ABB UK finance director David Mumford said: "The situation has come about because of losses on key contracts, and also because there is such a tight profit margin in specialist contracting."
He added that the job cuts were not just from the firm's Birmingham base and that some smaller ABB UK offices had been closed.
Mumford said that, as part of the strategy, a new management team had been put in to run ABB's contracting arm. He added that the UK operation would try to increase its customer focus.
One UK rival said rumours had been rife that ABB was going to pull out of the UK contracting sector altogether.
He said: "Everybody is now looking to pick up ABB work from the clients they have had trouble with, and if they do pull out of the UK, there will be a real scramble to pick up all of their work."
Everybody is looking to pick up ABB work from the clients they have had trouble with
Rival M&E contractor
Mumford denied that the group was considering pulling out of the UK in the near future. However, he declined to discuss the composition of the new management, or to give details of the contracts that ABB had made losses on.
In a statement, ABB cited a fall in the European construction markets as a further reason for its difficulties. It said the market had "progressively weakened".
The statement said poor demand had resulted in a 16% drop in orders and that its building systems and automotive divisions had been the most affected.
ABB president and chief executive Jorgen Centreman said: "After a detailed review of our operations, we took broad measures across our businesses to turn the page and put ABB on a better footing." He said the firm would continue to focus on its core divisions, cut costs and further reduce debt.
The group is implementing a worldwide job cull of 12,000 staff across all of its businesses, including automation, gas, oil and petrochemicals.
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