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Hill leads the charge for construction exports

INTERNATIONAL - As the DTI launches a new group to help contractors get work abroad, Arup chairman Terry Hill explains why UK firms must rise to the challenge of globalisation ? or be left behind for good.Alasdair Reisner reports

THE UK is a nation infected with wanderlust, a desire that is increasingly taking us to some wild places. If you want to keep up with the Joneses, booking a fortnight in Torremolinos no longer cuts the mustard. These days Brits like to brag about walking the Inca trail in Peru or swimming in geothermal pools in Iceland.

Yet there is one section of British life that seems quite happy to leave its passport unstamped. With a few notable exceptions the UK contracting indust ry has been travel-shy in recent years, ignor ing the increasing globalisation of the construction industry to focus on the domestic market.

This is an outlook Terry Hill has been charged with changing. Last November Mr Hill, whose day job is chairman of engineering giant Arup, was chosen to head UK Trade and Investment's newly formed Construction Sector Advisory Group.

'Our remit is dead simple, ' says Mr Hill. 'We are going to increase exports in the construction sector.' Mr Hill is well placed to take up this role. Wh ile Arup is a UK-based firm, it now sees 60 per cent of its tu rnover come from overseas markets, with projects spanning the globe from Hong Kong and Singapore to the USA and Middle East.

He hopes to instil this same global approach, which is also seen in other major engineering firms and leading architects, in the UK's contracting community.

'That is the direction that I will be looking, ' says Mr Hill. 'Naturally we want to look at how architects, engineers and other consultants can increase their global presence but I think it would be a good result if we could see how contractors and suppliers can increase their exports. That would be good not only for the UK economy but also for the companies themselves. It is only by exposing ou rselves to the best of global compet it ion that we get bet ter ou rselves.

'I think we are in a fantastic place at the moment.

The consultants and professionals can be at the leading edge of design, procurement and delivery in overseas markets. It would be interesting to see how they could take UK contractors and suppliers with them.' Fortunately it seems that, if contractors can lose their reticence about packing their suitcases, there is an increasing market to take advantage of.

'I have found we have a fantastic ready and hungry market th roughout the world , ' says Mr Hill. 'I was part of the Prime Minister's party that recently went to China and India. That generated a huge amount of interest about the UK. China is tak ing a remarkably commercial approach to the advantages British companies can bring as it opens its borders and becomes part of the global economy. There are Chinese companies that want to partner with UK firms in the global marketplace.' As an example he cites Costain which, as one of the UK's few well-travelled contractors, has recently linked up with China Harbour on a £100 million breakwater construction project in Mexico.

So what help can Mr Hill's group offer contractors wanting to expand onto the international scene? The possibilities are twofold.

He says: 'The first thing we can do is to provide information. How do companies set themselves up in other countries? What are the procurement systems?

How do you bid for work? Who are the people you need to know? How is the government organised?

What is the market like for private sector work?' Mr Hill hopes to rope in UK embassies and high commissions around the world to help collate this information, providing a one-stop shop for firms with an eye on the international construction market.

He also thinks firms can be helped by being offered places on trade missions to emerging and existing markets, being given a foot in the door through introductions to key local developers and government officials.

The first meeting of the Construction Sector Advisory Group took place on February 27, with three more expected over the course of the year.

Mr Hill is currently trying to populate the group with some of the biggest hitters from across the broadest sense of the construction industry.

'I'm about halfway through at the moment in populating the advisory group. There are those volunteering, those knocking at the door. To try to make it a good cross-section I am hand-picking a few myself. I am looking for about 15 members, ' he says.

But surely this is going to be stepping on the toes of the already well established trade association for construction exports, the British Consultants and Construction Bureau? Not so, according to Mr Hill.

'We will be working very closely with the BCCB because they are totally geared up to look at the export market from the private sector point of view. We are not treading on their toes. The BCCB is about the industry helping itself. This is about leveraging in the UK Government to help construction exports, following advice from us, ' he says.

But does the UK really have someth ing to offer to the rest of the world? Surely foreign clients are only going to work with UK firms if they can provide services not available from their own indigenous firms or other international rivals?

Mr Hill highlights two areas in which he feels the UK construction industry leads the way.

'We are lucky that in the UK we have enlightened clients, which means generally we have efficient procurement systems, ' he says.

'I was giving a talk in India on Public-Private Partnership projects and I started by saying that, like many other British inventions such as golf and football, PPP was for other nations around the world to perfect. I was going to mention cricket as well but we were winning the Ashes at that stage.

That whole area of procurement excellence is being exported and we could do more of it. Just look at the USA. There is a huge market there that is still at a very basic level in the way it procures, particularly for public projects. It still has a lowestcost-is-lowest-finished-cost rather than lifetime cost mentality. That presents a huge opportunity to bring our expertise to their procurement.' The second area where Mr Hill feels the UK could be a world-beater is in the regeneration of brownfield sites. As economies around the world shift away traditional heavy industries, the sites of former factories are becoming ripe for redevelopment.

'One initiative that UKTI is already working on is regenerat ion. It is something we do well in the UK that is becoming more applicable internat ionally, ' says Mr Hill.

'We can see how it has happened up and down the UK, going right back to the garden festival sites and right through. It comes with three wins. You take land close to a city centre so it's in the right place, you clean it up so it's good for sustainability, and then you build new facilities. Look at places like China, Russia or the American steel belt. There is phenomenal potential to take UK companies and the lessons they have learnt over the years to these countries.' But the one thing Mr Hill feels UK contractors should not try to do overseas is to compete with other global contractors purely on price.

He says: 'We have such expertise in many different types of construction but let's take a straightforward comparison between, say, a UK contractor and a Chinese contractor. On pure price the Chinese contractor will always win so we need to know what ou r edge will be.

'For a long time our edge is going to be our intellectual capital. That is the way the UK economy is turning ? export of our intellectual capital. But the point about intellectual capital is that you cannot patent it. You have to stay ahead by developing it through innovation. My contention is that by exposing ourselves to international markets we will stay ahead.' If the Const ruct ion Sector Advisory Group succeeds in its aims there is no reason why UK contractors cannot make their presence felt on the global stage. The alternative is to remain bound by the UK's own borders, letting other international firms scoop up potentially huge workloads.

'In the global marketplace you will see companies moving from country to country. The only thing that matters is that the most efficient wins. We have to make sure the UK is up to the challenge, rather than being denuded of its skills and intellectual capital, ' says Mr Hill.

'That may sound like scaremongering but that will be what happens if we don't do any thing. We have to make sure we raise the profile of UK const ruct ion.'