A new materials company with an 800-strong workforce has quietly but assuredly entered the UK construction market. Alexandra Wynne speaks exclusively to Hope Construction Materials chief executive Chris Plant.
It is rare and perhaps surprising to hear of a not insubstantial-sized firm being set up in such turbulent economic times. But for Chris Plant, chief executive of brand new Hope Construction Materials, there is every reason to be optimistic about the potential of his new firm to make the right impact.
Hope Construction Materials came into being on 7 January following the purchase by Mittal Investments of over 180 former Tarmac and Lafarge facilities last November. The Competition Commission ordered the two companies to sell the assets as a condition for allowing themerger between Lafarge UK and Anglo American’s Tarmac business. The ruling effectively paved the way for the entry of a new competitor into the UK construction materials market.
Describing itself as Britain’s largest independently-owned supplier of cement, concrete, aggregates and asphalt, the firm already has around 800 employees, plus 400 contract drivers. Its sites include the vast Hope cement plant located in Hope, Derbyshire - which lent its name to the new firm - a national network of readymixed concrete plants, plus aggregates quarries, rail depots and asphalt plants.
The reasons for the optimism are numerous for Plant. For a start, he calls it “fantastic” that the Competition Commission in overseeing the sale decided to set up a substantial new competitor to the big players from day one, which set the tone for how the company entered the market.
Since the purchase of the £300M turnover business on 18 November last year Hope has embarked on a three-phase development programme.
“Have we got to a[concrete] run rate that I’m happy with? Not yet. But we’ve made progress and are going in the right direction”
Chris Plant, Hope Construction Materials
The first was mobilisation - primarily meeting the staff and customers and setting up management and operations systems. This gave way on 7 January to the stabilisation phase - which had a focus on developing customer relationships. “We are deep into stabilisation,” says Plant, adding that the firm is already changing ways of doing things to “improve performance and keep things simple for customers”. The final phase - optimisation - involves developing a longer term strategic approach to the business.
At present the focus is on customer relationships, understanding what specific needs they all have and making it clear that Hope understands that a one size fits all approach is not necessarily appropriate. In this respect, he says, for example, there are different distribution, supply and sales models for urban environments versus rural environments.
In urban environments there is a greater prevalence of national and multi-national customers buying frequently and making decisions based on the quality of the product.
The rural market is dominated by very small, cash buyers who may be buying quantities of 1m3 to 2m3 at a time. “I envisage we’ll take distinctly different approaches sector-by-sector,”he says. “And I don’t think we’ll have the same business model for [all].”
Plant is cautiously optimistic about how the business is performing in these early days. “Have we got to a [concrete] run rate that I’m happy with?” he asks, before answering: “Not yet. But we’ve made progress and are going in the right direction.”
Sadly the weather has taken over and made it a “pretty tough” three months, he points out. “It would be nice to have less frost but it is the whole industry that is suffering,” he says. However, he notes that on the flip side, cement products that are less susceptible to the weather have done well.
The Competition Commission has been understandably keen to understand when the stabilisation period will come to an end.
“It will end when I can predict the next month because that’s when you can make rational plans,” says Plant. “I can’t quite predict next month yet.”
Meanwhile Plant is also thinking about the optimisation phase. He says that the management team is already asking: “What will the economic landscape look like in two to three years, so we can look at our investment profile.”
The “economic landscape” would understandably be forefront in anyone’s mind in the sector, not least of someone who is the boss of such a new firm. Hence the plan to begin looking at where the growth might lie.
“We will pick the sectors that give us the most stable work bank and have more long term planning,” says Plant. The utilities sector - particularly energy from waste and water - are attractive prospects for the industry, he says, along with major projects such as the London Gateway port and Crossrail.
He is also excited by the “great and bold” gesture of High Speed 2 (HS2) and the fact that it is taking the UK back to its Victorian heritage. But he is also cautious about the immediate opportunities for the industry because of timescales between announcement and expected delivery.
Plant agrees that there is a lack of long term transport planning in the UK but gives credit to the government for “doing everything it possibly can to attract money [for infrastructure] from the private sector”. All that’s lacking there is an ability to boost investor confidence, he adds.
Despite a significant proportion of Hope’s cement making its way to the South East -“because that’s where people live” - Plant says that there are signs of workflow improving elsewhere.
All of this helps because, he acknowledges, in the materials sector “it’s been pretty tough”, with volumes falling 9% last year, with predictions of only a more modest fall this year.
“I’ve worked through three recessions and while there’s the pain of entering a recession, there’s the other side of it, which is how we come out of it,” he warns. “Because everything contracts, and then, where do you get delivery drivers and skilled labourers from? Those problems can be more challenging that sizing yourself for a recession.
“Is it going to be as bad as it was in the 1980s? Probably not. But as a leader of a business, where do we need to place ourselves so that we have the right balance - it’s nice to have the opportunity to be sized as we are.”
It has been of a great benefit for the new business to have been “born at the bottom end of the cycle”, he says, because it has meant that even with 800 employees “we’re pretty lean”.
The employees, or as Plant prefers to refer to them “colleagues”, have a great deal of expertise among them, as well as an entrepreneurial spirit that he is particularly excited by. Roughly 600 people transferred to Hope from Lafarge and Tarmac.
These are mostly in operational roles on site and about 170 were recruited via internal advertising within the two companies during the mobilisation phase. These recruits were for many of the management, commercial and functional roles. Another 24 people were recruited from outside these businesses.
“I’ve worked through three recessions and while there’s the pain of entering one, there’s the other side of it, which is how we come out of it”
Chris Plant, Hope Construction Materials
Plant says that the concept of building the company from people who get involved in things that aren’t their core responsibility has helped create an entrepreneurial culture. While he expected that attitude from those they brought in, he was thrilled with the response from the rest most of whom he met during the early part of the mobilisation phase. Plant, chairman Amit Bhatia and the rest of the small, seven strong management team spent much of their time in the first week of the company’s formation meeting around 90% of the workforce.
“Logic said that those 200 or so that we recruited in would be really up for the new business but the 600 who joined us through Tupe [employee transfer arrangements] were equally, if not more, motivated.”
Indeed they were not just motivated, it turns out, but brimming with ideas on how to help the business - for example, early on, rather than await their instructions, many delivery drivers offered up lists of who they had been delivering to.
One model that the business will aim to capitalise on is one of partnering and alliancing. Plant graduated as a civil and structural engineer, is a chartered civil engineer and has worked in major contracting for many years. His experiences of working in alliances in the past 15 years in particular have shaped his view that this is his “preferred way of doing business”.
“You do need partnerships,” he says. “It’s no good winning massive contracts and not realising you need others to play their part.” It is particularly key in the light of how focused clients are these days on saving money.
Plant says that this is less about simply cutting costs and more about being able to measure how much you’re saving. Clients want to know that the product is good quality, its entry and exit price and when the project will be built, he adds.
“If you’re delivering these, then everyone is happy,” he says. “But it’s quite difficult to do on your own and you need a few contributors doing the same to ensure you can do it.”
Chris Plant CV
1980 University of Bradford, graduated in civil and structural engineering
1981 Shephard Hill Civil Engineering, site engineer; agent; then contracts manager
1995 Lafarge (Redland) Aggregates, contracting regional manager; director of contracting (2001); managing director Asphalt & Contracting (2005)
2010 Lafarge Group, vice presidentfor health and safety - aggregates and concrete division
2013 Hope Construction Materials, chief executive