L&G to shut down Selby
Legal & General is proposing to reduce business activity and cease new production at its modular housing factory in Yorkshire, while it reviews strategic options for the business.
The institution said that as a start-up business with a significant fixed cost base, a strong and predictable site pipeline is required to make L&G Modular Homes a successful sustainable business.
However, factors including long planning delays and the impact of ‘macro’ events such as the Covid 19 pandemic, have meant the business has not been able to secure the necessary scale of pipeline to make the current model work – and without this pipeline, it has not proved possible to build a business that can sustain the significant running costs of the Selby facility.
As a result, L&G will start consultation with all employees around the proposal to make the majority of modular homes roles redundant.
Bill Hughes, chair of Legal & General Modular Homes’ board, said: “Legal & General is proud of what we have achieved in bringing forward a new approach to construction through our factory. However, without the necessary scale of pipeline it is not sustainable to continue producing more modules. We are therefore reluctantly proposing to reduce business activity and cease production of new modules at the factory.
“Regrettably, this includes commencing consultation with all employees around the proposal to make the majority of Modular Homes roles redundant. We recognise this will be a challenging and uncertain period for our staff and we will be actively exploring redeployment opportunities and supporting them during this difficult time.
“Legal & General remains deeply committed to the UK housing sector, where we have delivered 15,000 homes over the last three years, and to our valued industry partners and customers. As such, we are continuing to actively explore all options available to us and will retain a select workforce to ensure high quality delivery and aftercare services for our existing customers, whilst engaging with each of our partners regarding ongoing modular projects.”
L&G launched its modular housing business in 2016, developing the 550,000 sq ft factory in Sherburn-in-Elmet as it sought to make inroads in a market often cited as under-represented in the UK housing mix.
However, it is not alone in struggling to make the modular sector work – Urban Splash’s modular arm Urban Splash House Holdings went into administration around a year ago. The Manchester company had itself acquired certain property and assets of modular construction business SIG Building Systems for a token £1 in 2018.