Suffolk road worries as Kier sees share price fall after profit warnings
- Credit: Suffolk Highways
Vital safety repairs on Suffolk’s roads will continue if the county’s road contractor is unable to continue due to financial worries, people have been assured.
Safeguards have been put in place for Suffolk County Council to step in and take direct control of the area's road management if necessary after the share price of Kier, which currently carries out the repairs, fell by more than 40% last week.
The company also warned that its profits were likely to fall from £169m to £129m.
It has also failed in attempts to raise £264m on the money markets to cover increased costs in major contracts to build part of Crossrail under London and the HS2 project for a new rail line from London to the Midlands and north of England.
Over the last year Kier's share price have fallen from 1,004.32p to 165.4p - sparking fears that it could suffer the same fate as fellow construction and service company Carillion, which went into administration last year leaving a string of government and local government contracts unfulfilled.
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Suffolk County Council Green Party councillor Robert Lindsay said the future of Kier was a concern.
"The council's Conservative administration outsourced its entire roads maintenance team to Kier in a five year contract back in 2013, saying the private sector could do the same work for less money.
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"And then, despite many problems with the contract, renewed it early in 2015 for another five years.
"If Kier goes bust, Suffolk County Council will be left scrabbling around trying to find new contractors to do vital safety repairs to roads and there will inevitably be an extra cost as contractors charge a premium for emergency work.
"I very much hope the council is making contingency plans so that, should the worst happen, it can take the work, and any necessary staff, back in house.
"I hope Kier survives, but the Conservatives' 'outsource-at-all costs because the private sector is better' policy needs to be laid to rest."
Mary Evans, cabinet member for highways, transport and rural issues at the council, said the situation was being monitored.
"Senior officers across the council have been closely monitoring this and are keeping a dialogue open with senior Kier staff," she said.
"We have reviewed our business continuity plans and processes in the event that we need to step in should something happen. All of our contractual payments are paid in arrears so our financial exposure is mitigated."