It has been a difficult year for many in the civil engineering world and the geotechnical industry was among the first to feel the full weight of the economic downturn. Keller UK’s managing director Jim De Waele tells Alexandra Wynne why now is the right time for a change of direction.
This recession has hurt many firms throughout the construction industry, but few harder than those dependent on the housing and commercial property markets.
To them, the effect on incomes has been devastating. The geotechnical world was right at the forefront of this, as a collapse in the number new developments caused site investigation and piling contracts to dry up almost overnight.
Even the giants of the industry have not escaped unscathed − including independent contractor Keller UK.
It has been something of a rollercoaster ride for managing director Jim De Waele and he has yet to celebrate his first anniversary with the firm. “The drop off was so sudden,” he says. “It was like someone turned a tap off overnight in terms of orders. The truth is − if you’re in housing, it’s been tough.”
Keller UK is one of those firms that traditionally has had a keen interest in housing along with many of the smaller schemes offered to the industry and which have also taken the brunt of the recession’s impact. To illustrate, Keller Group - the global operation − reported a drop of 22% in orders for the six months to 30 June.
“The drop off was so sudden. It was like someone turned a tap off overnight in terms of orders. The truth is − if you’re in housing, it’s been tough.”
Jim De Waele, Keller UK
And the global picture has been reflected in the UK business − revenue in the same period was down to £30.7M from £44.8M and it reported an operating loss of £400,000 against a profit of £2.2M in 2008. The drop off has had consequences for the firm − most notably with its recent decision to cut costs partly through job cuts of around 20%.
But for De Waele, now is not the time to be complacent. Although Keller has witnessed signs of house movers returning to the market in the past three months, De Waele says recovery is still some way off.
“Any recovery [in the housing and commercial sector] will be a slow and gradual one. We can do nothing about that,” he says. Instead he is playing a big role in repositioning the firm as a major player in bidding for the bigger schemes.
It is a move that is long overdue, he says. Keller has for some time been one of leading independent contractors in the UK, is a FTSE 250 company and the 13th largest construction firm in the UK.
“But what we don’t really do is punch our weight. In the past we tended to be happy to wait in the wings,” says De Waele. “Right now, for us, the challenge is to hook into some of the major projects.”
Historically the firm has had little exposure to larger schemes. The upshot is that it has been involved with a high volume of smaller jobs − with £87M turnover generated from 850 jobs, for example.
It has already begun to make headway. Growth in the years before the recession through acquisitions such as Phi Group and Systems Geotechnique has certainly helped broaden its appeal. Keller now employs 450 across the UK. As a result Keller totalled an impressive £12M worth of contracts on the Olympic Park and has worked on the M1 widening in Nottinghamshire and the M74 extension in Glasgow.
“My belief is that infrastructure and public spending will suffer post-election regardless of the hue of the government.”
Jim De Waele, Keller UK
All of which has given it a taste for more major projects. There are three targets in De Waele’s sights in the immediate future − the £695M Victoria Tube station upgrade, the new nuclear build programme and, of course, the £15.9bn Crossrail mega-project.
Each will require a proactive approach to targeting clients and creating a close alliance with contractors early on − a strategy Keller found lucrative on the Olympic Park.
Early discussions with Team Stadium, the Sir Robert McAlpine/Populous/Buro Happold consortium building the main stadium, led to every one of Keller UK’s companies working there.
De Waele says prime Crossrail targets include Tottenham Court Road station, where he has already nominated a project director, and Bond Street.
Chances of winning big
Keen to improve his chances of winning big, De Waele says his firm is partnering up with German contractor and plant manufacturing giant Bauer (News, last week).
The two have worked together before internationally, but by coming together here in the UK he sees them being able to offer a comprehensive range of Crossrail-focused services such as diaphragm walling, multiple piling methods, ground anchors and grouting.
However, he is conscious that the future is far from certain for such a big-money project − although hopeful that it will not be mothballed, he is wary that the programme may slip a little.
“We will see privately financed projects continue - it’s clearly one way to stimulate the economy without the high risks.”
Jim De Waele, Keller UK
This cautious optimism is an attitude that prevails when talking about the future of other projects too. “My belief is that infrastructure and public spending will suffer post-election regardless of the hue of the government,” he says.
“But we will see privately financed projects continue − it’s clearly one way to stimulate the economy without the high risks.” And there is still the company’s traditional core business to think about.
“We still want to do the 800 small projects − we’re not talking about getting rid of Phi, for example. We want to retain those relationships [with our subsidiaries] to keep being able to do the £10k projects.”
Which brings him neatly to Keller’s internal strategy. In the past, its different companies have acted independently, often doubling up on work and bidding for the same contracts − De Waele intends to change that. “Keller globally − particularly in the United States - acquires firms, helps them grow and lets them compete.
“But UK clients don’t like group companies competing with each other for the same work,” he says.
“In growth periods it’s been easier to let Phi Group and Systems Geotechnique carry on as they are. Now there’s a downturn, we’re trying to create one price and one solution, rather than many.”
Clarifying the brand
Part of the plan has involved a recent re-branding exercise so that all firms now have the familiar Keller colours of gold and blue incorporated into their logos. This has also led to the creation of two separate divisions − Keller Foundations and Keller Geotechnical − to more clearly define the services the company has on offer.
It is a significant move, says De Waele, because clients in the past have misunderstood what Keller can offer.
“I’ve been in meetings where clients have told me they’ve not given us the contract because it’s gone to Systems Geotechnique. I’ve had to tell them, well thanks but ‘yes you have’.”
In the early days of this transition it means he is keen to send along more than one person to client meetings to ensure they give the right technical offering.
“We’ve started to make more time for one another within the Keller Group.”
Jim De Waele, Keller UK
The aim is that it will help cross-fertilisation by bringing expertise from different parts of the business to the right job. “We’ve started to make more time for one another within the Keller Group.
“Probably it’s because we’ve got time to do it, we’re not all out inventing techniques, we’re more interested in sharing information with one another.”
The other internal change has come in the form of centralising the business.
Non-operational teams such as human resources, accounts and marketing have been brought together from Keller Ground Engineering, Phi Group, Systems Geotechnique and Colcrete Eurodrill − a move that has accounted for some redundancies, but one that De Waele hopes creates a better structure and increases Keller’s attractiveness.
Looking ahead, De Waele does not rule out the possibility of further acquisitions. “We want to build our portfolio.
But any acquisitions would have to fit our strategy. We’re into cross-selling with one technical department that will lead.”
The state of the economy, the company’s recent fortunes, and a change of strategy all make for a sizeable challenge. But De Waele is not phased by this.
“Yes, the line between success and failure becomes much thinner [in an economic downturn], and it is a challenge. But you grow with challenges and it’s what makes you earn your money as a manager.
“And if we structure the business correctly − and we will − along with backing of Keller Plc, major projects in the future are a big opportunity for us.”
Jim De Waele CV
- October 2008 Joins Keller UK as managing director
- 2007 Appointed managing director at Stent
- 1994 Joins Stent as a senior contracts engineer
- 1990 Becomes area engineer at Cementation Piling and Foundations
- 1990 Graduates from Aston University with a BEng in Civil Engineering