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Contractor Profile: Steady hand on the tiller

The company which Tony Whale took over three-and-a-half years ago when he was made CEO was very different from the stable, good-to-do-business-with model which has emerged under his management. But there is still a long way to go for Emcor UK and its clients. Paul Braithwaite talks to the man at the helm
Contractor Profile: Steady hand on the tiller
WHATEVER the client wants.

That's the rationale behind everything that Emcor Group (UK) plc does.

But not at any cost!

It has to be a commercial decision, insists Tony Whale, chief executive officer.

Too often, in the past, when tendering for a project, the company had questioned whether the project was feasible from an engineering aspect, not a commercial one.

This is just one of the checks and balances which has helped Tony turn Emcor into a good, stable mechanical, electrical and facilities services company - with lots of repeat business.

When Tony took the job three-and-a-half years ago, Emcor was a different animal.

Operating profit in 2003 for the UK arm of the American-owned $5.1billion Emcor Group Inc had dropped into the red with a £12million loss on a £22million gross profit.

Now, it is a different matter.

Profit before tax was £5.8million for the year ended December 2006 with gross profit of nearly £29million following the cost of investment during the year.

This year started with a bang.

Emcor bought a controlling interest in an FM company in Dubai ­- now called Emcor Facilities Services - and, more recently, the m&e arm of Rosser & Russell.

The company has been reducing its m&e contracting business in Dubai and has recently sold off the remaining equity there but it sees facilities as a burgeoning market, hence the switch.

'Better to be in an emerging market,' Tony adds.
And the American parent company has not had to help with the purchases.

'Emcor UK has been able to pay for its own acquisitions,' says Tony, not a little proudly.

So are there more acquisitions to come?

'Emcor has always been acquisitive, but we have not shouted about it' but Tony added the rider: 'any acquisition consideration must fit the criterion'.

'Obviously we want our business to be sustainable and we want to be sure of what we are doing so that we can manage our future by having a clear plan. There can be no ego trips.'

When he joined Emcor Tony put in place a rolling five-year plan.

The three parts of stage 1 were:

· assessment;

· containment;

· stability.

Three-and-a-half years into that initial plan, Tony assures these three parts have been accomplished.

'Now we are into the second stage ­- controlled growth - hence the investment and acquisitions.'

Building is cracking on apace in the Middle East, he adds. In one development, there are 78 tower blocks, most, more than 300ft high.

Tony adds the new facilities company offers a consultancy role, advising companies how to look at the running and management costs of their facilities services as well as the usual FM options to maximise efficiency and effectiveness.

But there is plenty of business to be had in the UK as well.
'Part of the strategic plan was sitting down and looking at where we wanted to be.'

Now there is an approval process. All procedures have been standardised so that any project over a certain amount has to have approval from the managing director of the operating company.

Any larger and they have to be referred to the Group board.

Further, each operating company has its own trading policy which is approved by the board and if they want to step outside of this, then, again, board approval is needed.

There is also a capability statement so that, in the whole of the group, 'we know where our capabilities are'.

Indeed, Tony adds that in three years time Emcor will have changed again, almost beyond recognition.

'Emcor has come a long way in three years. In the next three years, the very nature of the business will probably change.'

However, Tony would not even hint at what he means. But the smile said everything.

But he did say that the biggest restraint on Emcor's future is resource.
And this stretches across: numbers; capability; availability and location.

'We have turned down opportunities because the chances are that we would not be able to achieve what was required,' says Tony.

He adds it takes a long time to build a reputation to achieve, and achieve with quality, which can be lost overnight by making the wrong decisions.

Furthermore, not all opportunities meet our objectives.

Emcor looks at the potential business and asks:

· Can we perform?

· Does it satisfy the return relative to the risk?

· What is the capital investment relative to the return?

· Is the resource available and will that resource be available throughout the duration of the work? 'If it is not then the risk factor goes rocketing up.'

· Is the funding there? 'Take, for instance, PFI where facilities and m&e is tail-end-Charlie and where the business would be unlikely to get any returns for its capital investment for four or five years. There could be other projects where Emcor could turn the same money over four or five times and with greater returns.'

Training is a concern for Tony. Again this year, the training budget has been increased.

But as well as recruiting and training new staff and apprentices, it is important for Emcor to nurture and develop its existing workforce.

And give its engineers - 'who are some of the best in the business' - a commercial awareness which has sometimes been missing.

But it is not a case of telling them what to do. Tony hopes training would condition staff to know what to do.

At the top, he wants people about him who are not afraid to disagree with him when they think he is wrong - and argue their cause where necessary.

And he is a great believer in succession planning.

Two side to the business

EMCOR is a business of two halves.

One is the project work. This is measured in: time; contractual commitment; price; quality and all defined by a contract so that 'everyone knows what they are doing'.

The other is the service work. 'There is no time limit, there is often no specified contract sum (although there is a budget) and the client can change everything he wants us to and we oblige.'

Tony gives an example. He was called to a client.

'We - the Emcor Facilities Services people and the client - danced around the topic for about 20 minutes. Then the director of the client suggested he and I went into another room.'

Tony says he asked him point-blank to express his concern.

'Basically, he said. Emcor was reactive and sometimes it took too long to implement.'

Tony countered that Emcor was reactive because the client was not saying what was wanted until too late - after it had happened and Emcor could only react

'I offered to sign a confidentiality agreement on behalf of Emcor to prove how seriously we took our role but although he turned the offer down, he nevertheless agreed to discuss his future business plans and where the company was intending to go with its products.'

With the new information the facilities people were able to warn that the m&e plant would not be able to cope with the proposed increase in the workload as the load was way above the designed intent.

'We were then able to help with the planning for the solution.' The relationship is now very strong.

And, yes, sometimes it needs the CEO of one company to talk to another.

'You have to be diplomatic and show clients how important they are, when necessary.'

Find missing kids

EMCOR UK has followed its American parent with a missing kids initiative.

For the past few months, Emcor vans have had the picture and details of a missing child displayed.

Tony is pleased with the results so far, with one missing child already found out of three so far displayed.

In America, where the company has been running the initiative for some time now, it has been responsible for finding 39 missing kids to date.

Transfer of knowledge

TONY Whale is the first UK boss to sit on the Executive Management Committee of the parent company and, as such, he is one of five committee members who are responsible for the operational activity of the whole group. It is their job to run Emcor Group Inc.

Turnover for the American parent in facilities management is higher than the UK but the business over there is not as sophisticated as here - nor as broad in activity undertaken.

Emcor UK has been almost a guinea pig. The US facilities business is based upon the American market's developing needs.

'It has been a transfer of knowledge and understanding,' says Tony diplomatically.

There have been some things which Emcor UK has learned in return.
There are 74 companies in the parent group and most are specialist contractors.

The American company deals mostly with the Americas and Canada which leaves Emcor UK to manage other selected parts of the world, particularly where a British company is beneficial.

There are also clients who are common to the firms on both sides of the Atlantic.

1 May 2007

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