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What's in a name

The choice of a new brand for one of construction's best known firms was never going to be easy. 'It sounds like a seventies rock band', was one of the first reactions in the NCE office to the new name for Tarmac's demerged contracting operation.

Carillion - a corruption of the word carillon, meaning a harmonious collection of bells - was chosen to accentuate the service element of the company's operations. It was also picked to distance the company from the contracting sector... no doubt working on the assumption that contractors have butch names.

The strategy is similar to that of many contractors, with Amey going the furthest when it tried - unsuccessfully - to convince the Stock Exchange to list it under Services rather than Contracting.

There are plenty of good reasons for being seen as a service rather than a construction company, especially for plcs. Construction's record of producing pathetic profit margins colours the judgement of many analysts, brokers, investors and banks. It is also a lot easier to recruit high quality staff into the modern, fast moving world of services, than the dangerous, dirty, anachronistic construction sector. Clients too may be less suspicious of service companies, given construction's reputation for time and cost over runs.

But Carillion must be careful. The City, staff and clients are not stupid. Carillion, like most of the would-be service companies, has only a very small proportion of work its workload outside construction. An image that clashes with reality will produce confusion and a lot of disillusioned people.

Contractors like Carillion are wise to explore opportunities in service sectors. They have management and technical skills which make them serious competitors. But they must reserve much of their energy for tackling the problems which made them want to reduce reliance on construction in the first place. That is the long term solution, with many positive benefits for the firms, their clients and society.

In the meantime don't worry if you find the Carillion name annoying. NCE reckons it will disappear pretty soon - once Sir Neville finds the right merger partner.

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