'Layoffs an opportunity'

Johannesburg - The global economic crisis has left many companies with no option but to lay off workers, but Basil Read says this means there are more skills for it to take up now.

Local construction firms Murray & Roberts and Group Five have had to retrench staff owing to cancelled projects.

Construction group Basil Read told Fin24.com that the layoffs in the industry will feed its appetite to grow further, as it needs more employees to keep up with growth.

"We are growing at such a pace," said Basil Read CEO Marius Heyns, following the group's full-year results presentation on Friday.

For the year to end-December, the group reported a 73% rise in revenue to R3.5bn, an 81% increase in operating profit to R308m and a 68% rise in headline earnings per share to 267.04c.

Basil Read had also secured new contracts during the year worth R5.6bn, pushing its order book to R6.3bn at the year-end. This was almost double its R3.6bn order book at end-2007.

The recent announcement regarding Debswana's cancellation of mining activities in Botswana has snipped R235m off its order book.

Even though this was caused by the financial crisis - which eventually led to a collapse of commodity prices as the demand for resources dried up - it fared far better than some of Basil Read's heavyweight construction peers.

In the six months to end-December, Murray & Roberts lost or suspended contracts to the value of R10.4bn in its order book, even though it managed to secure a R60bn order book at the end of the period. It had to lay off 3 900 employees globally as a result. The majority (3 385 people) came from SA, of which 50% hailed from the local mining industry.

Group Five laid off 3 000 workers in Dubai after contracts worth R4bn were cancelled due to the global economic slowdown.

Infrastructure cushion

"Skills are more available in the market now," said Heyns.

The group has been employing 30 staff members a month for the last two years, said Heyns.

And now with R787bn in public sector infrastructure spend coming online - as announced by Trevor Manuel in the 2009 budget speech in February - more jobs will need to be created as public infrastructure grows.

Construction companies across SA have benefited from government's multi-billion rand infrastructure spend programmes over the past few years, which have helped them divert from an ailing residential building sector and has cushioned the effects of a global economic slowdown.

In an interview with Fin24.com after the budget, the CEO of Basil Read's roads and infrastructure division Roadcrete, Martin Lombard, said the latest budget would "continue to support employment" in the sector. "I can assure you that we are very happy with this," said Lombard.

Basil Read is working on three sections of the Gauteng Freeway Improvement Project which is worth just over R2bn.

It is also planning to bid for projects like the construction of new Tshwane municipal offices in Pretoria, several prisons around the country, and power plants. It also wants to focus on potential port and harbour upgrades and water facilities projects.

In its mining operations, it has plans to partner with local partners to be a "key success factor" in Botswana. It is also looking for partners in Namibia, where it is working on the Rössing Uranium mine for global mining giant Rio Tinto. It is also looking to other African countries like Zambia for other untapped opportunities.

- Fin24.com