Rok boss Garvis Snook explains his firm's job cuts

350 of the 750 total job losses at Rok have already occurred and most of the remaining 400 will take place before the New Year, says Garvis Snook, chief executive.

These job cuts – announced this morning – involve Rok’s white collar employees.

“The other side of the picture is that we are still recruiting people with traditional skills to go into our maintenance businesses at the rate of 50 a month,” said Snook. “This part of the group is still growing strongly.”

Snook had thought that the 350 job cuts made earlier this year would suffice, but then the dynamics of the situation changed.

“We saw that construction sales would be £120m down so we are setting our new base for that. If construction work is shrinking, we’re quick off the blocks to drive through our reaction.

“We see low tender rates and we don’t want to be a player in that territory.

“Take social housing, both new build and maintenance. It won’t recover until next spring. The social housing frameworks are fine, and yes, we are still winning work there and have an orderbook running to £2.1bn.”

However the area outside of frameworks is experiencing change.

This is highlighted by one of Rok’s clients who had until now been spending £800,000 a month on refurbishment. In mid-October that client asked Rok to finish its existing work and go away until next April as it had no money left.

It had invested the money earmarked for the work in a bank in Iceland.

Another example of the current woes relates to a social housing company developing low-cost housing for sale. The lack of sales had triggered a switch to turning the work into rented accommodation which in turn resulted in a lack of capital receipts. Hence the future part of the development was going back to the drawing board for a re-design.

“It will be the second quarter of 2009 before things get back on track,” said Snook.

Last summer Rok tightened its credit control, resulting in some of its local teams deciding that they didn’t have adequate confidence in the clients’ financial stability.

“We pulled out of one which was subsequently taken on by another contractor,” said Snook, “but several have not gone ahead at all.

“A lot of Rok’s senior heads went through the last recession so there is experience there.”

Is the immediate 50% drop in Rok’s share price rational?

“The whole Stock Market is not rational these days,” replies Snook. “In time we will be recognized as having been fleet of foot and I hope we’ll get credit for that.”