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Rok in a hard place with 750 jobs set to go

The Rok group is set to make 750 job losses, after projects worth more than £150 million were shelved or cancelled by public and private clients due to the economic downturn.
Exeter-based builder Rok said, in a trading statement, that it was set to cut its 5,000-strong workforce by 15% as a result of the 'rapid' impact of the property downturn and said the majority of job cuts will be in white collar roles.

The Rok group was already planning to shed 350 employees but will now cut an extra 400 staff as part of efforts to save a further £20m, as the 'speed and severity' of the credit crunch hit and as businesses suffered a hefty blow.

The firm said committed projects totalling in excess of £150m have been cancelled or deferred as customers have been “unable or unwilling to access cash linked to the current banking sector crisis”. £74m of this activity would have been expected to fall into 2008.

Rok's committed order book now stands at £470m, compared with £600m at the end of June.

Rok, in its interim statement about the period July 1 to November 4 2008, said “While the group's maintenance activities continue to trade well, since the beginning of October there has been a significant deterioration in expected revenues for the last quarter in our contracting, small building works and social housing operations from both private and public sector clients.

The duration of Rok's projects is considerably shorter than for many in the sector and therefore the group says the impact has been far more rapid.

Some 50 projects across all regions have been effected with £30m in general construction, £15m in social housing refurbishment, £17m in private housing and £12m in social housing new build.

The group's statement added “In light of the speed and severity with which Rok Building's operations have been impacted, the Board has now identified and is implementing a further £20m of annualised cost savings that will be executed by the end of this calendar year on top of the £10m of costs already removed.”

“In addition the group is also turning away a significant amount of business where customers are unable to provide concrete evidence of their ability to pay or where we consider the margins to be unviable”.

Profits will be £12m lower than previously expected as revenues fall by about £120m, the group said.

The group has been scaling back its contracting operations to focus on repairs, refurbishment and response maintenance.

The Rok group's cost savings are expected to help speed up Rok's plan to focus more on maintenance and repairs, which is 'performing well' and less on contracting.
6 November 2008

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