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Morgan Sindall 'ready to make further changes'

Morgan Sindall’s managing director has told CN he will change the structure of the business “as regularly as necessary” in a bid to be “one step ahead” of the UK market.

Graham Shennan was speaking to CN after the shock resignation of chief executive Paul Smith last week following restructuring which has included merging six of its regional divisions into four, office closures, 60 job losses and the departure of senior directors.

Mr Shennan also revealed his company is in early talks with the government and other contractors about potential ownership of the UK’s road network.

The MD said the “significant” change to the business was two years ago when the company merged its construction (Morgan Ashurst) and infrastructure (Morgan Est) divisions – a different situation from its recent announcements, he said.

“Is that structure going to stay in place? No, probably not.”

He said there was a “real dawning” on the firm in 2010 as Morgan Sindall customers said the complex structure was “actually making it a little bit difficult”, adding that Balfour Beatty is now doing the same thing, albeit “a little overdue”.

Although there were no “major” changes in the pipeline for his group, he said he is “prepared to adjust the structure as regularly as necessary”.

The business now has four, rather than six, regional divisional managers with responsibility for the South and Wales, North and Wales, Scotland and London and aviation; alongside directors for tunnelling, infrastructure, utility services and professional services (design).

“Is that structure going to stay in place? No, probably not,” said Mr Shennan.

“We’ll probably change it. I don’t want to be flippant – it will change from time to time as we add a new stream – for example, rail.

“It could well be that we might end up with a specialist rail MD – as an example of how things do change.”

Morgan Sindall most recently closed offices in Durham, Ashford, Bristol, Banbury and Theale, and merged five Lovell divisions into two, with 60 job losses.

Mr Shennan said the base principle of the contractor will be “exactly the same”, with managing directors who “know their game, who are empowered to run”, working with the support of people like himself.

Last week the company opened an office in Trilogy, Scotland, and has seen an increase in staff numbers in Inverness.

Having moved staff to London, the next place is likely to be Sellafield, after Morgan Sindall’s recent £1bn nuclear decomissioning win with Sellafield Ltd.

“Ashford wasn’t far short of just a brass plaque in a room really,” said Mr Shennan.

“The balancer is we have opened an office in Cumbria. Yes, it was set up there to target the Sellafield job, but that’s the first part; the next part is to capitalise on the ancillary work that centres around Sellafield.”

Mr Shennan said the firm deliberately has most of its premises on short terms leases to give flexibility.

He added: “It’s a little bit disconcerting for our staff, and naturally when we have to lose people it’s very painful, but I think actually people realise that’s part of the industry…and providing you’re doing it for the right reason, you explain why you’re doing it, I think most people understand the rationale.”

Mr Shennan said his business - which provides 60 per cent of group revenue - has also seen staff move to London. He said £1bn of revenue comes from within the M25.

Morgan Sindall - market focus

Transport: Mr Shennan sees a need for more UK rail and infrastructure services to go underground in what is already a “busy island”, which “puts us in quite a good place” due to the tunneling business. He highlighted the Northern Line extension at Nine Elms, along with Bank station.

He said his firm is “involved” in the Thames Tideway, which as CN revealed is looking to procure £1.5bn of work across three contracts, on the back of the£635m Lee Tunnel sewage overflow scheme.

Mr Shennan is looking forward to “a number of awards” in the road sector. The firm is “particularly interested” in Aberdeen Peripheral.

The MD expects to have a role on High Speed 2, where it is already construction adviser to Atkins.

Defence: Some “movement” is expected in the Ministry of Defence Next Generation contracts after spending cuts, procurement problems and leadership changes slowed progress.

Utilities: He sees the company ‘evolving’ the business, by growing areas from nuclear to overhead lines.

He said clients such as National Grid and Northern Gas Networks, have people from the former nationalised networks “being driven to produce significant business improvements”.

On the return of John Morgan as chief executive…

Mr Shennan said the return of 56-year-old John Morgan’s to the chief executive role is to provide the “flattest” and “most efficient” structure, with Mr Morgan wanting to be a “little more in touch”.

He said Mr Morgan has always been a very visible figure in the group, even more so than former chief executive Paul Smith.

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