Opinion: What is going wrong at Balfour Beatty?

Grant Prior 9 years ago
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Everyone likes to have a pop at the biggest player in any industry.

But Balfour Beatty is making itself an easy target for detractors as it lurches from crisis to crisis.

Yesterday was a typical day in the Balfour soap opera with a £50m profit warning and another management shake-up.

A regional managing director was bundled out of the door after holes were found in local contracts.

And it’s all change at the top again with Mike Peasland and Andrew McNaughton taking on new roles in a bid to steady the ship.

It must leave the thousands of Balfour staff and shareholders wondering what on earth is going on.

How many reviews does it take to find out what the problems are and how to fix them?

Company foot soldiers were hit with 650 redundancies last year after a sweeping review of operations.

The promise then was of jam tomorrow as efficiency savings kicked-in.

Instead they have been rocked by two profit warnings in six months – the latest coming just over a month after posting annual results.

The latest management merry-go-round is an attempt by the board to reassure worried shareholders that Balfour’s newly unearthed problems are going to be rooted out.

With the firm’s credibility in the City on the line, it must also spell a period of further job insecurity among staff who are only just coming to terms with the last shake-up.

Balfour is certainly not the first firm to run into problems with regional contracts in this recession.

A major temptation for a contractor the size of Balfour is to buy local work at any cost just to keep your resources employed.

That infuriates smaller regional rivals.

And it has a nasty habit of coming back to bite you when the final accounts are drawn-up.

Balfour CEO Andrew McNaughton took charge in January after being groomed in senior roles at Balfour Beatty for a decade.

It has certainly been an interesting few months.

There has been enthusiastic talk of  a refocussed business, global markets and major engineering projects ahead.

Before Balfour heads off in that direction, McNaughton has the small matter of sorting a few things out closer to home.

He has to make sure this latest reshuffle works because in the world of profit warnings it’s often a case of three strikes and you are out.

 

 

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