Cleveland poised to double its turnover

Jan 20 2009 by Karen Dent, The Journal

A FULL order book and the "imminent award" of another major contract will create 200 new jobs at engineering company Cleveland Bridge, almost doubling its turnover to around £70m this year after a bitter legal battle over work on Wembley Stadium plunged it into the red.

The Darlington building and engineering firm, owned by Saudi company Al-Rushaid Petroleum Investment, saw its latest set of annual results dragged down after it lost a four-year court wrangle with Wembley developer Multiplex Constructions. The judgment resulted in an £18.2m exceptional charge, leaving CBUK nursing a £17.7m pre-tax loss during 2007.

But CBUK, which specialises in the design and construction of major bridges and landmark structures, is now poised to recruit 200 people as it prepares to start work on a major offshore contract at Haverton Hill on the River Tees.

It is also about to sign a three-year £25m contract to carry out maintenance work on Bidston Moss Viaduct in Merseyside and has continuing work on two other major projects, worth £50m each, to see it through this year and into 2010.

A spokesman said: “We presently have two large jobs we are working on, the M74 bridges near Glasgow and the Shard Building on London Bridge. We don’t need to book any more work this year and it’s only January.”

The company is set to sign the Bidston Moss contract with main contractor Costain and is recruiting staff to begin work on a semi-submersible rig at Haverton Hill, a contract it won 18 months ago.

The spokesman said: “The jobs are on-site orientated. We’ve got probably over 2,000 applicants.” CBUK’s ambitious annual turnover target of £70m is almost double the £37m it achieved in the year to the end of December 2007, the most recent figures available. Those annual results were hit by the long court case with Multiplex.

CBUK built the stadium’s steel arch under a £60m contract but the main contractor – now called Brookfield Europe – was unhappy about a number issues including delays and the quality of the work. The Darlington firm gave notice it would not carry out any more work in July 2004, which led to the court battle.

Multiplex won the case in September, leaving CBUK with legal costs of £7.3m. It was also forced to write down the value of its contract with Multiplex by £11m and pay £6m in damages. However, Multiplex faced a £10m bill for costs because the judge found against it on some issues.

CBUK, which employs around 600 people, announced 200 redundancies following the case.

Both sides have applied for leave to appeal against aspects of the judgment.

But CBUK’s is confident of a strong 2009 following the case. Its positive start to the year has also bucked the gloomy trend seen in the construction industry as a whole.

Recent Government figures show new orders for construction projects fell by 27% in the three months to November 2008 compared with 2007, while the Chartered Institute of Purchasing and Supply (CIPS) said in December that new orders had fallen at the fastest rate on record.