Scottish jobs on the line after building giant Rok collapses

THE jobs of hundreds of Scottish construction workers hung in the balance last night after building group Rok collapsed into administration.

• Shares in Rok were suspended at 18.5p yesterday Picture: Neil Hanna

The news came after the company, which is involved in some of Scotland's largest construction programmes for the likes of Diageo, Scottish Water and Highlands & Islands Enterprise (HIE), had recently revealed hefty losses and financial shortcomings at its plumbing and heating division in England.

Its Scottish operation claims to have been performing well and only last month was celebrating the winning of a contract with HIE worth up to 32 million over four years to carry out most of the agency's building work across the region. The firm employs 758 in Scotland with almost half of those based in the Highlands.

PricewaterhouseCoopers yesterday said it was looking for a buyer for the Exeter-based firm which had fallen into difficulties in meeting its financial obligations.

Possible suitors for all or part of the company could include Carillion, Balfour Beatty and Galliford Try, which owns Scottish business Morrison Construction.

Mike Jervis, joint administrator at PwC, said no redundancies had been made amongst the company's 3,800 employees and that it was business as usual while a sale was sought. It is understood discussions have already taken place with potential buyers of all or parts of the business with hopes of progress within days.

Shares in Rok - in which Scottish Widows Investment Partnership is one of the largest institutional shareholders - have fallen 90 per cent in the past three years and were suspended yesterday at 18.5p.

The administration announcement came just months after Rok revealed a 3.8m half-year pre-tax loss and an independent review by accountants BDO uncovered serious failings at its plumbing, heating and electrical business.

Rok has expanded its Scottish operations aggressively in recent years with the acquisitions of Tulloch Construction and its Corrie plumbing and heating arm along with Glasgow-based Dickie Construction.

David Sutherland, chief executive of Tulloch Homes, which sold its civil engineering arm to Rok in 2006, said the development was "disappointing and very concerning" for staff.

"It is a pity that events south of the Border have caused a move towards the announcement of administration," he said.

Although Tulloch held on to a stake in Rok following the deal to sell Tulloch Construction, it has since sold it.Sutherland added that Tulloch had no plans to "directly enter the markets tackled by Rok in the Highlands and elsewhere in Scotland".

In August the head of Rok's Scottish operations, Andy Mallice, said the company's operations north of the Border had "performed very well" with turnover rising, steady profits and a strong order book.

HIE said yesterday it was seeking a meeting with administrators to discuss both its major contract with the firm and the wider implications of the problems at one of the Highlands' largest employers.

Two projects have been awarded so far under the contract including 7.5m of work at the European Marine Science Park at Dunstaffnage near Oban in Argyll, although work has yet to begin.