Quality is key to firm’s survival

Mar 6 2009 by Chris Knox, The Journal

UK contractor Kier Group has said that its North East operations are holding up, despite a significant fall in its UK profits, and is now hopeful of landing a number of major contracts in the region.

The business, which operates in the region from its office in Newcastle, recently announced that its pre-tax profit before amortisation and exceptional items was £26.4m in the six weeks to December 31 2008, compared to £45.6m a year earlier.

This drop was in line with its own expectations and also saw total revenue dip to £1.108bn from £1.205bn in the previous half, as the full weight of the recession continues to bear down on the construction sector.

The picture is similar in the North East, with bosses saying that its annual turnover of £100m had seen a drop and that it had been forced to cut around 20 workers from its 200-strong workforce in the region.

However, Steve Flint, regional director at the company’s site in Hebburn, is hopeful that the North East can maintain its position as one of the North East’s biggest contractors and is bidding on a number of large-scale contracts to help secure jobs.

It is currently in the frame for a £100m contract to build a number of homes for the elderly in North Tyneside, and is one of two bidders on a PFI framework with North Tyneside Council, which would involve maintaining the vast majority of its housing stock and would provide its staff with 10 years worth of work.

Kier’s North East operations is not new to such large developments, having put the finishing touches to a £12m job to extend and refurbish the interior of the Hancock Museum in Newcastle, which is to be opened as The Great North Museum later this year.

It is also on site at Frankland Prison in Durham, where it is involved in the £20m development of a 120-cell block as part of its Kier Custodial business.

Mr Flint said: “It’s tough for everybody at the moment and I would be lying if I said that the recession hasn’t affected us.

“However, we still have a healthy number of contracts on our books and are bidding for new work all the time.

“Working on some niche contracts, such as the museum and the prison, has helped us, as have more traditional jobs on schools and hospitals.”

The national figures show that the order book for the construction and support services business stood at £3.32bn at the end of the first half of 2008, up from £3.20bn a year earlier.

Kier Northern managing director William Kay said: “All areas of business and the economy are experiencing a downturn, and it is our responsibility to ensure that we continue to deliver the quality of service and end product that have been our trademark throughout the last 25 years in the North East.

“Furthermore, our ongoing commitment to the region, including the opening of a new North East office, should reaffirm our stated belief that the underlying market in the region is sound and, by continuing to do what we do best, we will see through this difficult period.”