Managers are in consultation with staff about 35 planned redundancies in an attempt to trim overheads by around £1.2m.
The Scunthorpe contractor is a key player for North Lincolnshire Council work. The council recently said that £1.2m worth of road schemes had been put on hold as a result of Government cuts.
A spokesman for Clugston Construction said: “The reduction in capital spending by the Government, on top of the recession, which has deeply affected the construction sector, has and will continue to impact on our turnover.
“In reviewing levels of business, it is necessary to align our numbers of personnel.
“Sadly, this will result in a number of redundancies and we have begun the appropriate consultation processes.”
A list of at-risk job titles was released on Tuesday and consultation is ongoing.
“Up to 35 redundancies are anticipated from across the business, involving both head office and our construction projects,” said the spokesman.
“We are disappointed to have to take this action but it is necessary in light of reduced and more competitive workload.”
Many people are on notice at the company, and it is understood the consultation period will end on Friday, October 8.
The latest company results for 2010 showed group turnover declined significantly from its historic high of £141.7m to £86.7m and group profit before taxation was down from £2.78m to £1.5m.
The construction arm squeezed in an operating profit of £775,000. Clugston also made job cuts last year, with average staff numbers falling from 661 to 517.