Severfield-Rowen announces drastic cost cuts

SEVERFIELD-ROWEN has announced a raft of cost cutting measures in preparation of worsening market conditions including potential job losses.

The North Yorkshire-based structural steel manufacturer said that following consultation staff, management and workforces at Watson Steel Structures in Bolton, Fisher Engineering in Ballinamallard, Co Fermanagh and Rowen Structures in Sutton-in-Ashfield had agreed to salary reductions and other cost saving measures.

Similar agreements have also been reached at Severfield-Reeve Structures in Dalton and Atlas Ward Structures in Sherburn near Malton.

Against the backdrop of reduced demand the group’s total production volume will be reduced by 20%, which puts 95 jobs at Dalton and 60 at Sherburn at risk until the end of 2009.

However, no agreement has been reached with regards to pay with the operational workforces.

The board and executive management committee have also agreed to a 20% reduction in basic salaries from January next year.

Severfield hopes that the measures will generate cost savings of around £10m a year from the beginning of next year.

Last month, Severfield reported positive half-year results but warned that market conditions had been “extremely challenging” and that it was likely that 2010 would be a “trough” year in relation to UK demand and prospects.

The group saw revenues increase to £200m for the six months to June 30 compared to £173.3m at the same point last year.

Underlying pre-tax profits dipped slightly from £25.3m to £24.6m, while underlying operating profit dropped by 5.8% to £25.4m.

Its order book stands at £256m – a figure the group said was “relatively robust”.

Projects worked on by the group during the first six months of 2009 include the 2012 Olympic Stadium, Glasgow Riverside Museum, Heron Tower Commerical Office in London, and Dublin Airport.

Severfield said it expected its second half trading performance to be ahead of its expectations because of project timing and better than anticipated financial performance.

Today, Severfield thanked all of its employees for their support through this “difficult and delicate” period.

It added it was confident that the steps taken would help the group compete within the UK market and would assist it to develop its export opportunities.

However, it warned that further contingencies may need to be implemented subject to developments in supply/demand and market pricing.