INTERNATIONAL. John Laing Homes, a major US home builder and fully owned subsidiary of Emaar Properties, said yesterday it had cut staff and was “reviewing its operations” because of deteriorating economic conditions.
Emaar bought John Laing Homes in June 2006 for AED 3.85 billion (US$1.05 billion) in cash to gain access to the US market and leverage the company’s expertise for Emaar’s international projects.
But the subprime mortgage crisis and ensuing economic downturn have taken their toll on the company.
Linda Mamet, a John Laing Homes spokesman, said yesterday that staff were cut across the company’s operations, particularly in Southern California and Colorado, where the market has been particularly hard hit. The company did not say exactly how many jobs had been cut.
“John Laing is reviewing its operations due to market conditions,” Mamet said in an interview for The National. “We have made a reduction in force this week and we’ll have more information shortly about the review of the operations.”
The company is also deciding whether to stop sales on projects and shut down some of its offices, she added. Work has stopped on a 180-unit condominium building in Hollywood called the Madrone, according to media reports in California.
John Laing Homes has also retained Development Specialists, a legal consultancy, to assist it in evaluating its operations.
“We are currently advising the company,” said Bradley Sharp, a lawyer with Development Specialists, who specialises in “crisis management and consulting services” according to the firm’s website.
Lower revenue from John Laing Homes was the main reason cited by Emaar for a 3.2% decline in profits for the first three quarters of 2008. The company has written off AED 750 million in connection with its acquisition of John Laing Homes, it said in October.
Emaar is also contending with dramatically slowed sales in the UAE. Average home prices in Dubai declined by 8% in the fourth quarter of 2008, according to the property consultancy Colliers International.
At the time of the purchase, officials called John Laing Homes the second-largest home builder in the US. The company, which is originally British, dates back to 1848. It expanded into the US market in 1984 and has focused most of its business on the western part of the country.
In May, the long-time CEO of John Laing Homes was replaced by Robert Booth, the Managing Director of Emaar Canada.