As has been widely reported in the trade press and across the mainstream media, Legal & General has stopped new production at its modular housing factory at Sherburn-in-Elmet, near Leeds with over 450 redundancies expected. The troubled provider blamed 'long planning delays and weak demand' for the problems.
Strategic options for the factory include a sale, merger, fundraising from third parties or eventual closure. The company will begin a consultation with employees about redundancies, retaining a number to build modular homes for existing projects in Bristol, Selby and Broadstairs in Kent. L&G's modular housing business has made slower progress than expected, running up cumulative losses of £176million since it was established in 2016.
The L&G statement read: "Legal & General has announced today that it is proposing to reduce business activity and cease new modular production at its modular housing factory in Selby, Yorkshire, whilst reviewing and assessing potential strategic options for the business. As a start-up business with a significant fixed cost base, a strong and predictable site pipeline is required to make L&G Modular Homes a successful sustainable business.
"However, a number of factors, including long planning delays and the impact of recent macro events such as Covid, have meant the business has not been able to secure the necessary scale of pipeline to make the current model work. Without this pipeline, it has not proved possible to build a business that can sustain the significant running costs of the large factory in Selby. As a result, Legal & General is also commencing consultation with all employees around the proposal to make the majority of modular homes roles redundant. The business will be doing all that it can to support employees during this difficult time and will be actively exploring opportunities for redeployment."
Bill Hughes, Chair of the L&G Modular Homes board added: "Legal & General is proud of what we have achieved in bringing forward a new approach to construction through our factory. However, without the necessary scale of pipeline it is not sustainable to continue producing more modules. We are therefore reluctantly proposing to reduce business activity and cease production of new modules at the factory. We recognise this will be a challenging and uncertain period for staff and we will be actively exploring redeployment opportunities."
Source: www.legalandgeneral.com
