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Bachy restructures for an unpredictable future

PILING - With the mega-projects that pushed its turnover above £100 million now thin on the ground, Bachy Soletanche carried out a radical restructuring last year. Managing director Martin Pratt discusses the changes with Joanna Booth

FEEDING off the glut of work at Heathrow's T5 and the Channel Tunnel Rail Link, the UK's biggest foundations firm grew even bigger in 2003. Bachy Soletanche became the first in the sector to break through the £100 million annual turnover barrier.

But when those large infrastructure projects came to an end without replacements to fill the breach, turnover dropped by a fifth. This was the catalyst for management to take a good hard look at how the business was run.

'In the past decade or so Bachy had grown into a company that relied on large projects like CTRL or the Jubilee Line alongside our core business, ' explains managing director Martin Pratt. 'Our objective was to create a structure that allowed the core business of contracts worth up to about £10 million to stand alone, irrespective of whether major projects came along or not.' So in early 2005 the team took a fresh look at the company's structure. Turnover came equally from two sources: from major projects, consisting of a mix of geotechnical and civils work with Bachy working in joint venture with a major contractor partner; and from a range of geotechnical works as a subbie for main contractors or ultimate clients. The latter was viewed as Bachy's core business.

It became clear that this core business could be run in a more efficient way. Previously it was divided along depar tmental lines, with separate teams taking on different types of work.

The restructure involved moving to a system where each geographical region ran as a stand-alone business with a manager responsible for everything down to the bottom line.

Plant and operations, which had been run separately, were put under the control of one director whose job it is to co-ordinate both, ensuring efficiency and focus.

This restructuring allowed the merger of the two southern offices, with employees in Godalming relocated to the headquarters in Alton. It also required fewer people, resulting in 55 redundancies.

Mr Pratt is convinced the restructure was the right move.

'We were able to reduce overheads by 30 per cent, ' he says. 'But even with that, we're doing 20 per cent more core business than last year.' With a predicted turnover for the coming year of £70 million, it is clear that Bachy is not trying to reach the heady heights of turnover generated by major projects with core business alone. It is manoeuvring itself into the best position to survive the lean times before major projects come back on line.

'We want to keep the core business healthy and at the same time remain well placed to take opportunities in the heavy foundation market when they arise, ' Mr Pratt says. 'We've been in th is posit ion before, in 1992. A handful of people were tendering for the Jubilee Line, but down the line we had two major contracts as a joint venture shareholder. It's nothing new.' He sees Bachy's posit ion as part of a mult inational group as a massive benefit when it comes to flexibility.

'There is always a bit of shuff ling around and redeployment of resources when a major project comes up, ' he says. 'Input from the group as a whole can be really helpful when it comes to tendering, provision of resources, plant and specialists.' Mr Pratt believes this is what sets Bachy apart from its competitors. 'We are independent and can support other companies in the industry without having links to their competitors. There is a downside ? we don't have in-house work like they do, ' he says.

He is convinced that Bachy will be in a strong position when new major projects come up.

'The one on the horizon is Crossrail. That's right up our street ? major heavy civils, geotechnical problems, lots of grouting and movement and protection works.

We thrive on that.' But when the work will get started is anyone's guess.

The same applies to the other major source of work looming ? the Olympics.

'We're not aware of the scope as yet, ' says Mr Pratt.

'I think it'll be a mix of heavy and light work, which will be good for the market. Although it will put pressure on resources, which is something we all need to keep an eye on.' Larger jobs in the pipeline include the £185 million Tyne road tunnel, where Bachy is working with Parsons Brinkerhoff on the Bouygues bid, and on the London Gateway project, where P&O is converting a former oil refinery into a port and business park.

Bachy is involved with the Laing O'Rourke bid, working on a large retaining wall.

Mr Pratt's business plan involves growing the core business steadily. Currently strong in medium and heavy foundations, Bachy will look to increase work levels organically.

'The lighter end currently isn't really us, ' he says.

'But with the right opportunity we could see a potential there through acquisition.' This route has already been a successful one for Bachy. It paid Interserve £1.5 m illion for Westpile in 2003 and , by reducing overheads, it is now showing a 3 per cent profit on just under £10 million turnover.

'Westpile overlapped a bit with Bachy in terms of the type of work it took on but it had different clients, which it retains along with the name, ' says Mr Pratt.

More of the same could be on the cards.

'It would have to be the right opportunity though, ' he clarifies. 'There's no point doing things by halves.' Bachy is also expanding geographically. New offices in Glasgow and Dublin, which have been beginning to build up turnover, have helped the firm ride out the quiet period London has recently experienced.

'The regions got busier when London tailed off and now London seems to be coming back on line the regions are staying buoyant, ' Mr Pratt says.

Research and development is also an area Mr Pratt thinks is essential to give the company its competitive edge. All ideas are fed to a central team based in Paris where they are developed.

The past two years have seen the introduction of Screwsol, a non-displacement piling system.

'For a given depth of pile, Screwsol allows increased capacity with lower concrete volumes and so less spoil, so it's good in polluted sites. We're developing it further to get a wider range of diameters and depths.' Currently the firm is looking at ways to improve auger and large-diameter piling techniques.

'I can't talk about it in detail, ' Mr Pratt says. 'We're filing for a patent.

'But if the prototype succeeds we should see the improved technology in the next year or so.'