Troubled housebuilder Persimmon (PSN) has announced that the Midlands will bear the brunt of its job losses programme with more than a quarter of the 1,100 redundancies announced by the company falling on the region.
Already badly hit by other job losses from rival housebuilders Barratt Developments (BDEV) and Taylor Wimpey (TW), to say nothing of the 157 lost with the collapse of various companies from the Chase Midland group, the depressing news is a further blow to the region’s economy.
The York-based company, which trades as Charles Church, Persimmon Homes and Westbury Partnerships, said its house sales had slumped by 31 per cent to 5,501 in the first six months of the year, leaving sales revenues down by more than a third at £1 billion.
The 1,100 job losses –around a fifth of its workforce – are expected to save the firm around £45 million a year.
Breaking the bad news, David Bryant, group development director, said: “As we announced in our trading update, the restructuring process we have undertaken since the start of the year has regrettably resulted in approximately 1,100 redundancies of salaried staff across the Persimmon group. This affects 280 members of staff in the Midlands, which includes six companies.
“Naturally, this news is very disappointing and we are providing all the support required during this difficult time for everyone involved.”
Mr Bryant said the reorganisation reflected the further deterioration of market conditions being experienced by both the wider economy and the housing sector as a whole since the start of the year, in particular limited availability of mortgage funds and a reduction in consumer confidence.
“As previously reported, we have taken action in reviewing our build activity and are evaluating work-in-progress on a site-by-site basis,” he added. “To this effect, we are continuing to concentrate on progressing sold and contracted plots, and applying caution to further investment in land, until the mortgage market and availability of credit for house purchasers improves.
“Only by taking these necessary steps to tailor our business in line with prevailing conditions are we able to operate efficiently.”
The firm said that if the housing market improved over the next few years then it would review its operations.
In the meantime, it added that despite the job losses, no regional offices would be closed.
“All our active developments across West Midlands are open and ready to welcome our valued customers as normal,” added Mr Bryant.
Within the West Midlands the company has ongoing developments in Birmingham, Coventry, Sandwell, Stourbridge, Walsall and Wolverhampton, together with sites in Shropshire, Staffordshire, Warwickshire and Worcestershire.
However, there are now doubts over the future of several of its schemes in the area, particularly an 80-acre site on former colliery land at Dawley, near Telford.
The company had been preparing to develop the site and it was thought capable of sustaining around 1,000 new homes. The scheme would have had a life expectancy of several years.
One sub-contractor expected to have worked on the site said he now doubted whether he would be able to find enough work to sustain him.
“I’ve worked on several of their other sites and was expecting to start work on this one but now I don’t know what I’ll do,” he said. “The situation’s now so bad in the Midlands that I may have to look abroad if I’m going to find anything.”
The site was also expected to provide business for many companies in the supply industry.
Local brick supplier Blockleys, part of Michelmersh, had been confident of work for some time to come but its plans will now have to be scaled back.
Once the job losses are complete, Persimmon is likely to employ just shy of 4,000 people and will have 32 offices across the UK. The company has shut three offices since January.