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WATSONVILLE – In the throes of a stalled construction industry, Granite Construction announced plans Monday to cut 227 workers, or 13 percent of its salaried work force.
Cost-saving efforts also may include selling off underperforming investments, according to a prepared announcement released by the Watsonville-based heavy civil contractors and materials company.
The cuts include 50 of the 275 salaried positions in the Santa Cruz area headquarters and offices that service the Tri-County area. The company employs about 1,700 salaried people although, with hourly workers, the number of employees can top 5,000 during peak construction season. About half of the company’s cuts were in California, which corresponds with the significance of the market downturn in the state.
“This is one of the most difficult decisions we’ve had to make as part of this overall cost reduction plan,” said Jacque Fourchy, company spokeswoman. “However, it also was an essential part of the process to get through the downturn and prepare Granite for when the market improves.”
“Throughout the course of this challenging environment, our management has been focused on identifying effective ways to reduce costs, improve processes and strengthen the overall business,” said James H. Roberts, who took over leadership of the company Sept. 1. Granite is one of the largest diversified heavy civil contractors and construction materials producers in the U.S.
The goal “is to become a more efficient, collaborative and adaptive organization that is better positioned to respond to changing market conditions and take advantage of future growth opportunities,” Roberts said. Reducing the work force, while a difficult decision, is “an important part of our plan to be more competitive, restore long-term profitable growth and create value for our shareholders.”
Employees were notified of the cuts Monday. They were given two weeks’ notice, transitional health care options and severance pay according to their number of years with the company. Some employees have been asked to finish out the year, others, to move to consolidate to new offices. Most of the cuts were in middle management, according to Fourchy, who said she didn’t expect additional cuts in the near future.
Granite will record a $10 million to $12 million pre-tax charge in the fourth quarter but the company estimates the layoffs will save $20 million to $24 million annually. The executive team is also looking at dropping any underperforming assets and investments.
In August, the company reported a net loss of more than $47.6 million for the first half of the fiscal year. In recent years, the economic downturn has meant a drop in development and government contracts. The company, which builds roads, bridges, mass transit structures and dams as well as driveways, has been trying to broaden its markets to include alternative energy and military projects.
The company, however, also reported a backlog of projects valued at more than $1.55 billion and recently announces a $126 million contract with the U.S. Army Corps of Engineers to build a new auxiliary spillway control structure for the Folsom Dam and a 25 percent share of a new $85 million highway project in Arizona.
The company is expected to discuss the restructuring Nov. 9, during a scheduled conference call with analysts and stockholders about its third quarter fiscal 2010 earnings.
Company shares, which have closed between $21.22 and $36 during the last year, dropped 59 cents Monday to close at $24.02.
This article first appeared here.