Modular housebuilder blames delays to existing orders and a “slow” market but says it retains a strong pipeline

Leading modular housebuilder Ilke Homes has started a redundancy programme after experiencing contract delays during the coronavirus lockdown.

Ilke Homes

The modular housebuilder told staff last week that it was looking to cut the jobs, a decision executive chairman Dave Sheridan said was made in order to cope with delays to existing orders and a slow market since the onset of the coronavirus pandemic.

Ilke has not confirmed exactly how many jobs are at risk, but it is understood that around 100 staff are involved in the redundancy consultation. The firm currently employs more than 600 people.

The news comes shortly after the firm in May announced the opening of three new regional offices – in London, Bristol and Birmingham – and appointed a former Crest Nicholson executive to head up a new “homes and development” business unit. At that point it said it was managing a “near 200%” increase in its demand pipeline.

Just last month it signed a £23m deal to build 120 affordable “eco-homes” for Stonewater Housing in Hereford, and Sheridan told Housing Today the firm’s pipeline of work remained strong.

Sheridan said: “Unfortunately, covid-19 is forcing us to make some incredibly hard decisions right now to deal with delays to existing orders and a slow market. Our ability to fulfil client orders is unaffected and we have a strong pipeline, albeit we are having to work with clients to manage the impact on their own businesses.

“The restructure we recently announced was about diversifying our business geographically and offering a turnkey development service to clients. Our pipeline remains strong, our funders are fully behind us and we continue to see offsite manufacturing playing a critical role in driving Britain’s recovery.”

The news comes the week after traditional housebuilder Crest Nicholson announced it had started a redundancy process, and following reports that Berkeley Group is also laying off staff. A large number of contractors have also started slimming their businesses to cope with the expected economic downturn.

ilke Homes factory

Ilke, formed from a joint venture between Elliott Group and Keepmoat in 2017, has a steel-frame production facility in Knaresborough at which it was targeting an annual production capacity of 2,000 homes by this year. Last year it secured a £30m loan from housing quango Homes England, at which point it said it was considering opening a second facility to bring production capacity up to 5,000 homes a year.

Modern methods of construction such as employed by Ilke are increasingly being promoted by government as the way forward for the construction industry, and manufacturers have trumpeted their ability to continue to produce homes throughout lockdown. However, the news from Ilke, which supplies homes directly for clients such as developers and housing associations, seems to indicate the sector will not be immune from any tailing off of demand for housing as a result of the pandemic.

Last year the firm also signed a deal with housing association Places for People to build 750 homes, described at the time as being worth £100m. The firm’s latest accounts, for the year to March 2019, showed the business, backed by private equity firm TDR, made a pre tax loss of £22m. However, this covered the firm’s initial set-up phase prior to winning contracts, and the business at the time said the loss represented the significant upfront investment necessary to acquire the specialist technology needed to manufacture at scale.