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Interserve boss warns against cutting local supply chain ties

Major contractors must invest in the local pound if they want their supply chains to “come through the tough times”, Interserve’s head of UK construction has told CN.

UK construction managing director Ian Renhard spoke of the importance of local suppliers in winning the Jaguar Land Rover £355 million factory job in Wolverhampton, at a time when some contractors are reducing their supply chains.

And he warned against companies “pulling away” from local economies in the UK, just as the UK Contractors’ Group prepares to roll out its Creating Britain’s Future campaign to the regions with a Manchester launch on Thursday.

“It’s important that when you are in a local economy, you are actually investing in that economy and spending money,” Mr Renhard told CN, adding that Interserve has 14 regional offices.

“When you see some of the contractors now pulling away and shutting offices down – that local relationship is important.”

He said using local suppliers while working for local authorities has led to more projects for Interserve – for example in the West Midlands, where the firm picked up the £355m state-of-the-art factory for Jaguar Land Rover.

“Part of the success in that is the work we were doing with Sandwell and local authorities in the Black County to develop links in to local suppliers and employment for local people,” said Mr Renhard, who was promoted to the board of the firm this month.

“We have built a very strong supply chain over the years and we want to support and maintain them through the tough times, and make sure they are coming through it with us.”

Jaguar Land Rover flags £2bn investment

Interserve is building Jaguar Land Rover’s advanced engine facility in Wolverhapton in a project worth around £355m.

The two buildings, each the size of four football pitches, are using around 4,200 tonnes of steel and 20,600 cubic metres of concrete.

Workers are on i54 South Staffordshire Business Park, although Interserve was not officially announced by the luxury car manufacturer, which revealed a 30 per cent boost in car sales last week alongside plans to create 800 more jobs in the UK.

JLR said it is investing £2bn in its products and facilities this financial year. Council bosses in Wolverhampton and Staffordshire are also spending £38m on a new slip road from the M54 motorway to provide access to the new factory.

The car firm said its £355m Wolverhampton project will create around 750 jobs. it also recently confirmed a £370m investment programme for its Solihull site, which includes the installation of a new aluminium body shop for the all-new Range Rover, as well as plans to invest a reported £200m in its facility at Castle Bromwich.

Companies including Balfour Beatty and ISG have also spoken of the importance of their supply chain, but have trimmed them down as they endeavor to manage them more efficiently.

“What we want to make sure is that we have the supply chain that is right for the various schemes we are working on – I don’t think it’s necessarily a numbers game,” Mr Renhard said.

Mr Renhard and George Franks, who leads international construction, were promoted to Interserve’s executive board earlier this month.

The strategic change sees the UK division report to executive director and head of developments Dougie Sutherland. International construction, led by George Franks, will report to chief executive Adrian Ringrose.

Executive director David Paterson, who has led both UK and international construction, will retire from the board and the company on 30 April.

Interserve also revealed the joint acquisition of Omani oil and gas services company Willbros Middle East for £26m a few days before the board news.

Mr Renhard said the changes were driven by the international business. “With the growth in the overseas business, and announcements earlier in the week, it was deemed appropriate that it started to stand on its own two feet, as it were,” he said.

“Our plan at the moment for UK construction is to make sure we retain our size and shape.”

The firm’s UK construction division recorded turnover of £731m in 2011, while international saw £224m. Both were down on a year earlier.

Looking ahead, Mr Renhard said: “I think 2013 is going to be a tough year. But we have got good visibility and a confident outlook for 2013. Will there be growth in 2014? I don’t know.”

Interserve Developments directs all of the group’s private finance activities, leading the bid process and managing the company’s PFI equity investments. It also leads on strategy for acquisitions and development of the local government sector.

Mr Renhard said reporting to Mr Sutherland was not a consequence of the new private finance initiative, but offers a tighter line of communication with the investments and development business.

He said the firm is “not on an M&A drive” but said it will continue to look at services they feel would enhance their offering.

Mr Renhard said UK construction will continue to build on the relationships and business that have “served us well over the last couple of years”, including frameworks and existing relationships with major organisations.

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