Construction group Kier said it would be axing 350 jobs at its faltering housebuilding division, as it became the latest victims of the housing market slump.
The firm said it would be concentrating on housing support and regeneration projects like the £67 million Snow Hill development in Birmingham after closing its four regional housebuilding offices as a result of plummeting sales.
The residential division has shrunk by 60 per cent since the start of the year when it employed 600.
It will be operating solely from its last remaining office, in Bedfordshire, after announcing offices in Cambridgeshire, Hertfordshire and Glasgow were set to join the Lincolnshire branch, which was closed in May.
Like most other housebuilders, Kier has been hit by the chill in the housing market in recent months.
Completions for the year ending June 30 were down nearly 20 per cent to 1,438 units, while the group’s order book was down 45 per cent on the previous year.
And conditions in the residential property market have continued to get worse over the last few months, with occupier demand slowing even further.
The firm’s land expenditure budget has been reserved for settling debts, with no further purchases planned until the future of the housing market became clearer.
Sales at Kier’s housebuilding group only account for a small proportion of group sales, but a relatively large proportion of overall profits.
Kier stressed that its core construction and support service divisions were still seeing good levels of growth.
And it pointed out it was still expecting underlying pre-tax profits for the firm to meet expectations, and to be ahead of the year before.
In 2006-07, the group reported underlying pre-tax profits of £79.6 million on total sales of £2.13 billion.
The firm said it would be changing to focus on its more profitable operations. In a statement, a Kier spokesman said: “Whilst the market for our homes has continued to deteriorate over recent months, we are responding to reduced demand by significantly reducing our residential overheads.
“We will run a smaller, leaner operation in the future with our focus shifting towards affordable housing and regeneration.
“Our construction and support services businesses continue their profitable, cash generative growth. Our balance sheet is strong and our cash balances remain high.”
Kier is best known in the West Midlands for its work on the Snow Hill building, part of a £500 million, one million sq ft scheme which will create a new gateway to the centre of Birmingham.
The project, currently in construction, is planned to create a new district boasting Birmingham’s tallest residential tower, a luxury hotel and two grade A office buildings.
Office space in the project has already been snapped up by big names including KPMG and Wragge & Co.
Broker Landsbanki kept its ‘buy’ recommendation on Kier shares, saying the company’s general financial situation overshadowed the losses expected from housebuilding, meaning it was still a good prospect overall.
Kier is just the latest big name to get caught up in the woes affecting the construction industry as a result of the housing slump.
Two weeks ago it was announced the industry had lost a total of 5,000 jobs, as housing groups looked to cut costs in the face of a downturn in demand.
Building giants Persimmon, Barratt and Taylor Wimpey all cut about 1,000 jobs apiece, with hundreds more at Bovis Homes, one of the most successful housing companies in the country.
And days before that the troubled Chase Midland group had to call in the administrators when its construction wing collapsed because of a cash flow shortage.
The company that had previously managed the £15 million mixed-use development to the south of the Mailbox simply did not have the money to complete the contracts it had signed.