Rok still recruiting skilled trades at 30-50 a month

Rok is still recruiting skilled operatives at the rate of 30-50 a month. The majority are multi-skilled individuals, typically having started out as a carpenter before adding an additional skill such as painting or plastering.

Garvis Snook, chief executive, offered an update on the position at Rok after the group announced its annual results this morning.

The message to all directly employed staff is that there is no plan to trim wages…but neither is there much chance of them going up.

Rok’s annual pay-round review is scheduled for mid-year. Snook said: “I doubt there will be anything [i.e. a neutral outcome].”

Even this is good when compared with the outside world.

Snook added: “Subcontractor rate for core trades are down by 30%-40% from their peak, though these are not the people you’d want to take on as they’ll be in that position because their bank is calling in their overdraft and they are struggling.

“The problem with taking on the cheapest like this is that they will probably fall over before completing the job.”

Skilled tradesmen/women working on a salary for Rok, however, are in a different league.

“We’re all on the same package in Rok, all employees get the same pension and health care deal,” said Snook.

“In addition, our operatives are all on an incentive scheme whereby they can enhance their income through higher productivity.”

Without exceptional costs of £12m last year, Rok’s on-going operations would have made a pre-tax profit of £20m.

The market expectation is that Rok’s profit in 2009 will be slightly ahead of that £20m figure, with turnover falling from £1bn in 2008 to around £750m-£800m.

“We have already got 90% of our planned 2009 revenue secured,” said Snook, “and we’ve lowered our cost base by £30m.

“It was Rok’s new build division that took all the pain in 2008. The social housing new-build was fine and last year’s turnover of £130m will grow this year, but the other part, the new-build contracting which used to account for a turnover of £450m will be down at £250m in 2009. Most of that is already secured.

“We had 20 branches of Rok where they did new-build contracting. That figure has shrunk to five.

“In the early 90s I was operational director at Stansell [which has since become part of Morgan Sindall] and I saw what that recession did to new build contractors. People were desperate for volume and margins were slashed.

“Today there are so many contractors who will keep taking volume, firms that allow the bid decision to be taken at a local level where someone will take the view ‘we’ll be OK at this low price as we’ll screw more out of the subcontractor’.

“The reality will only surface two or three years down the line when they’ll be unable to settle the final account and will then finally see how bad their losses are.”