Arup’s redundancies this week are an unfortunate reflection of the state of the industry
Redundancy rounds at construction firms have become so familiar over the past two years that often they barely register on the radar. Even so, Arup’s revelation this week that has axed 670 UK positions will send a chill down the spines of the sector’s consultants.
The cull, which amounts to 15% of the engineer’s UK staff, is a sure sign that even this far into the economic slump, the worst is not over for these companies. The scale and timing of the move suggests that consultancies are about to experience another wave of pain, as they make a belated attempt to adapt to a shrunken market.
Last autumn, Building revealed that while consultants’ workload had fallen 30% from levels at the top of the market, UK staff numbers had declined by only 13%. The diverse nature of many of these companies - with services ranging from architecture to management consultancy, projects from waste plants to iconic towers, and operations spanning the globe - was for a long time a blessing. For each job lost (and there were thousands) another was often saved by shifting resources to healthier markets. By contrast contractors - largely UK-based and focused on a narrower range of markets - suffered a sharper, deeper hurt.
Consultants’ spread of work also enabled many of them to bury their heads further in the sand, and for longer, than perhaps they should have. The scale of Arup’s retrenchment is partly because the long-trailed public sector cuts are starting to bite but also because, unlike when other markets dropped off, the company has run out of ways to rearrange the deckchairs. With many overseas markets going through a similar economic cycle, and limited signs of life in the private sector, Arup has few remaining options for deploying its staff.
It’s likely to be a similar story at other big consultants that have had a heavy presence in the public sector. Arup’s new head in the UK, Robert Care, who transferred from the firm’s Australasia business in January, has clearly been able to look at the situation with the cold realism of a fresh arrival.
But he will not be alone in the painful conclusions he has drawn.