Step up a gear to lead the field
One company’s Scottish expansion plans are singularly undiminished by the recession, says Neil Clark
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
‘I ALWAYS DO OPTIMISTIC. PEOPLE REMARK ON THE GOOD VIBE IN OUR OFFICE COMPARED WITH OUR COMPETITORS’
– Andy Mallice