A DROUGHT of new home buyers has forced Scottish housebuilder Cala Homes to down tools on development sites and cut almost 8 per cent of its workforce.
The Edinburgh-based firm, which builds about 1,500 homes a year, said it would only continue work on houses or flats that have already been sold.
Cala is to cut about 30 jobs from its workforce of around 400 in an effort to keep costs down and av
oid having to go to lenders for further funding during the industry downturn.
The Cala board of directors took the decision to stop construction work when it became clear in March that housing sales had "(fallen] off a cliff".
Geoff Ball, the executive chairman of Cala, told The Scotsman the plan was called "Project Dunkirk", on the basis that there was "an orderly retreat".
He said: "We decided immediately we would cut down on our landbank, we would slow down construction and only build where we had sold the house or the flat.
"We had to look at our overhead levels. Very regrettably we had to make some redundancies. We have had to let go of about 30 people, some of whom have been long-serving Cala people. That grieved me deeply."
The redundancies are in line with similar cuts made by other housebuilders, albeit on a smaller scale. In what was one of the worst weeks for the housing industry in recent history, Barratt announced it was cutting up to 1,000 jobs and closing and merging offices, affecting Scottish operations in Aberdeen and Edinburgh. Taylor Wimpey also announced plans to shed 900 staff and close 13 offices.
Ball warned that job cuts would make it difficult for the housebuilding industry to get back on its feet when the industry eventually recovers. "So many people are being made redundant and will leave the industry," he warned. "So much labour is being lost on the sites. It will take a long time to rebuild those teams and labour forces so when any upturn comes we won't be able to rebuild production to market needs."
Housebuilders have been hit by a "mortgage famine", as banks withdraw mortgage products to potential buyers.
Recent figures from the Council of Mortgage Lenders Scotland showed there were 16,000 mortgages issued in the first quarter of 2008, compared to 20,000 in the first quarter of 2007.
Last month Homes for Scotland warned that "several thousand" jobs were threatened by the slowdown.
Some maintain Scotland's housing market has so far been immune from some of the worse effects of the credit crunch. According to research from the Nationwide building society, prices north of the Border are performing better than in the UK.
Although average house prices in Scotland had fallen 1.8 per cent in the last quarter, UK-wide, it showed annual house price inflation at its lowest since the crash of 1992.
Ball confirms the fall in house sales in Scotland was sudden and recent.
"In March the market fell off a cliff," he said. "I have never known anything like this in my career.
"If you talk to people in the industry, everyone is shellshocked."
The full article contains 537 words and appears in The Scotsman newspaper.
