Success Overseas Gives Irish Contractors Greater Stability
Michael Stone, Group CEO of Designer Group and former CIF President, outlines his leadership philosophy to Barry McCall.
Designer Group emerged from the recession stronger than ever thanks to the successful implementation of a diversification strategy. Today, the mechanical and electrical contracting business, founded by CEO Michael Stone in 1992, has operations in Ireland, the UK, Europe, Africa and the USA.
“Annual revenues in 2018 will be approximately €200m, and we have over 1,000 employees,” says Michael Stone. “We are headquartered in Dublin, and the key sectors we serve include pharma, commercial, energy, food & beverage and data centres.
“We work mainly for the private sector, however, in Ireland we have carried out many successful and important Public-Sector contracts. We are currently working on the Leinster House Government Buildings refurbishment and have just completed the new Department of Health headquarters on Baggot Street, Dublin. We are also about to start the new DIT headquarters in Grangegorman, as well as the ESB’s new headquarters in Dublin. On the private sector side, we are currently working for Abbott Pharmaceuticals in Donegal and have just completed a large pharmaceutical project for Bristol Meyers Squibb in Blanchardstown. We are also contracted on the largest commercial development in Dublin city at Capital Dock and are about to start an exciting new commercial development for IPUT in Wilton Terrace, Dublin.”
The company is also exceptionally busy in the UK, where it has been in operation for more than 12 years.
“Our UK company is led by Managing Director, Nick Baish, and we are currently working on a number of prestigious projects in Heathrow and Gatwick Airports, in Canary Wharf on three separate 60-storey towers, and with M&W Group on a large waste to energy project in the city.”
It wasn’t always like this. In 2007, 98% of Designer Group’s business was in Ireland. Over the past 10 years, this has been reducing year on year.
“This year Ireland will account for approximately 40% of our turnover,” he continues. “Our business strategy is that we will have it down to 30% by 2020. Over the past 10 years, we have put a huge focus on diversification, both in terms of sector and geographic spread. That was one of the positive outcomes of the recession for us.”
Attracting Quality People
Looking at the challenges facing the construction industry at present, Michael Stone believes that the critical one is people.
“The biggest single issue facing the sector is the huge number of people who left it and went abroad or changed careers. The industry is now seeing the effect of this in the availability of quality people in the marketplace,” he says.
Luckily, however, the M&E sector fared better than others, due to the companies in the area focussing on training.
“Electrical and mechanical contracting businesses in Ireland have a great tradition in training their people. For example, we have our own training academy in Designer Group, and we place a huge emphasis on the ongoing teaching and development of our people,” he says. “Irish M&E firms have been able to expand into Europe and beyond because of the quality of their teams. That’s been a great success story, not just for our industry, but also for our country. Designer Group and our major competitors from Ireland have grown internationally, and we have all done very well there.”
However, that is not necessarily the case for other sectors of the industry.
“My biggest worry is the lack of resources available in the industry generally to deliver projects in Ireland,” Michael warns. “So few people came into the sector during the years of recession between 2008 and 2015.
“The industry is going to have to address that. The boom and bust cycles to which the construction sector is subject to are acting as a big deterrent to people coming into it. Parents see the industry as offering an insecure career for their children. That’s where the Government needs to come in. The National Development Plan is so important in that regard as it gives a long-term outlook for the industry. It acts as a buffer to a potential slowdown in the private sector.”
Focus on Schools
Michael Stone believes that more emphasis needs to be placed on schools.
“The number of students choosing engineering college is a challenge, and we need to encourage more students to take it up,” he says. “Construction has become much more technical, and there is a huge increase in the requirement for engineering skills. We are bringing our tradespeople through engineering programmes. We are lucky that we do not have a problem recruiting apprentices. We have a great relationship with the schools in our area, and we visit them during Transition Year and so on. We bring young people into the company to see what we do.
“Full-time study and the third-level system doesn’t suit everyone,” Michael adds. “The apprenticeship model suits young people who want money in their pockets while they are being trained. The construction industry, in general, does not sell itself well enough. Collectively, we have to step up to the plate and take more responsibility for this.”
Building Information Modelling
One of the most profound technical advances in the industry in recent years has been the introduction of Building Information Modelling (BIM).
“BIM is now an essential tool for the successful delivery of complex and technical construction projects,” Michael Stone explains. “Up until recently, it was seen as something new that was an option for clients. Now, it is a critical part of the delivery process. I believe that if you have a contracting business that’s not fully invested in BIM, you are going to lose out and be left behind. One of the great advantages of BIM is that it can be used on the ground with tradespeople, who see the advantages it brings to a project in identifying clashes with services. This cuts out the necessity for rework. Over the years, I have observed that one of the most demoralising things for a skilled tradesperson is having to take down and re-do good work due to it not being designed and coordinated correctly. BIM greatly assists in avoiding this scenario.”
The primary challenge for Designer Group is managing growth, according to Michael Stone.
“There are risks when you are expanding overseas,” he points out. “The most important one is keeping your people safe wherever they are, as well as learning the different cultures, laws and ways of doing business. All of these things are challenges.
“Keeping good people in our business is also a key focus for me as the CEO,” Michael Stone says. “Good people are in constant demand and have lots of options open to them, so I see my job to be communicating with them and letting them see that there are options and opportunities for them in our business to develop themselves to their full potential.”
While growth has resumed in Ireland, Michael Stone sees an issue with margins in this country.
“We see margins remaining very tight in the Irish market; competition remains fierce with a lot of companies in the space. Wage rates are now higher in Ireland than in any other location that we are working. There has been a correction, as there were no increases to the tradespeople during the recent recession.”
Michael Stone sees great opportunities in the pharma and data centre sectors in the Irish and European markets. He also sees the UK government’s plans to invest hugely in infrastructure as a major opportunity for Designer Group with opportunities, particularly in the transport and energy sectors.