The smile says it all. These are troubled times for contracting, but Eric Cross is a happy man. The chief executive of the Ringway Group heads a prosperous family of companies operating in the highways maintenance market, and innovation has been the key to a record financial performance last year in difficult market conditions.
'They were exceptional,' says Cross. 'We had a bit of luck, to be honest. We had a lot of additional work thrown at us by various local authorities and we've performed well. You don't always get everything performing well in construction, but we happened to get it right,' he says.
Ringway may not be one of the most recognisable names in the game, but the low profile masks the fact that the group reported an increase in turnover last year, from £109.3M to £114M, while pre-tax profits surged ahead impressively from £3.4M to £5.8M. With more than 1,000 employees and expansive tendencies, Ringway is outgrowing southern England and has a legitimate claim to the title of national contractor.
'If the right business came along and our evaluation is favourable, it wouldn't worry us or our shareholders to put a proposal up to purchase it,' says Cross. 'We have purchased a few businesses in our time, including the surface dressing division of Colas.'
The company has long term maintenance contracts with the Highways Agency, and with a whole clutch of local authorities - Lincolnshire, Gloucestershire, Wiltshire, Berkshire, and Suffolk. 'We were never a major motorway or dual carriageway contractor. We never went in for the £10M turnover jobs and one-off schemes. We have always been a maintenance contractor, which is what we do well.
Ringway has planned its growth on privatisation, adds Cross, and Kent County Council has become the latest addition. A big drop in work over the past five years prompted the council to turn to the private sector to take over the maintenance of 8,000km of roads, and 4,700 structures. Kent's direct labour unit will transfer to Ringway in October, under a £10M five year contract covering highway maintenance, winter maintenance and emergency call-outs on the county's network.
'We try and build businesses around those contracts. We were the first to enter that market with Berkshire seven years ago. We have very motivated and experienced people and they love the way we work. We push a lot of decision-making down into the company, so they consider themselves running their own company, to a degree,' says Cross.
'Ringway Highway Services has been our main expansion in monetary terms, and a lot of the senior staff, managers, and directors are shareholders, and that has proved very successful.' Very few leave the firm. 'You're only as good as the people who work for you. We are a very hands-on team - we're not people sitting in an ivory tower and running the business.'
The company is no stranger to partnering agreements and value engineering. Having seen through so many block transfers of local authority workers, Cross is also well aware that construction is a people business, and he values the public sector service ethos as vital to the success of the business. The transfers allow county council staff to be unleashed from constraints, believes Cross.
Blue collar workers have two main concerns - pay/salary and pensions. 'We've always treated people and the system very fairly on both of those. Once a contract is three months down the line, people see that they are earning a similar amount of money and that pensions are protected as far as possible, and things settle down.'
Quality is of prime importance to clients, says Cross. 'If people can't deliver that they won't get what we call 'the return trip'. The Highways Agency and local authorities are putting quality into the overall assessment of tenders, and various companies have actually fallen at the first hurdle on the tender evaluation because their bid has not been good enough. There are some major companies that have had that happen to them, which rather concentrates the mind and focuses your attention on just how important quality is.'
While the group revolves around road maintenance, it is also into recycling, road marking, street lighting, fencing and innovative surface dressing products. And with a directly employed workforce, Ringway has a genuine claim to be a one-stop shop. 'Some of our competitors are more project management orientated,' Cross points out.
The shift of public expenditure away from new build to maintenance puts the company in a position that bodes well for the future. The group's road marking business benefited from the change, and the sign making business is also profiting from the programmes to re-sign the ring road around Manchester, and all of London within the M25.
Ringway also enjoys the backing of its parent company, French civils contractor Entreprise Jean Lefebvre, which turned over £1.3bn last year. 'The best way I can illustrate the relationship is like this: there was one particular privatisation that was about to go belly-up because the plant side of the business, which was also being privatised, went sour,' says Cross.
'I saw that the only way through was to make an offer to purchase the plant that we wished to use. I phoned our president and within two hours we had the thumbs-up to go ahead, and we're talking millions.'
Another advantage of the relationship is that Lefebvre also invests some £5M annually in research and development on new materials and innovative processes. Ringway has open access to the results and is able to select freshly developed products or methods that will be useful in the UK.
These include low noise and low spray surfacing, insitu recycling with foamed bitumen, and the Gripfibre skid-resistant micro-surfacing system, a patented system that fills specification requirements between thin surfacing and surface dressing
The road marking business has a production unit in Rochdale and it recently launched a new product, Wetlite, which has been developed to provide improved reflectivity in wet conditions. Cross says the product has been well received and has been specified in preference to other available products on several Highways Agency schemes.
Cross is bullish about the future: 'Nowadays processes are being accepted fairly quickly by clients on the basis of performance, whereas 10 years ago you would be facing 20 years wait to get a scheme approved. The whole thing seems to have turned around.'