Memos confirm pension scheme closure and warn of redundancies if firm loses out on new work

Skanska has warned staff they face redundancy if the company fails to win two major projects in its pipeline.

The news was contained in an internal memo from UK president Mike Putnam to staff at the firm’s building arm on 6 January. It followed a memo before Christmas which informed employees their final salary pension scheme would be axed to reduce costs.

The move comes after a reported cut of 650 staff at Laing O’Rourke and a raft of redundancies at Bovis Lend Lease and Shepherd last year. Bovis was also one of the first large contractors to drop its final salary pension scheme, in June 2008.

Skanska UK employs 5,500 people, although it is not known how many jobs may be lost.

Putnam wrote: “We are currently waiting on the outcome of a number of bids, including Essex schools [Building Schools for the Future deal] and Karolinska [PPP hospital in Sweden], and are actively looking to secure new work. Regrettably, if we are not successful at winning additional work in the short term, a number of roles will become redundant during 2010. The total number of roles at risk and the number of redundancies is still being worked through.”

The Essex BSF job is worth £1.3bn and the £1.5bn-turnover Swedish-owned firm is vying for it with Carillion. A winner may be announced on 1 February.

Skanska has had mixed fortunes in the BSF market, recently losing out to Kier on a £477m deal in Kent.

Putnam, who replaced Mats Williamson in September 2009, confirmed the final salary pension scheme would be axed by April, to be replaced by average salary schemes. This followed an announcement that there would be no salary rises in 2010.

An internal document said: “The cost of funding future benefits has risen substantially; and a deficit has arisen in the Skanska pension fund’s assets in respect of the benefits members have already earned.”

A Skanska employee said: “This is a massive kick in the teeth. The fact they are cutting the final salary scheme has left lots of us fuming.”