Step up a gear to lead the field

One com­pany’s Scot­tish ex­pan­sion plans are sin­gu­larly undi­min­ished by the re­ces­sion, says Neil Clark

The Herald Business - - Commercial Feature -

FOR most com­pa­nies op­er­at­ing in Scot­land, the prospects for growth and ex­pan­sion have been about as rare as the daf­fodils un­til re­cently, as the bit­ter chill of the econ­omy was mir­rored in the cold­est March for half a cen­tury. There are, of course ex­cep­tions to any rule and in­ter­na­tional con­struc­tion ser­vices com­pany ISG plc has been en­er­get­i­cally build­ing new foun­da­tions for growth north of the bor­der.

Andy Mal­lice, ISG’s man­ag­ing di­rec­tor in Scot­land, who led the start-up of the com­pany here two years ago, has been re­lent­lessly pur­su­ing new busi­ness and build­ing a team that now stands at 80, turned over £50 mil­lion in 2012 and is look­ing at a £70m turnover in the next busi­ness year.

Last year there were a raft of ma­jor new con­tracts, in­clud­ing a £4.8m retro­fit cladding project on the south­side of Glas­gow, and a £1.3m con­tract to re­fur­bish the Spec­trum Build­ing in Glas­gow for own­ers, Or­chard Street In­vest­ment Man­age­ment, as well as phases one and two of im­prove­ment works at Hermiston Gait for Scot­tish Wid­ows In­vest­ment Part­ner­ship to­talling £3.95m.

More re­cently, the com­pany se­cured a £4.1m project for the Univer­sity of Dundee, which in­volves build­ing an ex­ten­sion to the teach­ing fa­cil­i­ties at Ninewells Hospi­tal and Med­i­cal School, the £1m ren­o­va­tion of 9 Char­lotte Square for Corran Prop­er­ties – which will house Scot­land’s new­est pri­vate bank – and a £1.4m project in Dundee for global med­i­cal equip­ment gi­ant Karl Storz.

Much of this busi­ness for ISG in Scot­land – formed out of ROK Scot­land when its par­ent com­pany went into ad­min­is­tra­tion in 2010 – has re­sulted in a strat­egy that is tightly fo­cused on the pri­vate sec­tor and re­fur­bish­ment.

“The pub­lic sec­tor is quite a dif­fi­cult area in which to win work in Scot­land,” ex­plains Mal­lice. “For ex­am­ple, the pre-qual­i­fi­ca­tion process is chal­leng­ing and there is the frus­tra­tion of ten­der­ing then dis­cov­er­ing that, for ex­am­ple, the lo­cal author­ity doesn’t have suf­fi­cient fund­ing in place and the job is put on hold or scrapped.

“I de­cided that we needed to fo­cus our ef­forts on win­ning work that is less likely to in­cur costs for our busi­ness – things we can tar­get with a greater de­gree of success.”

The pri­vate sec­tor, he says, cur­rently gen­er­ates 80% of ISG’s work north of the bor­der. “This sec­tor rep­re­sents a re­la­tion­ship­based sit­u­a­tion where we have a proven track record and the op­por­tu­ni­ties to find work are greater,” says Mal­lice.

“The jobs con­vert more quickly, they start when they say they are go­ing to start and there is a de­gree of trans­parency that you don’t al­ways get with the pub­lic sec­tor – though there may well be more op­por­tu­ni­ties in that area in the fu­ture and I am con­tin­u­ally re­fin­ing the way we look for busi­ness.”

Mal­lice, un­sur­pris­ingly, con­cedes that cur­rent con­di­tions in the con­struc­tion sec­tor are dif­fi­cult but be­lieves that ISG can take ad­van­tage of the de­mand for re­fur­bish­ment while many new­build projects are put on hold. “Re­fur­bish­ment is where the mar­ket is: we are fo­cus­ing on of­fices and have shaped the busi­ness ac­cord­ingly. This has worked par­tic­u­larly well for us and we are de­liv­er­ing of­fices in Glas­gow, Ed­in­burgh, Dundee and Aberdeen.”

Aberdeen re­mains a boom town and ISG has worked with sev­eral of the world’s ma­jor oil com­pa­nies, while see­ing still more po­ten­tial in the north-east.

“Aberdeen is an in­ter­est­ing place, one that we con­tinue to watch closely,” says Mal­lice, who adds that there are sev­eral de­vel­op­ers and hote­liers in the Cen­tral Belt look­ing at plans in the area – and ISG is con­sid­er­ing an ad­di­tional of­fice in the north.

Other sec­tors that hold pos­i­tive prospects in­clude re­tail. “We have com­pleted a num­ber of projects at Hermiston Gait in Ed­in­burgh, East Kil­bride and for Arnold Clark and B&Q. Re­fur­bish­ment really sep­a­rates the wheat from the chaff; work­ing in a live en­vi­ron­ment and deal­ing with older build­ings that have struc­tural de­fects or as­bestos is­sues is cer­tainly more com­pli­cated. It presents a real op­por­tu­nity for us, one that oth­ers may have shied away from in the past.”

More de­mand comes from Scot­land’s most suc­cess­ful ex­port sec­tor, whisky, where the team has com­pleted around £120m of work and has an­other £40m on the books, work­ing with some of the largest com­pa­nies in the in­dus­try. “That is a fan­tas­tic sec­tor for us and win­ning more work in that area is part of the strat­egy. We are for­tu­nate that we now have 30 mem­bers of staff who can say they have ex­pe­ri­ence in the whisky in­dus­try – so from our clients’ per­spec­tive that is good news.”

The wider man­age­ment of events, known as “over­lay”, ex­plains Mal­lice, i s when the com­pany as­sumes the role of prin­ci­pal con­trac­tor – for ex­am­ple at Ham­p­den Park where it is ex­tend­ing and up­grad­ing the fa­cil­i­ties, so the venue can be used dur­ing the Glas­gow 2014 Com­mon­wealth Games.

This is an area in which the com­pany has an al­ready im­pres­sive track record: ISG was one of the largest con­trac­tors at the 2012 Lon­don Olympics, hav­ing built the 6000-seat velo­drome, while it also man­aged the over­lay works at 120 sites across the coun­try.

In Scot­land, with up­com­ing work at new­build ho­tel de­vel­op­ments plus on­go­ing re­la­tion­ships with prom­i­nent cl i ents such as Gle­nea­gles Ho­tel, Cameron House at Loch Lomond and the Old Course Ho­tel at St An­drews, Mal­lice has good rea­son to be op­ti­mistic. It’s a qual­ity he en­cour­ages.

He said: “I al­ways do op­ti­mistic – peo­ple of­ten re­mark on the good vibe in our of­fice com­pared with that of some of our com­peti­tors.

“We al­ways make a big ef­fort to be pos­i­tive and are look­ing at the cur­rent cli­mate as an op­por­tu­nity – and to do that you need a lean and ef­fi­cient busi­ness and a pos­i­tive at­ti­tude.”

ISG plc gained vis­i­bil­ity from the con­struc­tion of the 6000-seat velo­drome for the 2012 Olympic Games. In Scot­land the com­pany is tar­get­ing the re­fur­bish­ment mar­ket as many new­build projects are put on hold


– Andy Mal­lice

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