Legal & General (L&G), the FTSE 100 asset administration and pensions big, is to shut its modular housebuilding manufacturing unit, in a transfer which is able to put 450 jobs in danger and solid doubts over the way forward for a supposedly pioneering sector.
Sky News has learnt the corporate knowledgeable workers at its website in Selby, Yorkshire, that it intends to cease producing there following years of weak demand.
Sources mentioned the COVID-19 pandemic and planning delays had been main elements within the lack of ability of the unit to ship ample orders to grow to be worthwhile.
L&G established the modular housing arm seven years in the past, constructing a manufacturing unit with the capability to assemble 3,000 modular properties annually.
Although particular gross sales figures for the division are unclear, insiders mentioned it had considerably underperformed expectations.
It will full current orders to make sure supply, they added.
The choice shall be seen as a major blow to a phase of the housing market which was alleged to make setting up properties cheaper and sooner.
L&G had established the enterprise as a part of a self-proclaimed mission to make “housing fairer for all” throughout a interval of intense scrutiny of the sector and authorities housebuilding targets.
In an announcement issued in response to an enquiry from Sky News, L&G mentioned: “Legal & General has introduced at present that it’s proposing to scale back enterprise exercise and stop new modular manufacturing at its Modular Housing Factory in Selby, Yorkshire, while reviewing and assessing potential strategic choices for the enterprise.
“As a start-up business with a significant fixed cost base, a strong and predictable site pipeline is required to make L&G Modular Homes a successful sustainable business.
“As a part of its ambitions to tackling the housing disaster, Legal & General Modular Homes constructed a big manufacturing unit to ship impactful housing volumes, nonetheless, with this comes important working prices making it important to have a dependable pipeline.
“These factors, coupled with long planning delays in the UK and recent major macro events such as COVID, have meant the business has not been able to secure the necessary scale of pipeline to make the current model work.”
The firm added that it was “commencing consultation with all employees around the proposal to make the majority of Modular Homes roles redundant”.
“The business will be doing all that it can to support employees during this difficult time and will be actively exploring opportunities for redeployment.”
Media stories final autumn steered that L&G had accrued losses of near £175m for the reason that modular housing enterprise was arrange.
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One particular person near L&G contrasted the travails of the modular housing arm with its wider housebuilding presence.
Through CALA, an L&G subsidiary, and its reasonably priced properties arm, it has constructed 15,000 properties over the past three years.
It is focusing on an additional 15,000 throughout the subsequent three years.
CALA’s revenues grew from about £250m to £1.25bn beneath L&G’s possession, in response to the supply.
The closure of its Selby manufacturing unit comes as L&G prepares to call a successor to Sir Nigel Wilson, the long-serving chief government, who has pivoted the group in direction of huge investments in areas corresponding to city regeneration and social housing.
Source: information.sky.com”