Specialist skills are key to survival, says Groundforce chief

Sticking with a specialism will be the key to survival says David Williams, managing director at Groundforce. He tells James Stagg that service levels and innovation in established markets will pay dividends.

What size is Groundforce now?

As a division of Vp we are turning over about £35m a year across all the business units within Groundforce. We now have expertise in shoring, formwork, piling, surveying, pipe stoppers and have just made a foray into pumps.

Is your business restricted to the UK?

We work mainly in the UK and Eire but have worked on projects on mainland Europe from a UK base. In this respect we tend to follow the customer, so if they are doing a job abroad then we will offer support. For example, we recently worked on a basement shoring scheme for Per Aarsleff in Denmark. It was our biggest European job to date.

Our presence on the continent is still in its infancy, but at some point we will think about establishing a footprint. But right now we are keener to shore up things in the UK market.

Can you consider growth as a possibility this year?

Looking back to March last year the housing market switched off and all our products came back to the yard. We did see continuation of work in the commercial sector though that has now started to soften as well.

What we still have is AMP4 [capital investment in water infrastructure] and other large civil engineering jobs. But these are the only games in town and we have had to cut our cloth accordingly. Having said that, the diversity of our product range has held us in good stead.

So you are confident going forward?

Well, since Christmas we have all come back. Not to anything fantastic, but we have come back. We now reassess the situation quarterly and have forward visibility until autumn. But we are happy with that.

We put in a strategy 18 months ago to make sure we weren't too exposed to any one sector and that has paid dividends. In terms of recent work we have helped construct the tunnel under the River Shannon, worked on T5, roads and sewers and also the Olympics. Although for us the Olympics is not any more work in terms of foundations than T5.

For the next six months it is anything connected to the public sector.

And how do you predict workloads?

In terms of orders, we operate in spot hire so our forward order book is more about knowledge of what's coming up. We assess what is being let, who is to work on it and take a percentage guess at winning work from a particular contractor.

We are pretty good at predicting forward orders, but it is becoming more difficult so we are being more cautious.

What are your biggest concerns?

With the economic climate being so volatile we do not know who will still be trading and good for the money in six months time. We are seeing insolvencies change on a weekly basis. Our biggest challenge this year is bad debt, so we are being cautious with the levels of credit and terms we offer.

Are you under pressure to reduce rates?

Our view is that while we are feeling pressure on rates we will resist as much as we can. We are determined not to drop service levels and make a mistake that gives a customer a cause to move supplier.

In this climate bad businesses will fail and good ones continue.

How do you cope with products associated with struggling sectors?

In that situation we try to find other opportunities. We had been doing a lot of basement propping, but that slowed so we transferred the technology to civil jobs. The product is now used for keeping tunnel openings open like our work at the River Shannon. We hope to do the same for the Tyne Tunnel.

Will the current climate stifle innovation?

Right now we will be sticking to the knitting. To move forward we would have to invest, but right now there would be no sign of a return. The case for investment is harder than it has ever been. The business plan will have to tick more boxes than it ever has done.

We are part of a plc that has performed well for a number of years so as and when we see signs of recovery we will be well placed to take advantage.

Where do you see the business in the longer term?

When we do business planning we do not look beyond two financial years from where we are. As things change new opportunities arrive. For example, two years ago we had no basement props and now we are leaders in that field. The market we originally targeted is at a standstill so we moved the technology. I think that as a business we are quite agile.

Was it a good time to go into other sectors?

In terms of our pumps offering we are a minnow in an established market place, but we are applying Groundforce service levels and innovation and we see room for growth. We can be very competitive for those customers we service and will be leveraging relationships we have with all the major civil engineering companies. For every hole there is a pump.

How is the piling business faring?

Piletec is our most advanced division in terms of technology and processes in the group. It is able to deal with all driving, extraction and foundation preparation.

We have also added to this business since the acquisition of GE Capital's Dudley Valve business, which has gone from strength to strength.

How does Groundforce stand out?

We are targeted in our thinking and believe there is no point in having a general mentality. As a specialist we believe that sticking with what we know best will pay off. The challenge will be achieving growth without being a generalist.