Being nice in a cutthroat industry like construction can lead to disaster. But Jonathan Seddon says getting his company’s ethos right has been just as important as making money in the years following its restructure.
Halfway through my conversation with Jonathan Seddon, I ask whether his approach to business can sometimes be “too nice”.
“Yes,” the chief executive responds immediately through a mouthful of custard cream, before offering everyone in the room a cup of tea.
But while he might admit his approach to business can be too nice, meeting in Seddon’s head office on the outskirts of Bolton, it soon becomes obvious that his approach to his staff reflects his beliefs.
Evidently Seddon aims to be a company that’s committed to its people, and one that wants to do things in the right way – even in an industry like construction where cutthroat pricing and conflict between client and contractor are all too common.
Much of this comes from the Seddon family’s desire to build a sustainable company that can weather any peaks and troughs in a cyclical market. But a contractor and developer doesn’t stay in profit and remain debt-free just by being nice.
So how has Seddon, in its 120th year as a business, managed to maintain its place as one of the UK’s leading regional contractors through some of the industry’s toughest times?
A major restructure
Seddon started as a bricklaying business in Little Hulton, Lancashire, in 1897.
Although the company has gone through various incarnations over the years, it has always been family-run, with Jonathan taking the reins as managing director of Seddon Construction in 2007.
Since then, however, the firm has undergone a major overhaul, with the original business splitting into three separate entities in 2013.
Jonathan Seddon managing director Seddon Group 3
The original Seddon Group was divided into three businesses: Seddon, which comprises the construction, homes and development business; Seddon Property Services, which rebranded as Novus following the split; and Seddon Engineering.
Following the separation, each of these was headed up by a different family member, with Jonathan’s father Christopher Seddon owning and leading the construction and housebuilding arm. Ownership passed from Christopher to Jonathan, his sister Nicola and his brother Jamie, when their father passed away in 2015 aged 73.
“I annoy half of my directors here because I think profit’s irrelevant”
Jonathan explains how the companies took all the right steps to make sure the split of the business went smoothly, starting with the engagement of a family business adviser in 2010.
“You look back through history and not everybody gets it right,” he says. “We said at the time, success will be if all three families are still in business, better aligned, profitable and working well together. And three or four years on, they’re doing well, and we’re not doing so badly either.”
Part of the reason for the restructure was the recession, which Mr Seddon admits caused the company to “retract and lick its wounds”.
‘If it’s a crap job, you can’t argue’
The areas in which Seddon now operates – construction, housebuilding and development – remain cyclical, he says, which has focused the business away from traditional one-off tendering into building close relationships with its clients to get repeat and negotiated work.
“If we made money on every single job I wouldn’t be sat here today; I’d be in the Bahamas”
He constantly repeats the mantra of “get the job finished” – one that was drilled into him early in his development at the firm and which continues to shape his approach to business.
“We’re in a much better position to argue or debate with the customer if a job is spot on. If it’s not spot on or you’ve done a crap job, you can’t argue. And it’s better to put your hands up than try to argue the indefensible, which contractors are pretty good at sometimes. And they have to – when their backs are against the wall and they don’t have any money, that sort of behaviour comes out.”
From frog wrangler to managing director
Jonathan Seddon took his first job working for the family firm at the age of 14, which he describes as “semi-paid” work helping to clear out parts of Tytherington Golf Course – a championship course built by Seddon in Cheshire.
“My job was to empty ponds and the canal systems of that golf course of weeds, ready for the Women’s Open that was staged there every year,” he recalls.
Unfortunately, this probably wasn’t the best starting point for someone who admits he has a phobia of frogs. “I made the mistake of shrieking at one, so for the next month all I got was frogs lobbed at me by the guys on the site.”
He began his full-time working life as a labourer, helping to build a grandstand at Haydock Park Racecourse in 1989, and spent around two years working in various trades, including stints as a bricklayer, joiner and a plasterer.
He soon progressed to leading projects in 1995, before moving back to head office full time in 2001. He became managing director of Seddon Construction in 2007, before taking on the chief executive post at Seddon Group in 2013.
But surely Seddon can’t make money on every one of its jobs – after all, construction is a tough market to be in. “If we made money on every single job I wouldn’t be sat here today; I’d be in the Bahamas,” he replies. “I annoy half of my directors here because I think [focusing on] profit’s irrelevant. If you do a damn good job, finish on time and the quality is good, we’ll make money.”
He repeats that the firm has two main KPIs: the first – delivering on time – will generally lead to the second – making a profit. But he hastens to emphasise that delivery on time will take precedence in his mind over money. “If you’ve built it on time, you’ve built it right. I don’t think you’ll finish [a job] on time if you haven’t built it properly – you’ll have to go back and rectify all your mistakes.”
And that attitude towards getting the job done is what sustains Seddon’s repeat business, which has been one of the central pillars of the company’s strategy since 2013.
Jonathan Seddon managing director Seddon Group 2
Rather than gunning for single-stage tenders, which make up around 20 per cent of the firm’s business, negotiated jobs and frameworks are the company’s future, Mr Seddon explains. “I’d much rather make £10 out of a client and get another contract, rather than make £100 and not get another one.”
Of course, not all clients see it that way, with some still driving contractors down to the cheapest price – and contractors end up working on incredibly thin margins as a result. However, Mr Seddon is dismissive of this approach, describing his firm’s works as “reassuringly expensive”.
“Some customers are completely wedded to using a procurement route that’ll get them the cheapest answer, and that’s a shame, because it’s against the ethos of what the Farmer Review and all the other reports are saying is best practice. But that’s the world we live in.”
“Debt-free is a big thing for us… if we cock up we can put our hands up and say sorry, and get the job finished.”
One area where repeat business has flourished has been in the healthcare market, where Seddon has delivered a number of major care homes and extra care facilities across the country. “We’ve built 40-50 care homes in the last 10 years, and we’ll get them finished exactly as our clients want it, rather than doing it on the cheap.”
He adds that the firm’s balance sheet helps to reassure clients, particularly in a market like extra care, which he describes as “highly complex”.
The firm is on target to deliver around £220m in turnover in its 2016 results, up from around £170m in 2015 – when the firm had an operating margin of less than 2 per cent. Seddon took on £18m of debt as part of the group restructure but is now debt-free, something which Mr Seddon is keen to maintain, and which again ties into the ethos of getting the job done.
“Debt-free is a big thing for us: it gives us freedom from the banks, it lets us do what we want, and it allows us to be honest with ourselves and our customers – if we cock up we can put our hands up and say sorry, and get the job finished.”
On top of this, remaining a family-owned company has helped to steady the ship, rather than the firm having to chase turnover to keep shareholders happy. “We don’t have board meetings to hide behind to make decisions; decisions are made and we get on with it.”
People over pounds
Part of this open approach has helped to lure people away from larger contractors, which is all part of Seddon’s focus on its staff.
“If a client came along with an £80m bag of money, it’d be very nice, but we’d say no”
Recent hires from some of the industry’s biggest firms include Midlands commercial director Kieran Brennan, who joined from Galliford Try, while Steve Davies heads up the firm’s new housing division in the same region, having joined from Balfour Beatty in 2015. Eamon Burns, regional director for the Midlands business, also joined from a rival main contractor, having previously worked for Willmott Dixon.
However, Mr Seddon admits it is becoming more difficult to entice people away from the industry’s bigger players. “It’s a busy industry out there and it can’t just be the pound note that persuades people to come; it has to be more about the culture and the ethos of the firm. It ties you to people here, and keeps people here. We need to be mindful of what [new recruits] say about why they left those bigger contractors and why they like working for us.”
Seddon training skills apprentices
Seddon also directly employs its workers, including key trades, which is unusual for a company of its size, with around 700 tradespeople working for the firm in the North-west alone. “When you have your own apprentices, you can ingrain the attitude as well as the skills from an early age and make it run right through,” he says.
“Getting the ethos right is a constant battle, but it’s about spending time with people, talking to them and asking them how we get things done. That’s all more important than making a pound.”
Putting that ethos in place to help the business do things properly is evidently Mr Seddon’s passion – but what about growing the company in the future?
Seddon has already restructured its Midlands business to target £80m-£100m in turnover for 2017, but when asked whether this would signal its expansion further afield, Mr Seddon is firm: “We have no desire to be a national contractor.”
Regional expansion aside, what about following a client? After all, with Seddon’s mantra of getting the job done properly to keep winning repeat business, it would follow that the firm would be asked to move out of its comfort zone to get jobs done.
Seddon is already working for healthcare clients in Bath, Edinburgh and Glasgow – all outside its traditional strongholds of the North-west and the Midlands – and Mr Seddon admits that working away from its traditional regions can prove difficult.
“It does stretch us and we have to be careful. The supply chain doesn’t know us, every contractor has issues and the further away it is, the more difficult those issues can become simply because of geography.”
He also reveals the firm has had to turn down certain high-profile jobs to keep the business low-risk – although he refuses to name names.
But this is all part of the company’s strategy of targeting small-to-medium-sized jobs, where margins can be steadily improved with repeat business. “If a client came along with an £80m bag of money, it’d be very nice, but we’d say no. It’s about managing risk – we need a blend of work, and we work from £10k up to £30m.”
He adds that this approach – “we need a bit in the twenties, a bit in the tens, a bit in the fives, a bit in the ones and quite a lot beneath a million” – is what helps to keep the firm insulated from major movements in the market.
Jobs below £1m will be one of the company’s principal growth areas over the course of the year, with smaller blue-chip clients showing more interest in areas such as small industrial units, retail, and commercial. Seddon will also target growth in its M&E services, where Mr Seddon says the firm can push margin rather than turnover.
For the firm’s housebuilding arm, which posted revenues of around £50m-£60m in 2015, much of its work comes from frameworks. But it has not been caught up in the increasing drive towards modular, which Mr Seddon describes as “a red herring” in the industry’s search for a solution to the housing crisis.
“If you want to get more houses built, shoot the planners”
He reveals the firm’s position on offsite manufacture has changed significantly, with the focus now on modularisation of certain components rather than a large-scale investment in its own technology. “I’ve gone from thinking we need to be involved and owning and operating some sort of offsite Laing O’Rourke-style facility, to actually thinking we need to have full knowledge of all the systems out there.”
Seddon has used modular technology across a number of jobs, including a 450-bed student accommodation scheme for Keele University and a number of school projects in Staffordshire. It also makes extensive use of offsite manufactured plant, joinery and M&E.
Seddon_Keele University Barnes Hall
But Mr Seddon is keen to emphasise that building offsite manufactured homes is not on the company’s radar. The firm “spent a lot of time” working with Legal & General on offsite manufactured homes, he reveals, but stepped away “for commercial reasons.”
“Something like the L&G model is fantastic; it’s just not the answer to get more units. It doesn’t stack up in terms of cost – in lower prices, the critical path for a traditional housing estate isn’t getting the houses built. It starts with the place-making skills and planning permission.
“After all that you can bash out one or two houses every 18 weeks. Not many customers want them quicker than that, and certainly we can’t sell them quicker than that. From a sales point of view you wouldn’t ever want to build it off site.”
What Mr Seddon describes as “place-making skills” are also part of the company’s development business, which is headed up by his brother Jamie.
‘Shoot the planners’
The company has looked at a number of sites where using a combination of care and housing has helped get new developments through planning. One of these sites is the former Malsis School – where both Mr Seddon and his brother were pupils – which Seddon hopes to turn into a specialist care home and housing development.
However, at the time of writing, the project is yet to go before a planning committee after months of delays, something with which Mr Seddon is clearly frustrated. “If you want to get more houses built, shoot the planners,” he says.
“Doing a single-stage D&B refurb, you’ve not a clue what’s in there. You might as well just go and get a lottery ticket and see if your numbers come up”
Despite a focus on small-to-medium-sized works in housing, development and construction, there are still certain jobs the firm will refuse to do almost point blank, with single-stage design-and-build refurbishment jobs singled out as among the worst jobs to bid for.
“It’s a race to the bottom, isn’t it? There are that many unknowns. It’s fine to single-stage design-and-build something like a care home, which is a complex build but you’ve done it 30-odd times before in the last five years.
“Doing a single-stage D&B refurb, you’ve not a clue what’s in there. You might as well just go and get a lottery ticket and see if your numbers come up.”
The firm still tenders around 20 per cent of its total work – which helps the teams “know where the market is” – primarily in education, industrial, commercial and social housing, and is more selective on the frameworks it bids for.
All of this gives the impression that Mr Seddon is still very hands-on, but the firm this week appointed Peter Jackson, who has been with the business since 2005, as the construction arm’s new managing director.
Mr Jackson takes the step up from the chief operating officer role he has held since 2014, with Mr Seddon now focusing on his role as chairman of Seddon Construction and overall chief executive of the Seddon Group.
Mr Seddon admits he rarely gets involved directly with the tendering process, instead trusting his staff to get things done in the right way – which helped to pave the way for Mr Jackson’s appointment.
This ethos is what has kept the firm going from strength to strength despite ups and downs in the market: a commitment to its people, direct employment of its workforce, investment in training and, above all, trust.
“I know I’ve appointed people who are far more intelligent than me, and I’ll leave them to do it,” Mr Seddon says.
“We’ve got to give them the freedom and the tools to get on with it – and today they’re making a pretty damn good fist of it.”