The group has also put its Govan shipyard up for sale and announced changes at 拢1.4bn Kvaerner Construction.
Kvaerner Construction chief executive Keith Clarke said that, although he will be sad to lose the Cleveland brand name, the firm has been making too little for up to 10 years. He said that this lack of workload had been exacerbated by the strong pound and a lack of infrastructure projects.
The group is confident it will find a buyer for the 拢100m-a-year business, safeguarding more than 2000 jobs in Darlington, Dubai and Malaysia.
The aim of the restructuring of Kvaerner鈥檚 construction operations is to cut its overheads by 拢3.9m a year, although Clarke said there were no plans for redundancies.
Contracting is to be reorganised to give greater emphasis to specialist operations, such as the firm鈥檚 M&E arm Rashleigh Weatherfoil and plasterwork arm Clark & Fenn. Clarke said Kvaerner sees subcontracting work as more profitable than general building and civils work.
The two specialists currently account for 34% of contracting turnover, but Clarke wants to see their contribution grow to 40-50% without seeing a fall in the firm鈥檚 other work.
Clarke said Kvaerner intends to retain its position as the UK鈥檚 third-biggest contractor, but Clarke was less certain about the firm鈥檚 overseas operations. It will also continue to be Hong Kong鈥檚 biggest contractor, through its Gammon subsidiary, but Clarke said the market in South-east Asia was patchy. Kvaerner has already scaled back its presence in Thailand, Malaysia and Indonesia.
The firm also plans to sell its corporate development arm, but plans to continue to take stakes in private finance initiative projects.
The changes within Kvaerner Construction come against a backdrop of heavy losses across the group dating from a diversification that included the acquisition of Trafalgar House in 1996.
Clarke said he was heartened that construction remained a core business. He said: 鈥淚t is a great relief that we have a clear signal from our shareholders and banks to proceed with this restructuring.
鈥淚t will be a long, sensible grind over three years, but this is the end of the beginning.鈥�
