Jobs fears as York-based rail firm Jarvis goes into administration

The news, which sent shockwaves throughout York, came after the troubled national rail maintenance and freight group’s lenders said enough was enough.

As a result, Jarvis’s chairman, former Conservative Transport Minister Steven Norris and his board decided to suspend trading on the Stock Exchange and call in administrators.

Shocked Jarvis staff were asked to work normally until further instructions from the administrator, but an anxious Bill Rawcliffe the York and district branch chairman of the RMT union said: “No one has told us when or whether we are going to get paid.”

Members of the union were meeting at Thomas’s pub in Museum Street, York, last night, to discuss the future. They claim Jarvis has already lost 2,000 jobs over the past 18 months as a result of Network Rail’s policies.

Jarvis was hit hard by Network Rail’s decision last year to defer and then cut its five-year track renewal programme by 30 per cent. The company undertook a £3 million restructuring plan which cost 450 jobs nationally, 50 of them in York, and last year braced itself for a £5 million operating loss.

In a statement yesterday, the board said Jarvis had been hit by economic conditions generally and in particular the “very considerable reductions in rail and plant work volumes”.

The statement said: “Trading conditions have been, and continue to be, difficult. During this period, the board has been focused on improving the financial position and the long-term viability of the company for the benefit of all its stakeholders.

“The successful achievement of this goal depended upon the continued support of key customers and creditors (including the lenders under the company’s secured working capital facility and Network Rail) and the ability of the company to win new work.”

It was encouraged by the fact that it had just been awarded the £250 million Chiltern Railway’s Evergreen 3 contract, but after negotiations with the company’s secured lenders it became clear that “sufficient support” would not be made available to let it continue trading as a going concern.

Politicians and business leaders in York yesterday rallied to help.

Susie Cawood, of the York and North Yorkshire Chamber of Commerce, described the collapse as a “devastating blow” to York, and said: “Whatever buyer may come forward to the administrator, let’s hope that Jarvis jobs will remain in the city.

“But I am sure that as a responsible employer Jarvis will be doing all it can to safeguard the future of its workforce.”

Andrew Waller, City of York Council leader said: “We have offered as much support as we can.” He said the issue would be debated at the council meeting on April 8 to see what support the city could provide.

He said: “It is a very worrying time for the Jarvis employees and we are determined to give them all-party support. They are a major employer and part of the critical mass of rail jobs which keep York as a railway city.”

The council’s Labour opposition leader, David Scott, called for talks with unions, local MPs and the Government, while York’s MP, Hugh Bayley, said he had been in touch with Network Rail urging it to keep its track renewals going.

He said they “need the Jarvis workforce, whether or not they remain employed by that company to do that work”.

Mr Norris was unavailable for comment.

Workers demand answers on pay

RAILWAYMEN demanded answers from Jarvis on whether they will be paid from today, after the company went into administration.

Members of the RMT union were angry and feared there was no money to pay their wages at a meeting last night. York and district branch secretary Bill Rawcliffe said he had tried to get assurances that if staff went to work as normal they would get money for the work they were doing.

But the company had failed to tell him despite him seeking answers all day. He said he had been told it was up to the administrators.

Mr Rawcliffe said he had told the company that unless he got a firm guarantee today that members would be paid then they would not turn up for work, and those at work would walk out. “If they want us to work, they should pay us,” he said.

Members were angry about the lack of information and the prospect of the entire workforce losing their jobs. Some of them faced having to work for two weeks before their next salary cheque was due without knowing if they would get it.

Mr Rawcliffe told the meeting there was plenty of work for them to do, but it was being done by Network Rail instead of their company.

“We can’t just sit back and wait,” he said. He urged members to contact their MPs.

Rise and fall of an industry giant

THE story of crisis-hit rail maintenance giant Jarvis dates back more than 160 years.

Founded as Jarvis Construction Company in east London in 1846, the firm began to focus on keeping the UK’s railways safe in the mid-1990s and also diversified into the rail freight sector.

In 2001, it was chosen as the preferred bidder for the £50 million East Coast Mainline maintenance contract, having by then floated on the Stock Exchange – but it found itself engulfed in tragedy the following year. The company ultimately admitted liability for the faulty railway points at the centre of the Potters Bar disaster, which saw seven people die when a passenger train travelling from London to Norfolk derailed at the Hertfordshire station.

An investigation by the Health and Safety Executive discounted Jarvis’s original claims that sabotage could have caused the problems. The firm set aside £3 million to pay claims to victims and their families. An arduous battle to rebuild its reputation and financial position saw it fall £246.7 million into the red, as it lost £100 million in construction contracts.

In 2004, a subsidiary of the firm, Jarvis Facilities Ltd, was fined £400,000 after maintenance failures led to the derailment of a coal train near Rotherham, and cost-cutting measures saw Jarvis move into a smaller York HQ at Meridian House, in The Crescent.

Last November the company announced a £3.6 million loss and a near 50 per cent drop in turnover, having shed 450 jobs across the country, including 50 in York.

The problems were blamed on a Government decision to delay major rail works. Last month, Jarvis announced it was bracing itself for an expected £5 million operating loss and issued a profit warning. But it also told investors to expect “a healthier pipeline of work to look forward to”.

Victim of cuts

Expert David Hudson, head of corporate insolvency at Baker Tilly, said: “With the widely accepted view that public spending has to come down, people need to appreciate the inevitable knock-on effect of business failures, especially among businesses with a high dependency on public money.

“In Jarvis’s case, Network Rail’s decision to cut its track renewal programme by 30 per cent, as for any organisation losing such an amount of work, led to great difficulty for the business. For businesses reliant on public spending, the recession was tough but t”e recovery will be even tougher."