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Job losses at major Lowestoft firm

PUBLISHED: 13:06 28 November 2009 | UPDATED: 15:26 06 July 2010

A multi-million dollar legal dispute over a Middle East oil contract has forced one of East Anglia's biggest engineering businesses into administration.

A multi-million dollar legal dispute over a Middle East oil contract has forced one of East Anglia's biggest engineering businesses into administration.

The directors of Lowestoft-based SLP called in the administrators yesterday after months of speculation about the firm's future and wrangling over a Qatari oil deal.

Forty-five management jobs were lost "with immediate effect" - though the administrators said about 700 jobs are safe until SLP completes a separate project for BP next spring.

Concerns were first raised last year when it emerged that SLP was caught in $91m (£55m) claim-and-counter-claim legal dispute with Maersk over a contract to build accommodation modules for rigs in the Al Shaheen oilfield in Qatar in 2006.

Maersk claimed there had been a “series of commercial, financial and scheduling problems with SLP” over the deal - a claim which SLP rejected as “completely misleading and inaccurate”.

Yesterday Stephen Oldfield, joint administrator at PricewaterhouseCoopers, said the dispute had put a "significant financial strain on the business" and that the search was now under way for a buyer for the business.

"The directors have been exploring a number of options for the business over several weeks but were unable to find a solution," he said.

"Consequently they had no alternative but to invite my appointment."

Mr Oldfield said the agreement with a major customer - understood to be BP - for SLP to finish work on its contract meant that "a significant proportion" of the workforce would keep their jobs for the time being and that contractors would be paid for their work.

It is understood that staff in Lowestoft and SLP's other sites in Tyneside, Blackpool and New Malden were told about the decision to call in administrators yesterday afternoon.

"Alongside these customer and employee discussions, I will also be focusing on a sale of the remainder of the group to seek to try to secure the long-term future of the business," Mr Oldfield said.

"However, with SLP's prospective customer base being aware of its significant contractual dispute, the level of new work at SLP in recent months has been significantly reducing. Whilst we have been successful in securing one major customer and hope shortly to secure others, we have unfortunately been left with no choice but to reduce the management staffing at Lowestoft by 45 with immediate effect."

Mr Oldfield said he had explained to staff that his first priority is to secure the support of SLP's customers.

“I am very pleased I have been able to secure the support of the largest and most significant one,” he said. “My attention now turns to the other key customers to negotiate and agree similar arrangements. The outcome of those discussions is unlikely to be known until the middle of next week.

“As advisory partner for East Anglia I recognise how important this is for Lowestoft and therefore my second objective, as I explained to staff, will be to seek to find a buyer for SLP as a going concern.

“I have been able to reassure the remaining staff at Lowestoft that their wages and salaries have been paid this week and will continue to be paid by the administrator. Indeed, even those members of staff I have had to make redundant today have been paid their salaries up to Monday.”

He added: “The company has found it difficult to operate normally with the arbitration proceedings being made against them and administration means there is an opportunity for a buyer to take on the business and assets of SLP Engineering in Lowestoft without the burden or these arbitration proceedings, which must help the prospect of finding a buyer.”

Earlier this year, SLP chief executive David Edwards told the EDP that the company's order book accounted for 3,000 jobs in the wider engineering and energy sector in East Anglia. The firm has grown to become one of Lowestoft's biggest private sector employers since starting out in 1970.

Last night John Best, chief executive of the industry body the East of England Energy Group, said: "It was very disappointing to hear that as a result of a contractual dispute, SLP will be placed into administration. I understand arrangements are in place to retain a significant proportion of the workforce and the subcontractors engaged on current projects. Looking forward it is in all our interests to ensure that this challenging situation does not overshadow the tremendous opportunities which the industry has and UK plc requires. We must continue to produce secure, affordable energy using our regions skilled workforce and supply chain to harness the built and natural assets, in particular gas and offshore wind, on the path to a lower carbon economy."


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