Timber frame firm falls victim

May 30 2008 by Karen Dent, The Journal

A HOUSEBUILDING firm is the latest to join the growing list of construction companies hit by the credit crunch.

North Tyneside-based Lakeland Timber Framed Homes has ceased trading and has appointed business recovery and insolvency expert Geoffrey Martin & Co to organise a meeting of its creditors. A spokesman for Geoffrey Martin said that a liquidator would be appointed at that meeting.

Lakeland, which makes timber framed housing components and is part of the £7m annual turnover Lakeland Group, had revealed ambitious expansion plans at the end of last year.

The business secured £260,000 in funding from Evolve Finance in October to buy a new factory and office complex on the Nelson Industrial Estate in Cramlington. The idea was to move production to the purpose-built site over the next two years from its base at Earsdon to meet demand from its domestic and international customers. But the market has since toughened and is showing few signs of improvement. The construction industry was dealt a further body blow yesterday when the Nationwide Building Society’s monthly house price index revealed a 2.5% fall in the cost of a home during May, the largest monthly fall since 1991. The big players in the North East construction industry have been tightening their belts for some time. Last month, North-based Persimmon Homes said it was not starting work on any new developments after “unprecedented tightening” of the mortgage market had seen house sales fall by nearly a quarter since the start of the year.

Newcastle’s Barratt Developments said in its recent interim statement that it would only start new work if there was a clear demand for it.

And housebuilder Bellway, also based in Newcastle, posted a 3.9% drop in its interim profits to £96.9m in February and described the slowdown as much more severe than that of the early 1990s.

Brian Berry, from the Federation of Master Builders (FMB), said: “There has been an obvious downturn in the British economy in general so it is unsurprising that its biggest industry, the construction industry, has felt the force of this. Each quarter, we survey our members to find out their viewpoints on the state of trade and our latest state of trade survey for quarter one 2008 showed that construction work load has fallen to its lowest level since spring 2006.”