Stephen Teagle says firm has had ‘many positive conversations’ with subcontractors over 10% cost reduction proposal
The chief executive of housebuilder Vistry’s partnerships division has defended the decision to negotiate price reductions on existing and future contracts with contractors.
Stephen Teagle said the negotiations, under which Vistry wrote to contractors to propose 10% price cuts on existing and future contracts, have been “very successful” and that the agreed ”efficiencies” will allow more development and therefore more future work for contractors.
Teagle said: “We have had so many positive conversations with our partners, we are absolutely talking about how we can generate production efficiencies.
“But we are also emphasising and working with our partners to meet our ambition to continue building and increase the volumes which means we can give more business continuity.”
Teagle said its partnerships model, in which it pre-sells units to housing associations, councils and the private sector, gives longer term visibility to partners and contractors.
He said: “We can only really engage in those discussions [about price cuts] because we can offer continuity of supply.”
Teagle was speaking to Housing Today after the group yesterday announced 200 jobs will be cut under it restructuring of its business to focus more on partnerships and save £25m a year.
It is merging its housebuilding arm into its partnerships business and cutting five regional units in a move that it expects to hit its adjusted profit in 2023 by £40m.
Teagle said he is confident Vistry can increase its annual development rate to 20,000 homes within 18 months to two years. “We have the visibility of operational sites that will allow us to deliver that,” he said, adding the firm will then push to increase this further to 25,000 homes.
He said the default assumption is these homes will be built using MMC, which he said suits the partnerships model due to longer term visibility of work. As part of its deal to buy Countryside, Vistry has retained the firm’s 3,500-homes-a-year factory in Bardon, Leicestershire.