Contractors warn 15,000 jobs face axe

COMMENT

PETER RODGERS

Business Editor

Civil engineers predicted yesterday that 10,000 to15,000 jobs would be lost this year because a slowdown in roadbuilding orders is causing a deepening slump in the industry.

John Hackett, the director- general of the Federation of Civil Engineering Contractors, blamed the government for the downturn because of a slowing in the award of roadbuilding and maintenance contracts.

Mr Hackett said that the Highways Agency business plan had been revised downward for the 1995-96 year, and now included only one start on a major road scheme compared with eight announced at the start of the financial year.Maintenance had also been trimmed back and some smaller contracts already out to tender had been shelved.

Mr Hackett said: "In the present state of the market it is a severe blow to these companies to have incurred thousands of pounds in tendering costs, then be told that contracts will not be awarded."

He added: "The transport minister's announcement, and these actions by the Highways Agency, are accelerating the decline in road construction and maintenance that is dragging down the whole of civil engineering."

The contractors also blamed slippages in awarding design, build, finance and operate (DBFO) contracts - part of the government's private finance initiative - as a contributory factor.But a spokesman said the slippage was only three months and was not as important to the industry's problems as the straightforward cut in the number of government contracts awarded.

The spokesman blamed these cuts on a hiatus resulting from the national transport debate inaugurated by Dr Brian Mawhinney when he was transport secretary. "The road versus rail debate should have happened years ago. Our members were left waiting." The debate played into the hands of the Treasury, opening the way for a fall in spending on roads, he said.

The contractors, who employ 130,000 people, are to meet Dr Mawhinney's successor, Sir George Young, on Monday to discuss ways of speeding up the award of contracts, including the preparation of a standard set of contracts for DBFO projects.

The prediction of a deepening slump came from the latest quarterly survey of federation members.Only one in five firms was resisting the downward trend.

Mr Hackett said the most striking feature of the results was the continuing low level of invitations to tender for future work, which pointed to a greater fall in workload later in 1996. The percentage of firms reporting a fall in invitations is the highest for 15 years, while the percentage reporting more invitations is the lowest for the same period.

Mr Hackett added "This, and a succession of recent government announcements and actions by public sector clients, have created a situation of considerable uncertainty and concern over the outlook for civil engineering later this year."

There is, however, a slight pick-up in the number of firms reporting better current order books, because of higher orders from the water industry. But for every firm doing better there are two doing worse. Mr Hackett said more orders for water and sewerage works did not make up for the decline in orders for transport infrastructure that provided the greatest part of the civil engineering workload. The industry knew there would be more work later in the year on the first DBFO contracts, but that would not make up for the cuts in public spending.

The survey showed improvements in the circumstances of smaller contractors - with fewer than 100 workers on sites - but no change or a worsening for all the larger firms.