WHEN Jeff Fairburn left school at 17 he was sure of one thing: he wanted a practical job.
Almost three decades later and Fairburn has more than fulfilled that wish. He runs the northern division of one of the UK’s biggest housebuilders and is also group managing director with oversight of its national network.
Even amid a depressed housing market, Persimmon’s northern division churned out 2,077 homes in 2011, and holds more than 19,000 plots for development across the North.
Fairburn is one of a number of big names at the York-based housebuilder who have graduated from the building site to the boardroom.
Former chairman John White, who retired last year after 32 years with Persimmon, started out as an apprentice bricklayer. The company’s founder Duncan Davidson, now life president, was a labourer digging the Blackwall Tunnel.
“I come from a line of practical people,” said Fairburn, whose father was a motor mechanic.
“I decided university was not for me; I was keen to get a job. In those times and still now, schools were very keen for people to go to university without addressing what the practical alternatives are.
“I wanted to do something practical. My uncle was a quantity surveyor and I felt it was a good career opportunity.”
On leaving school he joined a youth training scheme as a quantity surveyor in his home city of York. For two years Fairburn split his time between mixing concrete, unloading wagons and knocking holes in walls, and training for a higher national certificate at York Technical College.
Life on the building site taught him “how to deal with people prior to moving into the office”.
“It teaches you the value of people you’re working with and you understand what motivates people,” he said.
“We’ve got quite a few directors who have come through the practical approach and apprenticeships – we still encourage it now.”
But Fairburn does not look of place behind a boardroom table in the plush City offices of the housebuilder’s financial advisor.
“I have always been very ambitious,” he said. “It’s grown with the business through 22 years.
“It’s a transitional thing and you tend to adapt and change to suit the circumstances. I’m very honoured to be in the position I am but it’s happened over a long period of time.
“We find that if people join the business early in their careers, there are opportunities available to them.
“They see if they commit and work hard there’s an opportunity to move through the business, and I’m an example of that.”
Fairburn believes that meritocratic approach can be traced directly back to Davidson. He founded the housebuilder – named after the 1896 Derby horse race winner – in 1972 with £1m.
“He was based in our York office and when a new person started there they got the call to see Mr Davidson. He’s very engaging and his people skills are second to none.
“We have that ethos in our business. Because of that we have a very good record of long service.”
Fairburn is one of these, after joining Persimmon in 1989. Four years later he took a promotion, moving to the group’s small North East operation, where he was given autonomy.
“Because it was a relatively small company I got an ideal opportunity to see all aspects of the business and become involved in that.”
In 1996 he was promoted to a director of the division, then on to technical director, and in 2000 became managing director of the North East division.
He drove a four fold increase in volumes, and by 2006, when Fairburn was named chief executive of Persimmon’s northern division, the group’s annual output peaked at 16,700 homes.
But then the sub-prime crisis arrived on UK shores, morphing into the credit crunch and recession and sending the housing sector into a nose dive.
Like many of its peers, who had been seduced by rising house prices and easy mortgage availability, Persimmon was caught short.
Having completed the acquisition Westbury Plc in 2006, its debt mountain stood at £1.2bn in April 2008. In 2009, Persimmon’s output slumped to under 9,000 homes.
“I don’t think anybody saw it coming,” said Fairburn. “It was a different world, but notwithstanding that we had a very strong business in the North.
“We took pretty fast decisive action.”
By the summer of 2008, the worst trading conditions in 30 years forced Persimmon to make 2,000 of its 5,000 staff redundant. Its regional offices were cut from 40 to 24. Fairburn found himself making long-term colleagues redundant.
“It was a very difficult time. We reduced our staff levels down to half of what they were over a six-month period.
“The initial stage was people who had not been with the business very long.
“Then we had to cut even deeper as things continued downwards.”
But finally, things are beginning to show tentative signs of improvement for the sector. Persimmon recently posted profits of £148m for 2011, despite building marginally fewer homes than a year earlier at 9,360 completions.
Crucially, it was one of the things Persimmon did not do which has helped its reputation – not asking for cash through a rights issue or placing.
“Persimmon is very well regarded in the City and we are proud that we were one of the very few major housebuilders that did not go back to shareholders to raise additional capital in the downturn,” said Fairburn. “We’ve got a very good history of delivering free cash into the business. When everything happened it was under careful review, but we were very happy that we could manage without making that cash call.”
Debt has now been eradicated and Persimmon recently revealed ambitious plans to return £1.9bn of surplus cash to shareholders over the next decade.
It plans to pay out dividends totalling £6.20 per share over the next 9.5 years – operating with a “zero debt model”.
As the payout pledge suggests, Fairburn does not see a major acquisition on the horizon.
“The key issue is that we already have national coverage,” he said. “We can grow our business without acquiring a competitor.
“We’ve got a very successful track record of mergers and acquisitions. But we believe there’s better value to be had elsewhere.”
In January came Fairburn’s latest promotion, adding the role of group managing director to northern division CEO. Fairburn’s remit involves looking at how to share best practice across the group. He also has responsibility for its strategic landbank – land it owns with planning permission or has the option to buy.
It’s a role with its fair share of challenges, he admitted, not least working with the UK’s lengthy planning system.
A planned development for 700 homes behind his former school in Fulford, York, sums up the obstacles faced by housebuilders in a country where everyone wants to own a home, but will fight tooth and nail to prevent them being built in their back yard.
“That site was being promoted for development when I was at school and we’ve not started on the site yet. We had to take it through the planning appeal process.
“It’s been a very long gestation period.”
But despite the challenges, Fairburn is convinced the builder will be propelled by long-term trends, as a growing population drives demand for new homes.
“The home-ownership model is deeply ingrained in the British psyche. We expect that to continue – most people aspire to own their home.”
For a company with track record of promoting from within, could Fairburn eventually become the man to lead Persimmon to that next stage of growth?
Life outlines of a director
Title: Group managing director and north division chief executive;
Born: May 22, 1966;
Education: Fulford Comprehensive, York;
First job: Trainee quantity surveyor;
Car driven: Range Rover;
Holiday destination: Florida;
Last book read: Bernie: The Fully Authorised Biography of Bernie Ecclestone, Susan Watkins;
Favourite film: Smokey and the Bandit;
Interests: Formula One motor racing;
Most proud of: The teams I have built within the business.