Global payroll is cut by almost half as Middle East downturn forces contractor to close regional hub
Laing O’Rourke will shut its Middle East division in the latest sign of the toll the global downturn has taken on the company.
The move follows deep cuts to the firm’s global workforce that have almost halved staff levels over the past year.
According to a Laing O’Rourke source that returned to the UK business from the Gulf this year, the worldwide workforce has been cut from 35,753 to about 20,000, largely as a result of the downturn in the UAE.
The closure of the division marks a significant change in strategy for the UK’s third-largest contractor, which relaunched the business with a three-region structure in 2006. The remaining hubs are Europe and Australasia, but the Middle East was the largest in terms of headcount.
The source said: “It’s been a nightmare for my family and hundreds of former colleagues who are out of work. The firm can’t employ more than 4,500 workers and 900 professional staff in the Middle East now, which is down from about 16,000 and 5,000 during the boom - a fall of about three-quarters.”
The closure follows the return of Norman Haste, formerly chief operating officer of the Middle East hub, to the UK late last year to spearhead the company’s push into the energy market. He was not replaced as head of the regional business, whose remaining operations will be overseen by the firm’s head office in Dartford, Kent.
The move to cut the division, which included south Asia, also follows the winding down of a joint venture with Indian firm DLF, which is understood to have little work on its books.
Despite the closure, the £4bn-turnover firm is expected to maintain a presence in the Middle East and will continue to have a relationship with Abu Dhabi developer Aldar, with whom it is working on the 54bn dirham (£10bn) Al Raha beach project. Previous jobs in the region included the 5.5bn dirham Atlantis hotel in Dubai.
The source added: “They will keep good relations with the ruling families, but will never be in a situation again where there is such a dependency on a market where it is hard to get your money back if things go wrong.”
The extent of the company’s debt in the Middle East is unknown, but according to its 2009 accounts its turnover in the region doubled to £829m, which compares with £300m at Balfour Beatty and £600m at Carillion, the two largest UK contractors.
A Laing O’Rourke spokesperson declined to comment.
Meanwhile, Laing O’Rourke is using its Australasia business as a springboard into Hong Kong. It is is pushing to win rail infrastructure work in the Chinese territory