Sites across the Laing O’Rourke group are being served redundancy notices in company-wide cutbacks.
Just eight weeks ago Laing O’Rourke filed accounts showing a pre-tax loss of £288m for the year to 31st March 2023. It is now taking action to cut costs.
It is understood that the board wanted to take action sooner but decided to wait until after Christmas to swing the axe.
Financial analytics by Company Watch sounds a warning about the company’s financial safety, having recently downgraded Laing O’Rourke from 14 to just 4 in its H-Score system (out of 100). Company Watch says that any company with a score of 25 or less falls into its warning area and is at serious risk of distress. (Only Tilbury Douglas has a lower H-Score than Laing O'Rourke among the Top 100 construction contractors – just 2.)
This year’s redundancies, on the back of 200 last year, include 60 at the Laing O'Rourke Centre of Excellence for Modern Construction (CEMC) in Steetley, Nottinghamshire, which the company describes as “the jewel in our crown”.
Human resources manager Jade White told staff yesterday that the company had to scale back the workforce to where it was three years ago “to match our order books which are where they are three years ago"
The 60 people losing their jobs at Steetley, which include casting staff, steel fixers, concrete finisher, are in addition to the 40-plus agency workers who have already been let go.
The cutbacks come despite Laing O’Rourke being able to boast record orders – it’s order books are pretty much full and major live projects include Hinkley Point C as part of the Bylor joint venture with Bouygues – but new project starts are being delayed. That is what is causing the pain. The future looks fine, but it first has to get through the present.
A spokesperson said: “Yesterday, we informed members of our workforce at our Centre of Excellence for Modern Construction (CEMC) in Nottinghamshire of a proposal that could reduce the number of roles at the facility by up to 60.
“Due to challenging market conditions, we have seen delays to some of the projects CEMC was set to service. Therefore, we need to reduce our operating costs, while continuing to deliver projects and protect our ability to invest in the technology and innovations that will transform construction.
“We know that any proposal to reduce roles creates a difficult time, we will work with our people and continue to support them through this process.”
Company Watch describes its H-Score as a measure of a company’s financial health using published financial results and analysis of its financial position from a number of angles including profit management, working capital management, liquidity and how assets are funded. Not all companies in the warning area will fail, it says, but of those that do, the vast majority were in the warning area before they collapsed.
Laing O’Rourke chief financial officer Rowan Baker said: “The FY23 trading period presented extremely challenging market conditions for us and the entire construction sector. Despite this, I am encouraged by the fact we delivered strong pre-exceptional group revenue growth of 13% (to £3.4bn) versus FY22, ended the period with net cash of £286.3m, and added £1.4bn to our group order book. These are positive indicators for our future performance. Importantly, we have performed strongly in the first half of the current financial year. Our revenue increased 22% versus the same period prior year, and results are well ahead of management’s expectations at £31.4m EBIT.”
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