The sector’s future looks bright, with improving results expected as various markets expand, says David Hurcomb.
M&E work is among the most susceptible to the wider market’s peaks and troughs, but 2016 is shaping up to be a positive year for a sector whose fortunes are cautiously looking up.
David Hurcomb is among the optimists. As chief executive of the UK’s second largest M&E firm, he cites 2015 as the year the sector largely came out of the recession and predicts that this will be reflected in strong results for leading firms over the coming years.
NG Bailey recorded a 15 per cent rise in orders for 2015 and expects strong growth in profit and turnover when it posts its annual results later this year.
Mr Hurcomb says much of NG Bailey’s success was down to strong performances in its rail and higher education businesses.
In rail, the company was involved in the redevelopment of Birmingham New Street station and is currently the main M&E contractor at London Bridge.
“Data centres are a massive area of growth in the sector”
David Hurcomb, NG Bailey
In higher education NG Bailey is seeing more universities building high-tech engineering research centres and new digital learning hubs.
“This will only get bigger,” Mr Hurcomb says. “Universities have put their focus on becoming world-class engineering environments so they can attract students from across the globe.”
London Bridge NG Bailey 3
But it’s not just the more traditional sectors that will prove fruitful for M&E contractors. “Data centres are a massive area of growth in the sector,” Mr Hurcomb continues, suggesting this is a sector where M&E specialists could provide a more attractive proposition to clients.
“The building around a data centre is there to just keep the rain off. If you are a client looking for a contractor, you will probably be looking for someone who can also handle the mechanical and engineering side to help with the facility’s resilience.”
The chief executive says large-scale investment is materialising around the country, not just solely in London, with areas such as Manchester, Leeds, Liverpool and the West Midlands providing more opportunities for firms than ever before.
Despite these successes, NG Bailey is still looking at other areas into which it could move.
Mr Hurcomb says NG Bailey has already started looking at a potential move into the rail electrification market, while mobilising to make the most of what he sees as a 25-year pipeline of work in the nuclear sector.
Hinkley Point C_100 tonne dumpers working on the HPC site, in front of Hinkley Point B Oct 14
The firm has been selected as preferred bidder for the £460m electrical installation works at Hinkley Point C in a JV with Balfour Beatty, with whom it has entered a memorandum of understanding that has the potential for further energy work.
However, Mr Hurcomb says the company’s aims do not stop there and that he is already targeting the Wylfa Newydd plant. “We have been working with [Wylfa client] Hitachi on some early task orders and would hope to be involved,” he says.
Get on board or lose out
While the opportunities are vast, Mr Hurcomb warns it only those looking to embrace offsite manufacturing and building information modelling will succeed. “Firms will need to invest in BIM or risk being merely a labour supplier.
“If you haven’t got manufacturing and BIM capabilities you will be excluded from the game,” he says.
For Mr Hurcomb, this will be one of several challenges alongside uncertainty around the impending EU referendum and dealing with the skills crisis that continues to plague the sector.
“My worry [over the threat of] Brexit is that it will cause nervousness in the market,” Mr Hurcomb says. “If investors don’t like the result either way, they might look at it and decide to invest elsewhere.
“Being part of Europe also allows you to have a much more flexible workforce – this is something people often forget.”