What's Happening?
Legal & General's modular housing business is in the process of winding down operations, having recorded a significant reduction in losses. The company reported a loss before taxation of £9.4 million for the last year, a notable decrease from the previous year's £44 million loss. This comes after a decision two years ago to cease production due to the factory in Selby, Yorkshire, failing to achieve profitability. The firm's turnover also fell from £12.4 million to £5.3 million, while net liabilities remained steady at just over £6 million. The company has been gradually reducing its workforce, with employee numbers dropping from 312 to 53, which has significantly lowered its wage bill. Despite these challenges, the company continues to deliver modular housing at its final live site in Bristol, with two of its three planned developments completed.
Why It's Important?
The winding down of L&G's modular business highlights the challenges faced by the modular construction industry, particularly in achieving profitability and managing operational costs. The decision to cease production reflects broader industry trends, where companies struggle with planning delays and the need for a strong site pipeline to sustain operations. This development could impact the modular housing market, potentially leading to reduced innovation and slower adoption of modular construction methods. Stakeholders in the construction and housing sectors may need to reassess their strategies in light of these challenges, as the demand for affordable and efficient housing solutions continues to grow.
What's Next?
The winding down process for L&G's modular business is expected to continue until 2026, with the company's obligations likely extending until 2028. As the company completes its final developments, it will focus on fulfilling its remaining commitments while managing the financial and operational aspects of the wind-down. The broader modular construction industry may see further consolidation as companies evaluate their positions in the market. Housing associations and other stakeholders may need to explore alternative strategies to meet housing demands, potentially leading to new partnerships or innovations in construction methods.
