Scottish housebuilder cuts jobs as it cites impact of oil sector woes
HOUSEBUILDER Stewart Milne Group has signalled between 60 and 80 redundancies, the vast bulk in
Scotland, citing market weakness in Aberdeenshire and the financial impact of losing nearly three months of trading during lockdown.
It attributed the weakness of the housing market in Aberdeenshire to the oil and gas sector’s woes. This sector had been recovering – after a protracted downturn triggered by the crude-price plunge which began in late 2014 – before the coronavirus pandemic struck.
The family-owned housebuilder, headed by executive chairman Stewart Milne, said it would be “wrong” for it to make further use of the UK Government’s furlough scheme at this time given the restructuring was “not directly related to the current restrictions”. It flagged the reorganisation as “best for the longerterm future of the business”.
While highlighting a “short-term spike” in UK housing market activity and noting the company’s “forward sales position for 2021 is very strong”, Stewart Milne Group chief executive Stuart Macgregor cited the board’s “responsibility” to plan for “the economic position...in the next few years”.
Aberdeen-based Stewart Milne Group noted it had during lockdown earlier this year, when there was no housebuilding or manufacturing, furloughed 795 employees. It added that, since the market re-opened, “almost all these employees have returned to work and the group currently employs almost 960 people”.
Noting the restructuring plans outlined this week would “put 60 to 80 posts at risk of redundancy in Aberdeen, Glasgow and Manchester”, Mr Macgregor said: “We fully appreciate that this is a painful process given the current economic climate where many more people are also facing uncertainty. We are committed to managing the process as efficiently, fairly and transparently as possible.”
Highlighting challenges in the Aberdeenshire housing market, the company said that, “although sales... have improved post-lockdown...this market remains more challenging due to a historic over-supply of properties and a significant drop in house prices as a result of almost six years of an oil and gas downturn”.
Stewart Milne Group said the loss of nearly three months of trading because of the restrictions put in place to slow the spread of Covid-19 coronavirus had “inevitably impacted on financial performance”.
However, it added that, since coming out of lockdown, it had achieved strong sales performance across Scotland and north-west England, particularly in Tayside, the central belt of Scotland and “popular commuter areas” in northwest England.
The restructuring involves the merger of Stewart Milne Group’s two homes divisions in Scotland – central and north. Jonathan Fair, currently managing director of Stewart Milne Homes
Central, will head up the combined division. Neil Thomson, regional director for Stewart Milne Homes North, will be deputy managing director of the enlarged unit.
Mr Macgregor said: “Regrettably, our restructure will impact on jobs and we are embarking on a consultation process which will put 60 to 80 posts at risk of redundancy in Aberdeen, Glasgow and Manchester from a total of almost 1,000.
“This is not a decision we have taken lightly, but one based on what is best for the longer-term future of the business, protecting the majority of jobs and ensuring we are better positioned for growth in the next five years.”
He added: “The UK housing market is currently experiencing a short-term spike in activity and our forward sales position for 2021 is very strong. However, the group board has a responsibility to look further ahead and plan for the economic position we anticipate in the next few years.
“Although most areas of Scotland, and all of England, are currently subject to Covid-related restrictions, these do not affect our construction and manufacturing operations in the same way as they did earlier this year. It would therefore be wrong for us to make further use of the furlough scheme at this time when our restructure is not directly related to the current restrictions but rather to meet our longer-term activities.”
Stewart Milne Group noted its timber systems business “continues to perform strongly and its workforce of almost 400 people, in Aberdeen and Witney, is not affected by this restructure”.
This off-site construction division designs and manufactures timber frames.
Mr Macgregor said the company’s recent annual business plan process “assessed the likely market demand in each of the housing markets in which we operate”.
He added: “As a result of this, we are combining our Scottish operations to ensure we have the right resources in the right places and can leverage the benefits of our newly developed consistent ways of working.”
This is not a decision we have taken lightly