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Steady as she grows

This year's Civil Engineering Contractors File reveals that Nuttall achieved double digit growth in turnover and profit. Richard Bennett finds out how they did it.

It has been a good year for contractor Edmund Nuttall. The UK's fourth biggest contractor experienced a 17% increase in civil engineering turnover to £296M and a 23% increase in operating profit. But Nuttall managing director Peter Brooks is surprisingly modest about his team's achievements.

'On the face of it, it has been a good year', he says, 'but there has been a heavy spend cycle. A number of millennium projects have topped up our turnover.

'Actually we have experienced steady growth for a long time now.' Since 1993 the company's turnover has grown by 80%.

Brooks attributes Nuttall's success partly to vigorous cost control. 'Cutting costs got us through the recession, ' he says, 'and we have maintained this approach.' He also thinks that Nuttall has benefited from having a broad spread of projects within the civil engineering market. For the last seven years the contractor has steadily diversified from its background of roads and heavy civils to develop expertise in land remediation, ports and harbours, mechanical and electrical contracts and, increasingly, water.

Founded in 1865, Nuttall has a tradition of stability which permeates the management team.

'Our reputation is steadysteady, ' says Brooks. Unlike its main competitors, Nuttall management has not been restructured since 1985, meaning that the second tier of senior managers has been around for a long time and knows the business thoroughly, Brooks says.

In 1978 the takeover of Nuttall by Dutch construction group HBG brought a more commercial focus to what had been a culture of gentlemen engineers.

HBG also brought in a Dutch ethos of openness and a flat management structure, which Brooks considers to have been an asset in hard times.

Nuttall's stability is complimented by an emphasis on forecasting. 'Luck takes a lot of making - we like to look ahead to predict costs and problems, ' comments Brooks. Project forecasts are reviewed quarterly by head office, but monitored monthly and weekly on site.

Nuttall is also keen on training. Most of its directly employed operatives are taking NVQs paid for by a £850,000 grant that has been awarded to Nuttall by the European Social Fund. Unusually the scheme extends to temporary employees and subcontractors. 'We want to create a pool of qualified labour, and employ more of our own people, or subbies of the same standard. Ultimately it improves profitability, ' says Brooks. 'We have found that training produces a feeling of belonging and ownership, which raises standards.'

Of the current projects, Brooks is especially proud of Nuttall's £20M contract 9 on the Maidenhead flood relief scheme, a major earthworks project to create an 11.6km flood relief channel parallel to the River Thames between Maidenhead and Eton. Contract 9 covered the channel excavation, and rather than subcontract the plant operations Nuttall opted to buy its own fleet of plant. 'It means we are in control, ' says Brooks.

Having bought the plant Nuttall was able to fit GPS receivers to the excavators. This allowed operators the dig the 45m wide, 4m deep and 10km long channel to accuracies of 50mm, providing a further degree of engineering and financial control.

Brooks concedes that last year's margins of 5.4% were exceptional, and turnover is expected to fall this year. 'We are expecting a bad first half.'

He expects this will be caused by the end of the Millennium awards, a slow down in spending in the water industry and a dearth of tender opportunities as local authorities switch from compulsory competitive tendering to best value procurement.

The recent failed takeover bid of Nuttall's parent company HBG by the smaller Dutch dredging group Royal Boskalis has had relatively little effect in the UK.

'They couldn't make it fit, ' says Brooks. 'It's all over now.'

Looking to the future Brooks sees further market penetration across the board, but no great changes. Nuttall is currently bidding for the Dublin Port Tunnel, second phase of CTRL and flood defences in the Norfolk broads.

Brooks sees future growth in rail and roads, particularly in Ireland. He expects to build on Nuttall's recent land remediation experiences on the Greenwich peninsula, along with more water work. But as ever he expects things to develop at a steady pace.

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