O'Rourke takes flak

Moves to drive up turnover spark talk of 'cut-throat' plan to drive out competition

LAING O'Rourke is coming under fire for its 'cut-throat tactics' after picking up a string of major contracts since the start of the year.

The firm is winning job after job as part of its strategy to drive up turnover ? despite latest results showing profits had dropped by nearly two-thirds as margins were slashed.

One rival contractor said: 'The cut-throat tactics being used by Laing O'Rourke certainly haven't gone unnoticed.

I think we have all suffered at their hands.

'I'm not part of their strategy team so it's difficult to say what the target is, but the most obvious answer is that by increasing turnover they hope to force someone out of the market.

'If they reduce the number of competitors in an already shrinking pool of contractors they will be in a position to put their prices back up.' Another rival said: 'Price is king now, due to the increasing popularity of lump sum contracting. Laing O'Rourke's tactics have taken advantage of that, and not just in the private sector, but in PFI too.

'It's not sustainable, since they have a huge workforce to feed, but when it will end only Laing O'Rourke knows. I guess it's possible to bankroll it for a while with cost-plus contracts such as that at T5.' So far this year Laing O'Rourke has already bagged a £180 million deal to build schools for City of Edinburgh Council and a contract worth around £100 million to redevelop Camberley town centre in Surrey for Crest Nicholson.

It has also moved into preferred bidder position on three off ice deals in the south-east worth over £100 million for Arup, Great Portland Estates and JP Morgan.

It is firm favourite to bag a £70 million deal to redevelop London's St Pancras Hotel and build £30 million of apartments in Manchester for ISIS Waterside Regeneration.

Firms such as Bovis Lend Lease, HBG, Kier, Sir Robert McAlpine and Skanska had all been looking to get their hands on the work.

Laing O'Rourke declined to comment.

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