650 jobs cut at Alfred McAlpine

TOM STEVENSON

City Editor

Alfred McAlpine is to shed 650 jobs as it closes its traditional open- tender building business. The shutdown, the latest move in the restructuring of the UK construction sector, will knock a pounds 34m hole in profits for the year to December, sending the company "substantially" into the red.

Despite the prospect of losses, the news was welcomed by the City, which pushed McAlpine's shares 10p higher to 158p. Many companies have trumpeted their refusal to join in the cutthroat tendering competition for building work, but few have acted as positively to withdraw from the overcrowded market.

All the job losses are in the building division, where 350 staff are to go immediately and another 300 to follow. The move represents a dramatic cutback for the company, which employs about 4,000, including 900 in the US. It is the latest stage in a reduction that has seen the number employed in the industry fall by 500,000 to 1.3 million since 1989.

McAlpine's decision leaves it evenly balanced between housebuilding and civil engineering. The company also plans to set up a "special projects" division, to focus on jobs such as new football stadiums, hospitals and leisure industry building works.

The withdrawal follows the announcement of a large asset swap between Tarmac and Wimpey and the withdrawal of several large contracting businesses from their housebuilding operations. All the moves have been in response to wafer-thin margins that have seen much of the UK building industry struggling to recover from the recession that started more than five years ago.

The restructuring of McAlpine's contracting division comes after a difficult period for the company in which it has been publicly criticised by its largest shareholder, the McAlpine family trusts, and approached in an unsuccessful bid attempt by rival Amec.

Last September a leaked letter from Sir Chips Keswick, acting on behalf of the McAlpine family, which still holds 15 per cent of the shares, said: "We have lost any confidence that we may have had that the present senior executive management is capable of rebuilding the group's profitability."

McAlpine's non-executive chairman leaves the company in May following the annual meeting and earlier this week a new finance director, Gavin Morris from Norcros, was appointed.

Oliver Whitehead, chief executive, said: "Although the costs will result in the group reporting a substantial loss for 1995, the reorganisation is expected to lead to significant profit improvement."

He said it had been a difficult decision to pull out of what had been a core business, but warned that the division had produced disappointing results for some time and was showing no signs of improvement.

"Some people think it will get better in 1996/97 as the Government hands out sweeties ahead of the general election - but we don't agree", he said.