Legal & General is to halt new production at its loss-making modular housing factory near Leeds while it reviews the future of the business, putting 450 jobs at risk and casting doubt over the pioneering sector’s prospects.
The factory, one of the biggest in the UK, manufactures homes in prefabricated modules that are put together on site, which is faster than tradition construction and has been hailed as a possible solution to the housing shortage.
However, amid long planning delays and weak demand, the insurance and pensions group has told staff it is ceasing the construction of new modules and will let the majority of them go.
The company will begin a consultation with employees about redundancies, retaining a number to build modular homes for existing projects in Bristol, Selby in North Yorkshire and Broadstairs in Kent.
Strategic options for the factory include a sale, merger, fundraising from third parties or eventual closure.
L&G’s modular housing business has made slower progress than expected, running up cumulative losses of £176m since it was established in 2016 by the insurer’s outgoing chief executive, Nigel Wilson. Its parent has injected £182m into it over that period.
Several other modular housing firms are also in the red; three went bust last year. One of the few profitable firms is the Bedford-based Vision Modular Systems.
Bill Hughes, chair of the L&G modular homes board, said: “We are reluctantly proposing to reduce business activity and cease production of new modules at the factory.
“We recognise this will be a challenging and uncertain period for our staff and we will be actively exploring redeployment opportunities and supporting them during this difficult time.
Hughes said L&G remained “deeply committed” to the UK housing sector, after building 15,000 homes overall over the past three years.
“As such, we are continuing to actively explore all options available to us and will retain a select workforce to ensure high quality delivery and aftercare services for our existing customers, whilst engaging with each of our partners regarding ongoing modular projects.”
