Electricity firms find contracting rough

Electricity companies which have entered the construction market since privatisation are hanging on by the skin of their teeth. Many have already had to make massive job cuts and there could be more redundancies to follow.

Wage cuts are being made at some firms while others are pulling out of contracting altogether. Privately the electricity companies are admitting that in many cases their attempts to cash in on the market have been scuppered by the depth of the recession.

A spokesman for Ipswich based Eastern Electricity said: 'Contracting's trading performance has been seriously undermined by the recession, despite having a clear niche in the domestic market.'

No company has fared as badly as East Midlands Electricity which has been forced to axe 700 jobs and close down three out of four of its contracting divisions.

Eastern Electricity has shed 100 jobs and restructured its contracting division while London Electricity has finished an operation to rationalise its pre-privatisation contracting division with the loss of several hundred jobs.

Even when firms remain in the contracting market and show a small profit, such as Midlands Electricity, labour costs have had to be pruned through wage cuts to make them competitive.

And Northern Electricity and Northern Ireland Electricity have virtually wound up their contracting divisions.

Those companies that have kept in contracting appear to have turned the corner and are now making a small profit. But there are fears further job losses could still be on the cards at least two major organisations.

Electricity companies are at pains to point out that not all diversification is bad.

Companies cite the move into gas supply as being successful and profitable, London Electricity points to its purchase of electricity distribution at the three London airports as a major triumph, and Seeboard has just been awarded a major contract to supervise energy efficiency measures in the Guandong Province of China.