Rok in a hard place as jobs axed

THE construction sector suffered new blows yesterday as one major player announced it was to axe about 750 workers and another revealed a 45 per cent drop in reservations.

Builder Rok said in a trading statement that it was set to cut its 5,000-strong workforce by 15 per cent as a result of the "rapid" impact of the property downturn. It issued a profit warning for the current financial year.

Meanwhile Redrow, the housebuilder with a sizeable regional arm in Scotland, admitted it was selling an average of just 38 properties a week across the UK.

Exeter-based Rok, which in 2006 snapped up the construction arm of Inverness builder Tulloch, said projects worth more than 150 million had been shelved or cancelled by public and private clients following the banking crisis.

The firm 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 recent developments of the credit crunch hit business even harder.

The majority of the jobs will be in white collar roles, Rok said, but it is not known if any of the cuts will be north of the Border.

Group chief executive Garvis Snook admitted work had dried up for the firm. "It's like someone just switched off the lights and walked out," he said. "Contracting work has just stopped dead, especially in the private sector."

Profits will be 12m lower than previously expected as revenues fall by about 120m, Rok warned.

Shares tumbled by more than half, wiping nearly 70m off the value of the business. The firm's stock closed 52.2 per cent down at 35.25p.

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

The firm said that the duration of its projects were "considerably shorter" than those of many companies, meaning that the impact of the slowdown has been "far more rapid".

Redrow said it had experienced a modest seasonal rise in September and October, but added that the group was braced for conditions to remain difficult.

It said reservations had plunged by 45 per cent year-on-year since June in an "extremely fragile" property market.

Redrow added: "There is increasing concern about the economy, with expectations of rising unemployment likely to impact confidence. The degree to which this will affect pricing and margins is uncertain."

The group has also taken action to offset the market troubles, cutting its workforce by 40 per cent over the past year, refinancing debt and cutting land buying and construction activity.

Redrow shares dropped more than 10 per cent yesterday, closing at 189p as analysts said the firm's statement revealed an increase in pricing pressures.