About 60 jobs are at risk in Staffordshire after specialist landscape and paving products group Marshalls (MSLH) said it was set to close two concrete manufacturing plants after being hit by the declining new housing market.

The move, which could see a total of 140 jobs being axed, will hit sites at Cannock and Sawley in Nottinghamshire.

Graham Holden, chief executive of Huddersfield-based Marshalls, said the company was in consultation with the workforce and unions at the two sites.

The decision to close the two sites arose from the need to offset rising costs and bring capacity into line with demand.

“The slowdown in the UK new homes market has reduced demand for our concrete products,” Mr Holden said.

The closures form part of a wider move to reduce the group’s overall cost base, which will involve a charge of £8 million in the second half of 2008.

Marshalls, which currently sponsors the Chelsea Flower Show, said in a trading statement that it expects to claw back the cost of closing the two plants within a year.

It also said that the Sawley plant will be retained as a regional distribution centre. The sharp downturn in the housing market has also dented sales of block and paving products in the domestic market as customers are increasingly deferring spending on “big ticket” items such as driveways and patios.

Marshalls’ sales to the domestic market were down ten per cent in the six months to June 30. About 80 per cent of its domestic products are installed by tradesmen on behalf of homeowners.

According to Marshalls installers had an average of 8.2 weeks’ work on their books compared with 9.7 weeks at the same time last year, although that figure was inflated by a backlog created by wet weather and floods.

“The established housing market is holding its own, but areas like DIY and RMI (repair, maintenance and improvement) are seeing some weakness,’ said Mr Holden.

Offsetting that, total group turnover for the period was slightly ahead at £211 millions, compared with £210 million in the same period last year pounds in the comparable period, although acquisitions largely accounted for this increase. This was mainly due to robust demand from the public sector and commercial sectors.

The group is also putting a greater emphasis on cash retention and said it will hold the total dividend for 2008 at last year’s level of 13.85 pence a share.

“In today’s uncertain markets we need to focus on sales, cost reduction and cash management,” Mr Holden said. “We recognise the importance of dividends to shareholders, but the shares are still yielding around ten per cent.”

Thursday's announcement saw Marshalls shares surge by 13 per cent to close at 148p, a gain of 16.5p. Investors were said to have taken heart from the company’s efforts to tackle costs.

Numis Securities analyst Chris Millington said: “Overall, Marshalls remains a well managed, invested and balanced business but the macro-economic headwinds are clearly having a progressively larger impact.”