Balfour Beatty’s restructure makes business sense according to the City

Balfour Beatty shocked many in the industry last week by putting 12,000 staff on notice of redundancy across its construction services division as part of a wholesale restructure of the UK business. But the decision, while unsettling for employees, has received a nod of approval from the City. Under chief executive Ian Tyler, Balfour Beatty has grown overseas, diversified and acquired unique businesses in a bid to outmanoeuvre its competitors and become a force in global construction and infrastructure. This latest restructuring is a direct response to reduced UK public spending and a harsh competitive environment - but the underlying message is that it is about making cost savings to position the business for growth.

That’s not simply corporate lip service either: the City buys it. Tyler’s strategy is to continue to expand in burgeoning sectors such as oil, power, rail, transportation and mining and to find yet more opportunities in emerging economies where the bulk of its profits lie. While the business goes about making £50m worth of efficiencies over the next three years, it can reform to better target clients and fix any internal cultural difficulties and union-related headaches. The main challenge for its UK business will be to understand how to implement such a strategy - the nature of its communication, to clients, staff and the City alike, will be vital to its success. But as one analyst puts it neatly : “They’re a global infrastructure business; they won’t be harmed by the loss of 1,000-2,000 jobs in the UK.” So unless something dramatic happens, it is difficult to see how the Balfour Beatty tanker can go adrift.   

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It has been raised in the House of Commons. It has the backing of ministers, MPs, industry leaders and trade associations as well as the hundreds of companies it supports. Since its launch in January, the Building 2012 campaign has striven to promote all those delivering the London Olympics and their legacy. Over the coming weeks we will continue to highlight their achievements while keeping a close eye on the government’s response to the industry’s complaints about onerous marketing rules. We’ll also be scrutinising the handover and legacy opportunities linked to the 2016 Games in Rio. And of course we’ll be celebrating the success of London’s delivery of the Games, first at the Building Awards on 18 April and then as we host the Building 2012 gala dinner at the Government’s Construction Summit on 2 July. This week we have signed up Laing O’Rourke chairman and chief executive Ray O’Rourke to make a key note speech on innovation at the summit. O’Rourke joins cabinet secretary Francis Maude, construction minister Mark Prisk and Atkins chief executive Uwe Krueger as part of an illustrious team of speakers.

For more information and to book a place at the Government Construction Summit see or call Jean Pierre Bird on 020-7560 4244.

Tom Broughton, brand director