British building supply firm Travis Perkins will cut 2,500 jobs in the U.K., about 9% of its total workforce, and close 165 stores as the Covid-19 pandemic is expected to weaken demand for construction materials over the next two years.
The branch closures will reduce its overall network by 8%.
Travis Perkins is Britain’s biggest distributor of building materials and owns various other chains including Wickes, Toolstation, Tile Giant and BSS.
The branch closures will largely affect the Travis Perkins chain, particularly smaller branches where social distancing rules are impossible. But the Wickes, Toolstation, Tile Giant and BSS chains will also undergo some closures.
However, the company’s 66 Toolstation stores in the Netherlands, France and Belgium will not be closed.
Jobs in distribution, administrative and sales functions will also be eliminated.
During the coronavirus lockdown Travis Perkins had kept about one-third of its general builder branches open, along with half of its plumbing and heating stores to serve essential businesses.
Over the past six weeks, the company has opened up more branches – sales volume as of June were about 85% to 90% of last year’s figures.
“While we have experienced improving trends more recently, we do not expect a return to pre-Covid trading conditions for some time and consequently we have had to take the very difficult decision to begin consultations on the closure of selected branches and to reduce our workforce to ensure we can protect the group as a whole,” said Travis Perkins chief executive Nick Roberts. “This is in no way a reflection on those employees impacted and we will do everything we can to support them during this process.”
The company added: “While there has been a significant recovery in trading volumes in recent weeks, it is evident that the U.K. is facing a recession and this will have a corresponding impact on the demand for building materials during 2020 and 2021.”
Travis Perkins has also negotiated an easing of its bank covenants and capped its spending.
In addition, 15,000 people – about one-half of Travis Perkins’ workforce — were furloughed for the first three weeks of the lockdown with full pay. Travis Perkins board and senior management received a 20% pay cut from May 1 for three months.
“The [Travis Perkins] group has a robust balance sheet, strong liquidity position and I am confident that these proposed changes will enable us to trade successfully through this period of uncertainty with a cost base that better reflects the environment we are operating in,” Roberts added.
However, the near future of the British builder-construction industry remains cloudy.
A recent report by Mitrefinch, a global workforce management firm, revealed that U.K. construction firms are highly unprepared for a post-covid-19 landscape in terms of having employees working remotely or on flexible schedules.
“It’s no secret that the past couple of months have been some of the most challenging for U.K. businesses in recent years, and with some elements of restrictions likely due to remain in place upon lifting the full lockdown, there looks to be significant challenges in the months and years to come,” said Mita Patel, product and development director at Mitrefinch. “The difficulty with the construction industry lies in the traditional nature of roles. Certain tasks can be challenging to perform remotely which leaves these industries falling behind as others make the shift to remote working.”
Patel added: “However, although surprising to many, there are many jobs in construction which can be done remotely. For instance, building documentation and defect management can be done from anywhere and many administrative tasks can be offloaded to allow managers to use time on site more productively. We are expecting to see a shift like this in these sectors over the next few months.”