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Caddy guides B&J over tricky course

PROFILE

Stuart Caddy has steered Baggaley & Jenkins from a £7 million turnover rm to a projected £30 million in four years. He talks to Steve Menary

THREE years before Stuart Caddy entered the construction industry in 1979, Ken Baggaley and Les Jenkins stumped up £120 for a second-hand van and started a damp proofing business.

Three decades later, Baggaley & Jenkins is expected to turn over £30 million this year and Stuart Caddy is the man at the helm of the rapidly expanding Mansfield-based contractor.

When Ken Baggaley left the business four years ago, B&J was at a crossroads.

Not only had a co-founder left but the shape of the business was in question.

'If we'd not grown, we'd have either declined or become a permanent subcontractor to the nationals, ' Mr Caddy, B&J's managing director, says.

'We want to remain a main contractor, although we have had to do some subcontracting to grow the turnover.'

This is a familiar quandary for many small-to-medium-sized contractors but one Mr Caddy is trying to master through B&J's social housing work.

Though the business ceased damp proofing work on council housing a long time ago, work on state-owned housing remains a healthy staple of the firm's diet.

When the Decent Homes programme was due to get going in 2002, Mr Caddy set a target of increasing B&J's turnover from £7 million to £30 million a year.

That was a grand ambition but not a risk many of B&J's potential clients would share. A major turning point for the business was Three Valleys Housing Association awarding a £4 million contract to B&J in 2003.

'We had to jump through all sorts of financial hoops to prove we could take that work on but we're now on the third phase and it's provided a total of £16 million worth of work over three years, ' Mr Caddy says.

That work helped B&J lift turnover to £23 million in the 12 months to June 2006 and Mr Caddy is confident of reaching his target of £30 million, then pushing on to £50 million by 2009.

The switch to long-term partnering deals made this plan a vital one to keep the business alive.

'We did very lit tle work that wasn't social housing up until three or four years ago, ' Mr Caddy says. 'We did jobs like window replacement and re-roofing that don't exist in that format any more because they are getting wrapped up in partnering deals.

'We weren't big enough to do that at the first tier and that's why we set out to grow the turnover to £30 million.

'It was a struggle to get on the tender lists but now we're up to £23 million it's better. We were told turnover didn't matter but then we didn't get anywhere.

Now we're given a bit more consideration.

'Once we're at £50 million, we can compete on equal terms on contracts we're going for with the likes of Connaught and Inspace.'

Inspace and Kier are both main contractors B&J has subcontracted for and now competes with head-to-head.

Mr Caddy insists that expected growth in social housing work through Decent Homes will mean these major contractors will continue to need help.

He would prefer this to mean B&J working as a main contractor only but will not tu rn down subcont ract work if this helps the company grow.

'The council is spending £140 m illion a year in Sheffield. There's no way there's the resources in Sheffield to do that so they will have to continue to bring resources in, ' Mr Caddy says.

'We also have an offer of some work as a subcontractor with Bullock in Not t ingham that should have star ted but that's been put back after the city council's star application failed.'

When Nottingham City Council's housing stock was transferred to a new arm's-length organisation, an application was made to rate the customer service on offer. If this was no better than before the transfer, a star rating would not be awarded and funding for refurbishment work would not be forthcoming.

The council's first application failed but a re-application is due later this year. That initial failure and a halt in spending reminded Mr Caddy that there was more work out there than social housing refurbishment.

'Social housing refurbishment has been a major growth development for us but in the past 18 months it's been more new-build and work such as sports halls, ' he says.

With more competition in that area, B&J's margins have been under pressure but are at a healthy 4.6 per cent.

Social housing still provides half the workload but 35 per cent of the turnover comes from other public sector work, such as education and housing, while commercial jobs provide 15 per cent.

That commercial work load includes £4 million worth of jobs for Center Parcs at its Sherwood site.

The firm prefers direct employment and has a workforce of nearly 200 - but only one office, in Mansfield.

'I see social housing starting to move by the end of the year, ' Mr Caddy says. 'I plan to expand the social housing work we do from £12 million to around £15 million and our geographical area will widen. In the next 18 months I expect to set up offices, possibly in Burton-on-Trent or Staffordshire and maybe Barnsley or somewhere else in Yorkshire.'

After 30 years and with a one-third stake in the business, Mr Caddy has been left alone by chairman Les Jenkins to run the firm his way.

'I've no regrets, ' says Mr Caddy, who once shunned a career with Wimpey. 'My career could not have turned out better.'

Summer job that grew and grew

AFTER finishing his A-levels in his native Nottingham, Stuart Caddy enrolled in a higher national diploma in civil engineering at Trent Polytechnic.

A year later he transferred to a degree course in the same subject and at the end of his fresher year, in 1979, he took a summer job with Wimpey.

'I got a site engineer's job and went to work in Leicester. After a few months, that job came to a close and I was supposed to go to Northampton but I didn't fancy that , ' he says. 'A fam ily friend knew someone at Thomas Fish and I went there.'

That assistant site manager's job was in 1980 but after eight years Mr Caddy moved to a contracts manager's job at smaller rival Baggaley & Jenkins.

'It was a company that was growing and there were prospects for me to grow with it, ' he says.

In 1992, Mr Caddy took over as financial director and took a 5 per cent stake in the business. Six years later, he became managing director and raised his shareholding to 37 per cent.