Crisis worsens in civil engineering sector, while SMEs express doubts over latest bank bail out

The bloodbath in the civil engineering sector worsened this week as Buro Happold and Faber Maunsell followed Arup’s cull of 400 UK staff last week.

Faber Maunsell said 119 UK employees faced the chop. Senior salaries at the firm are also understood to have been frozen and bonuses reduced.

Buro Happold is axing 10% of its 2,000-strong global workforce. The London office completed a redundancy consultation on Tuesday and many of the jobs have already been shed from its Bath head office. Before Christmas, the firm had circulated an email offering voluntary redundancy.

A spokesperson said: “Buro Happold, like the vast majority of consultants in the construction field, has been affected by the recent economic climate and has therefore taken action to reduce staffing levels globally by about 10%. A significant proportion of this has been achieved by the release of contract and temporary staff.”

Axed employees are understood to have received white envelopes confirming their redundancy when they arrived at work on Tuesday and were told they had to pack up and leave by midday.

One member of staff, who wished to remain anonymous, said: “Some people came in to find the envelopes waiting on their desks. Others were called into meetings. It has been very difficult.”

The cuts emerged in a week that senior financial sources suggested that the government’s plan to persuade banks to boost lending to small and medium-sized companies did not go far enough.

On Monday the government said it would guarantee 50% of the value of up to £20bn worth of short-term loans to SMEs and set aside £225m to cover the debts of firms that go under.

One senior banking source said: “It will help address the credit issues facing bank lending to SMEs but does not address the fundamental problem of a lack of liquidity.”

Richard Kelly, construction partner at financial services group BDO Stoy Hayward, added: “This will be monitored by ministers and civil servants at the business and enterprice department and I’m not sure it will be an effective mechanism.”

The Grimdex

Building has formed a seven-strong panel to find out how pessimistic they’re feeling about the times ahead. We’re asking them to rate their mood on a scale of 0-10, with 10 being very pessimistic. An average of all seven ratings is that month’s “Grimdex” forecast. December’s rating was 5.5

Steven Barker, partner at Robinson Low Francis, rated his mood at 5: “It is impossible to know in a short space of time if the new money will be enough, but the banks must come clean with the real level of toxic debt on their books. I don’t believe we have seen honest reporting from any of them. We are all suffering death by a 1,000 cuts. Will the bailout help the industry? In theory.”