Laing O’Rourke is to close its Middle East division following deep cuts to the firm’s global workforce that have almost halved staff levels over the past year.
Building reported that the company’s global pay roll is being cut by almost half. According to a Laing O’Rourke source that returned to the UK business from the Gulf this year, the worldwide workforce has been cut from 35,753 to about 20,000, largely as a result of the downturn in the UAE.
The closure of the division is a clear change in strategy for the UK’s third-largest contractor, which relaunched the business with a three-region structure in 2006. The remaining hubs are Europe and Australasia, but the Middle East was the largest.
The source said: “It’s been a nightmare for my family and hundreds of former colleagues who are out of work. The firm can’t employ more than 4,500 workers and 900 professional staff in the Middle East now, which is down from about 16,000 and 5,000 during the boom - a fall of about three-quarters.”
The closure follows the return to the UK of Norman Haste, formerly chief operating officer of the Middle East hub, who is now spearheading the company’s push into the energy market. He was not replaced as head of the regional business, whose remaining operations will be overseen by the firm’s head office in Dartford, Kent.
Despite the closure, the £4bn-turnover firm is expected to maintain a presence in the Middle East and will continue to have a relationship with Abu Dhabi developer Aldar, with whom it is working on the 54 bn dirham (£10bn) Al Raha beach project.
The source added: “They will keep good relations with the ruling families, but will never be in a situation again where there is such a dependency on a market where it is hard to get your money back if things go wrong.”
The extent of the company’s debt in the Middle East is unknown, but according to its 2009 accounts its turnover in the region doubled to £829m, which compares with £300m at Balfour Beatty and £600m at Carillion, the two largest UK contractors.