months.

In its interim results in August, Balfour increased its pre-tax profit for the first six months of 2018 to £50m, compared with £12m for the same period of last year.

This came as revenue fell more than £300m year on year from £3.54bn to £3.22bn, which left the firm with a pre-tax margin of 1.6 per cent.

A Balfour Beatty spokeswoman said: ”On 27 November, we commenced formal consultation with employees in our Balfour Beatty Ground Engineering, Balfour Beatty Living Places and Balvac businesses based in Derby and Basingstoke regarding our proposal to simplify our structure under a single leadership team.

“We are also proposing to consolidate the three businesses presence in Derby and Basingstoke into single integrated offices in both locations. This will enable closer collaboration and cost efficiencies. 

“As we are in a formal consultation process, it would be inappropriate to comment further at this time.”

Readers' comments (3)

  • Starting a redundancy programme which wraps around Christmas doesnt look like they've taken any notice of all the mental health initiatives the industry has been running. Would a month extra of wages have been that much more expensive for a company which yesterday was halfing its debts?

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  • "Would a month extra of wages have been that much more expensive for a company which yesterday was halfing its debts?"

    The reason it has halved its debt is because it doesn't do things like hold on an extra month so it doesn't make redundancies just before Christmas.

    I'm not saying I agree, but ruthless efficiency and considerate staff reductions do not go hand in hand.

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  • Its just sensible accounting really, start the redundancy conversations before year end and book it as an exceptional cost for 2018. Keeps the costs out of 2019.
    Not nice for the people getting the news or those having to deliver it at this time of year but it is logical.

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