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Grant Rumbles: Mouchel’s return ticket

Mouchel is a business reborn - freed of debt and winning major contracts. Mark Hansford talks to the man responsible for the transformation, chief executive Grant Rumbles.

People often ask me: ‘how do you turn around a business?’ I tell them, first of all you need a good business. And Mouchel is one.”

That is the bold assertion from Mouchel chief executive Grant Rumbles, speaking to NCE the day after the reborn firm posted results way ahead of expectations (NCE 19 December).

“It just had two fundamental problems,” he continues. “It was loss making and it had too much debt. So we sorted that out.”

The debt was sorted through a financial restructuring that saw the firm delisted from the London Stock Exchange and taken into majority ownership by its banks.

The losses were stopped through a root and branch review of activities and structure.

That review was started by Rumbles the day he joined and finished earlier this year, with the firm having removed some £21M of overheads, in large part by rationalising its property portfolio.

“Our order book is at a record high, leads are at an all-time record high ad we have got a lot of capable people out there”

And it means the firm ended 2013 in very strong shape, with profits ahead of the board’s expectations, an underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) of £37M and strong underlying cash generation of £39.3M.

The combination of a stable and sound financial position, together with a focused and accountable leadership team, has also allowed it to win a significant amount of work during the financial year, worth more than £1bn. Its order book at the year-end was £1.7bn and, since then, it has secured an additional £300M of new contracts in the UK, Australia and the Middle East. Its pipeline, which consists of opportunities where the bidding process has commenced, at year end, was a healthy £2.4bn together with a further £5bn of real opportunities.

It is a company reborn. And for Rumbles, it’s just the start.

“We see this very much as a beginning,” he says. “Our order book is at a record high, leads are at an all time record high and we have got a lot of capable people out there.”

“Having been shocked into it, there is no question that we are now better placed than the vast majority of consultants”

People have been central to Rumbles’ rebuilding job, with 250 of the firm’s top project mangers getting training in how to sharpen up delivery.

“We had people working in silos. We have introduced a ‘One Mouchel’ approach which is about getting the work right, on time, every time,” says Rumbles. “Doing that saves so much waste and both sides win - we delight the client and we get better profitability.”

Rumbles is also determined that, going forward, Mouchel will continue to retain and recruit the “best in class” and provide the assistance and motivation they require to excel in providing the best services possible. In the coming year, the firm intends to recruit at least 600 engineers globally.

Middle east targeted

Mouchel has a long tradition of delivering design and supervision of infrastructure projects in the Middle East.
In recent times the company suffered as much as most, reflecting the economic downturn since 2008. However, with some £45bn being spent in the region on consultancy alone in the next three years, Mouchel at least is confident - it aims to triple both turnover and staff numbers in that timeframe.

“The fact the UK has built approximately 60km of new motorway in the past decade, contrasts dramatically with Saudi Arabia which is building 600km,” says Rumbles.”

Infrastructure expansion on a similar scale is also taking place in the United Arab Emirates and Kuwait where Mouchel has been working throughout the past 30 years.

“We have a new management team in the Middle East which has detailed local knowledge and sound commercial acumen,” Rumbles says, adding that the firm has moved to new offices in Abu Dhabi, Dubai and the Saudi capital, Riyadh, and will shortly open a new office in Jeddah. “Being close to our clients is important,” he notes.

These new recruits will support Mouchel’s growing workload in all its sectors, but particularly its Infrastructure Services division.

The division has, in Rumbles’ words, “had an outstanding year”, reporting revenues of £388M in 2013, well ahead of budget expectations, with its integrated contract operations in England, Scotland and Australia and its intelligent transport business unit all performing particularly well.

Infrastructure Services embraces a range of Mouchel’s core offerings covering highways, water and environment businesses operating predominately across the UK but also in the Middle East and Australia.

In highways and water it operates across the entire lifecycle of essential infrastructure assets from demand analysis and business case preparation, to asset design, management, maintenance and operations. Its acquisition in February 2013 of the remaining 50% of its highways and maintenance joint venture, EnterpriseMouchel, was key, says Rumbles.

“We do like to think of ourselves as a one stop shop for clients. We have always wanted that and the acquisition of EnterpriseMouchel gave us that last piece,” he says. “And we can now export that.”

Rumbles is clear that enforced reorganisation puts Mouchel ahead of the game in UK consulting. “Having been shocked into it, there is no question that we are now better placed than the vast majority of consultants,” he says, adding that by stripping out the overheads at corporate level the firm can now bid for work competitively but still profitably. This is not something that all firms can do. “Some of our competitors are going to have to wake up,” he asserts.

Mouchel re-branded the EnterpriseMouchel company as EM Highway Services in August 2013 and business is booming.

Last week it was confirmed that EM had won the Highways Agency’s Area 9 Asset Support Contract (ASC) worth £180M a year for up to eight years.

This follows the recent award of the Highways Agency’s Area 3 ASC, worth up to £700M over five years and previously Mouchel’s largest ever win.

It’s good news in its own right and it also boosts work across Infrastructure Services. This is evidenced by the support the division provided to joint venture DownerMouchel’s successful recent bid for a £382M, seven year road maintenance contract in Sydney, Australia.

Design work is also coming in, with work on bids in Scotland for the dualling of the A9 between Perth and Inverness and the A96 upgrade between Aberdeen and Inverness also serving to highlight Mouchel’s progressive, client-focused approach.

“We look at things from the client side. We ask ourselves ‘how would the client perceive this?’” says Rumbles. “The A9 is a good example. We could be bidding it as Mouchel alone but what does the client want? Would he want the comfort of knowing that the resources of more than one firm were focused on the project? We decided yes, so are bidding it with Atkins. We are not greedy.”

And let’s face it - there is plenty of work to go round. Over the next four years up to 40 local authority road management and maintenance contracts will be let across England, creating a huge opportunity.

Rumbles is keen to seize that opportunity and to that end is recruiting in the region of 600 additional people into its Infrastructure Services business over the next 12 months, including apprentices, technicians and graduates.

Technology driven

Mouchel’s Intelligent Transport Systems consultancy services are recognised as being among the industry leaders in “smart” use of highways and in the delivery of information to road users.

In 2012 it launched its new Taranto traffic enforcement software product. It is already being deployed in Manchester and London, and is being used nationally to catch drivers avoiding Vehicle Excise Duty. It is also at the heart of the system which will allow barriers to be removed - but toll payments to be collected - at the M25 Thames estuary crossings at Dartford.

 

These new recruits will join a business that lost remarkably few people during its recent turbulent past. “At the senior level we retained virtually everybody we wanted to,” recalls Rumbles. “At the middle layer it would have been very few, and at the lower end you have always got churn and I think that is healthy.”

But Rumbles’ is not looking for just anyone - new recruits will have to fit in to the modern Mouchel culture. This is being driven from the top, where the senior team may remain in place but in most cases are working in entirely different roles.

“Of the top 70 people we moved over half to different roles. It has been key to the whole thing. Now we have virtually everybody sitting in the right chair, they have got the training they needed and now we have got some very powerful teams,” says Rumbles.

That is helping with the recruitment process, he says. “People like success and success breeds success. We are seeking excellence and that’s helping us in terms of recruitment. We won’t tolerate average.

“So we need to be very careful. It’s great that we are going to recruit 600, but we need to make sure it is the right 600. Our biggest challenge is to maintain the modern Mouchel culture,” he says.

“Because our strength is the 6,500 guys we have on the ground. That’s what people want to buy.”

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