Exclusive: NG Bailey unveils strategy to diversify to beat the recession

In his first interview, David Hurcomb said the building industry is going through its own double-dip recession as private sector activity fails to offset public sector spending cuts.

This presents a major challenge for the building services firm, one of Yorkshire’s largest family-owned businesses.

NG Bailey saw its turnover fall by almost a quarter in 2009-10 from £600m to £464m and warned this week that fewer projects and downward pressure on gross margins will hit profitability in 2010-11, while 2011-12 will continue to be challenging.

“It’s going to be a tough two years, but we are very fortunate. We have a strong company,” said Mr Hurcomb, 47.

The Ilkley-based group comprises of specialist mechanical, electrical, ICT, maintenance and building management companies. It has a workforce of 3,100 employees, including 700 in Yorkshire, and £88m in the bank to insulate it against the difficult trading environment.

Mr Hurcomb said: “We have an absolutely brilliant workforce. We are financially very strong, which is a real asset for management because we can focus on the business and not on having to pay back the bank manager. We have now identified a strategy to get us through the recession and come out.”

His main priority is to reduce the group’s reliance on the building market. “The business did very well in the boom times but the reality is, now the tide has gone out a little bit, we find ourselves very, very exposed.

“My vision is to make sure in five years’ time we have a stronger, more diversified, more resilient business that is well represented in a number of sectors, which will include building, but will also include engineering services, maintenance, ICT, energy, nuclear, these things.”

NG Bailey’s last chief executive, Mark Andrews, left the business at the end of 2009. Chris Newton, the chief financial officer, became acting CEO and declared his interest in the role full-time. But he lost out to Mr Hurcomb, a former board director at Carillion, who was headhunted for the top job. Mr Newton left the business last month after nearly nine years.

Mr Hurcomb, in the post for six months, has carried out a strategic review of the business and has toured the country to meet with staff and communicate his management team’s vision for the future of the group. He has also hired a new sales director from a major support services firm to help deliver new contracts.

He said NG Bailey “was looking for leadership in terms of how we get through this [recession] and more importantly how do we come out the other end stronger”.

He described the company’s roadshows as “incredibly powerful” for staff “so all our people know where we are, they know we are in difficult times and we shared with them the strategy to get out of that”. “It’s been a good bonding experience for all of us,” he added.

Areas identified for growth include the UK nuclear industry; NG Bailey had key contracts for the first and last nuclear power stations to be built in the UK and is preparing for the next generation of new builds, pending a Government safety review into the programme.

The group’s wider energy division currently generates up to £5m worth of business per year, which could be increased to £50m, said Mr Hurcomb. He is investing in his bid team and is in discussions with potential partners about contracts to provide electrical packages.

He wants to grow the building services maintenance division from up to £40m a year to up to £60m and hopes the group’s stature in the building and engineering services market will help it win contracts, particularly in the financial services industry.

Another potential growth area is public sector outsourcing, in which NG Bailey will offer its services to councils looking to offload building maintenance operations. Mr Hurcomb believes this market could be worth £100m a year.

Other areas include the £50m ICT and cabling business, which carries out work for blue-chip clients, the £8m off-site division, which takes electrical and mechanical work from the building site and does it in a factory environment, and NG Bailey’s £20m rail business. All have potential for major growth, said Mr Hurcomb.

A small celebration of 90 years

NG Bailey traces its roots back to 1921, when it was founded as the Bailey-Billington Partnership.

A year later, Noel Bailey bought out his partner and formed NG Bailey & Co.

This July, the company will celebrate its 90th birthday with “a very small, modest party, because we are in a recession”, said David Hurcomb.

Three members of the Bailey family are listed as company directors – the Reverend Edward Bailey, the 75-year-old son of Noel, and cousins Martin Bailey, 51, and Cal Bailey, 50.

Martin heads up safety, innovation, best practice and industrial relations, while Cal champions sustainability and lobbies on training issues.