Legal & General is set to close its Yorkshire-based modular housebuilding factory following years of low demand.
The decision will put 450 jobs at risk, with staff at the Selby site informed of the intention to stop production. The move is also likely to raise some doubts over the future of the modular housing sector.
The modular housing branch of L&G was established in 2016 with the opening of the factory that was capable of producing 3,000 homes a year. However, the division has been unable to record the orders required to turn a profit, with the pandemic and delays in planning thought to have had a negative impact.
A spokesperson for L&G said: “Legal & General has announced today that it is proposing to reduce business activity and cease new modular production at its Modular Housing Factory in Selby, Yorkshire, whilst reviewing and assessing potential strategic options for the business.”
“As a start-up business with a significant fixed cost base, a strong and predictable site pipeline is required to make L&G Modular Homes a successful sustainable business.”
“As part of its ambitions to tackling the housing crisis, Legal & General Modular Homes built a large factory to deliver impactful housing volumes, however, with this comes significant running costs making it essential to have a reliable pipeline.”
“These factors, coupled with long planning delays in the UK and recent major macro events such as COVID, have meant the business has not been able to secure the necessary scale of pipeline to make the current model work.”
L&G added that it would be “commencing consultation with all employees around the proposal to make the majority of Modular Homes roles redundant”.
“The business will be doing all that it can to support employees during this difficult time and will be actively exploring opportunities for redeployment.”
In autumn 2022, it was suggested that L&G had accumulated losses of nearly £175million since the modular arm was established. In contrast, L&G’ subsidiary, CALA, saw its revenue and home completions grow in 2022 year-on-year, despite the impact of September’s mini-budget.
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