Staff turn to social media to take issue with contractor being branded ‘the next Carillion’
Rival contractors say they expect to see a flood of CVs from Kier staff in the coming days after the firm yesterday said it was getting rid of 1,200 people in a drastic cost-cutting programme.
New chief executive Andrew Davies shocked peers when he said 650 staff would be gone by the end of this month.
A rival Tier One chief executive said: “It might be necessary but it’s the message it sends. With that sort of speed, everyone will feel in jeopardy. We go up against them all the time so I’m sure we’ll be seeing a lot of CVs come in over the next few days”
But he added: “[The firm] needs leadership, a strong chin, nerve and a bit of fortune. They need to stick to what they’re good at which is building and civil engineering.”
A further 550 staff are due to go by the middle of next year under a plan which will see the firm make inroads into its near £800m wage bill. The cuts mean that more than 5% of the 20,000 people it employed last year – more than 18,000 are based in the UK – will be gone in 12 months.
Another rival added: “With an organisation that’s contracting, what happens to all the talent? All the good people will be speaking to recruitment firms.”
Some Kier staff took to social media to take issue with the firm being bracketed with Carillion – which went bust at the beginning of last year.
One said: “It’s not helpful when you read posts saying Kier are the next Carillon, or comments berating the business saying ‘it’s deserved’ etc….please remember livelihoods are at risk and not everyone will be lucky enough to walk away with a pocketful of money.”
Another added: “Normally, cost cutting measures and selling off non-core businesses would see confidence grow [yet] it always looks like we can’t do right for doing wrong since the demise of Carillion.”
Kier’s share price sank to a new low yesterday and another chief executive told Building: “It doesn’t look good, I’m not sure how they dig themselves out of this unless they have some golden opportunities for years to come.”
Kier said the redundancy programme will cost it £56m and is set to produce savings of £55m a year from 2021.
But a number of firms contacted by Building said they expected Davies (pictured) to be announcing further cost-cutting plans in the coming months.
“I think there is more to come,” one said. “I’d be horrified if they left the industry. It’s a national brand but there’s got to be a chance they will go.”
He added: “There’s quite a few in the top 10 [of firms] that have just become so complicated and lacking in focus that, therefore, they’re in jeopardy. They don’t understand the sorts of businesses they’re engaging in.”
Kier has hoisted the for sale sign over its residential business, Kier Living, while it said it is looking for buyers for its property, FM and environmental services arms.
Getting rid of residential and property will take nearly £600m out of the business which last year posted a £4.5bn turnover. The firm does not break out the incomes for its FM and environmental services arms which are part of its wider £1.8bn services business.
Davies, who started at Kier in the middle of April, was forced to bring forward the announcement detailing the findings of his strategic review – originally scheduled for the end of July – after the markets became spooked about the scale of the problems he would uncover.
Its share price has been steadily heading south over recent weeks and the price closed last night at 107p – down nearly 23% from Friday’s close.
Kier’s stock traded for 988p on 18 June last year and was still worth 278p at the end of last month despite a rights issue in December.