Another 1,000 Construction Jobs Cut - Barratt Suffer From Market Conditions

There appear to be even more job cuts in the future for the construction industry. An announcement has been made that 1,000 jobs will be cut from Barratt Develpments. This will make for more than 2,500 lost jobs throughout the sector in what’s been a very rough two days.

Barratt has been on a decline for a while. Their share price has dropped 97% from the peak they witnessed back in February 2007. The losses were announced officially after staff meetings informed the employees. Upper management plans to cut their 6,700 employees down by 15% with all departments suffering losses.

Several other construction companies face similar difficulties in light of the weakening market. Galliford Try will cut its housing construction unit by 256 employees. Another developer in the field, Ballymore, will also cut nearly 10% of their employees. Taylor Wimpey, one of the biggest builders of homes throughout the UK, will try and cut costs by firing 900 workers and shutting down about 1/3 of their offices. This extreme cut is done so they can cope with a 45% drop in orders for new homes and 33% fall in completed projects.

The move from Barratt likely stems from new pressure they’ve been experiencing to balance their budget. They currently have £1.7 billion worth of debt. It is hard to believe that they fell from their high position last year. The company was worth £3.8 billion and traded at £11 a share after their takeover of Wilson Bowden for £2.2 billion during the highest part of the housing market.

Offices located in Chester and Sheffield will be closed along with the cuts while eight other regional branches will be downsized to four. This will leave the company with only 26 branches. The cuts are expected to hit all areas with cuts on constructions sites, in their sales department, throughout various administrative positions, and in general support.

Some hope is on the horizon as Barratt moves toward a big refinancing deal that will free up £400 million and relax the stress of a £600 million loan used to pay for the previous Wilson Bowden deal. Too this point, Barratt has no comment about the negotiations. This may be smart position for a future failure though, seeing as Taylor Wimpey’s recent failure to negotiate a refinancing deal caused a 50% drop in their share price.

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