Recovery still not in top gear, says Severfield

A laser show projected from the Shard skyscraper, yards from the banks of the River Thames
A laser show projected from the Shard skyscraper, yards from the banks of the River Thames
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Steel group Severfield said the economy is taking longer to pick up than originally thought, although it is well placed to take advantage of the upturn when it does come.

​The Thirsk-based group​, which has worked on Arsenal’s Emirates Stadium, the Shard skyscraper and the London 2012 Olympic stadium, said there is still some uncertainty in the wider economy.

​Severfield’s chief executive Ian Lawson said: “We’re seeing some early signs that the workload is picking up, but it’s taking longer than we envisaged six months ago.

“Clients are being very cautious in terms of planning and then appointing contractors. It’s taking longer than anticipated.”

Despite the sluggish recovery, Mr Lawson said the group “is getting its mojo back” after a torrid time.

​The structural steelwork fabricator​​ underwent a major re​-​structuring last year​ after ​ax​ing​ its​ former​ chief executive Tom Haughey.

Severfield was forced to seek emergency funds after uncovering severe losses on contracts, most notably the ‘Cheesegrater’ skyscraper in London.

“The business went through a very difficult time in January to March 2013,” said Mr Lawson.

“Without doubt it lost its mojo, but we’ve done a lot of hard work to get it back.

“We’re not 100 per cent there, but we’ll see that as the economy picks up.”

Speaking about the threat of Scotland voting for independence from the UK next week, Mr Lawson said Scotland is not a big enough market for the group for it to have a major impact on its finances.

“We haven’t had a job in Scotland for the last 18 months. It makes up less than five per cent of our business,” he said.

“That said we’re bidding on a very large contract to build a shopping centre extension in Glasgow at Buchanan Galleries.

“There will be a little bit of caution. If Scotland goes for independence it’s not for us to say what the effect will be.”

He said the biggest concern for the business is when interest rates will rise.

“There is general caution about where interest rates are going. People believe interest rates will rise – whether it’s in November or the early part of next year is giving some uncertainty,” he said.

The group is currently waiting to hear the outcome of a number of large orders and recently secured a £12m order for Telehouse, a data centre in Lon- don.

Severfield’s Indian business is showing signs of improvement, with cost savings and increases in production.

The Indian order book stands at £34m.

“India was far from satisfactory and we had some significant losses,” said Mr Lawson.

“Having been in the role for 10 months, I’ve got no emotional attachment to India.

“At the moment the business is performing far better than it was. It will still lose money, but nowhere near the levels of last year when it lost £3m.

“We do believe the market in India for structural steel could be immense.”

However, the group’s future is not dependent on India.

“We could pull out of India. It’s a joint venture. It’s an option, but a last resort option. It’s clearly not sustainable for us to have a loss-making business,” said Mr Lawson.

Last month the group reported a solid order book of £171m and said the business is showing improved stability​.

“It’s steady as she goes,” said Mr Lawson.

“We’re cautiously optimistic about the future. We’re very pleased with how the business is positioned.”