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Secret of succeeding in the M&E market

The M&E sector has not been the easiest market to operate in over the last few years, but there are many encouraging examples of those who have continued to grow, such as G&H Building Services.

Following reports from some of the major operators in the mechanical and electrical sector in recent years, including profit warnings, business failures and, in some cases, complete withdrawal from the market, the perception that there was no money to be made was increasingly heard.

Having spoken to a number of contractors in recent months, however, H&V News has discovered that there are a number of businesses operating in the M&E market that have continued to trade effectively throughout the downturn and, in some cases, have reported growth as a result. One of these is G&H Building Services, which operates from its base in Leeds and has continued to focus on working effectively with its industry partners and delivering high quality work in all areas.

Managing director Graham Kelly spoke exclusively to H&V News to explain how his company dealt with the challenges of recent years. One of the most important areas of focus has been to retain a directly-employed workforce and highly skilled workforce, he explains, combined with a willingness to engage with partners and suppliers in all areas.

The company has also extended its expertise to include renewable energy, resulting in involvement in projects that include a number of technologies. “We’ve set sustainability as one of our targets,” says Mr Kelly. “We’ve seen this grow from zero to just shy of £2 million last year, in areas such as biomass, CHP and PV.”

Having been formed in 1999, Mr Kelly joined as the need for more pipework expertise increased at G&H. While the main focus of the business in its early years was mainly on the domestic market, the company now covers all areas of the commercial sector.

Having seen the potential within both the business itself and the market, Mr Kelly purchased G&H in 2004. Although the company is significantly different to its 2004 identity, it has retained its focus on traditional values.

The number of services offered has since expanded and currently ranges from initial conception and design of the project, also incorporating the various building phases and, of course, the fit out and maintenance of M&E requirements. Its diverse range of services has been another key factor in its success in recent years.

Mr Kelly is keen to recognise the valuable role of the company’s employees in its success, further emphasising his initial comments about the importance of a directly-employed workforce. “I’ve employed some good lads. The majority of those on site have been with me for 10 years and they know how things should be installed,” he says.

Another important aspect of the company has been to avoid becoming involved in the pressure to reduce prices, he continues. “There’s no point in taking a job on at a loss just to keep things going,” he says. “You risk falling out with the client, so we just step away from it. It’s suicide.”

Comparing the healthy position of G&H with the profit warnings issued by major companies in recent months and the demise of respected companies such as MJN Colston in previous years, the wisdom of this policy is further justified. The business has not avoided difficulties entirely, however, as it has lost money through other companies failing.

When these instances occur, G&H has found the best policy has been to discuss any problems with its relevant partners. “I’m just open and honest to the supply chain,” says Mr Kelly, who believes that this approach helps to resolve any issues before they become more serious.

He states that problems in project delivery often arise because companies try to do too much. “You have to know your skill set, you can’t do it all,” says Mr Kelly. “It’s essential to manage your business structure.”

There has been a noticeable trend for companies in both mechanical and electrical sectors to extend their in-house expertise to cover both disciplines and this is the case for G&H. It previously relied on an electrical contractor to fulfil this aspect, while delivering all the mechanical requirements within contracts.

One of its more recent recruitments has been electrical contract manager Paul Churchill, adding further to the company’s expertise in this area. There has also been a company-wide effort to raise communication levels, resulting in improved reporting on progress at all stages of the contract.

Its focus on design has also resulted in delivering benefits in other areas: “There’s more work going into the bid, but we’re finding that we get on board a lot earlier than we did before, which is miles better,” says Mr Kelly.

Many people in the industry have reported difficulties in recruiting new staff and this is also true for G&H. The recruitment process can be expensive, it has found, with no guarantee that this will deliver the best candidate.

Despite these issues, the company has continued to increase its workforce to cope with increased demand and has recruited new staff in areas including engineering and estimating in recent months. The business was also involved in the process of recruiting more apprentices at the time of its meeting with H&V News.

Returning to Mr Kelly’s previous comments recognising the value of its staff, G&H tries to ensure that employees’ welfare remains a main priority. This includes the provision of accommodation whenever necessary – a vital element considering the company’s nationwide project locations – combined with social events that also include family members. “We’re just trying to make things a bit more social, with more togetherness, because you do spend a lot of time with your work colleagues,” he says.

Further proof of the company’s success can be seen in its new premises on the outskirts of Leeds. This has allowed it to combine all departments, including off-site manufacturing, in a modern, self-contained building of 12,500 sq ft and the business turned over approximately £19 million in 2014.

Additional investment has been made in the area of building information modelling, as G&H is seeing more demand for this. Having purchased the software, training has also been completed to ensure that it makes the most of all the many aspects of BIM.

Mr Kelly believes that there needs to be a radical effort throughout the construction sector to recruit more people and provide them with better levels of training. “We need to get more people into the industry. The old days of apprenticeships were much better and everyone was given a better start. Experience counts,” he says.

“We test all our new people to make sure they can do the job,” Mr Kelly continues. He gives the example of one particular applicant who supplied a good CV, but proved unable to complete the basic tasks required.

The role of managing director has also proved to require a diverse number of skills, especially in a business that places great importance on a positive team spirit. “Sometimes I feel I’m more of a social worker than a managing director,” says Mr Kelly with typical good humour.

He concludes on a more serious note of advice for the industry in general: “We need to push people to make sure they get the right level of training and development. We also need to make sure that trainees have more commercial awareness.”