Solid foundation that could keep housebuilder stable as the Brexit storm clouds gather
In the depths of the last property downturn around eight years ago, construction group CCG made the decision to spend £12 million on a facility near its Cambuslang headquarters where up to 60 per cent of a house can be built indoors, with insulation, doors and windows fitted into panels ready to put together on site.
More than 230 of the homes built for the athletes at the 2014 Commonwealth Games came out of that off-site manufacturing (OSM) plant on the outskirts of Glasgow, providing a steady stream of work through some of the worst of the recession.
CCG clocked up solid growth as the property market recovered, but director Calum Murray and others in the industry are concerned about the fall-out from the vote to take Britain out of the EU.
The two hardest-hit sectors as the FTSE plunged on Friday morning were banks and housebuilders, the latter only thriving during periods of certainty and consumer confidence.
“It is going to make for very challenging circumstances going forward,” says Murray. “But given the balance of our business is driven out of the public sector and the affordable housing sector, we look forward fairly optimistically, as we are geared up for the Scottish Government’s target of 50,000 new affordable homes in the next five years.
“We are less exposed to the private housing market, where there are going to be some choppy waters. We are able to manage our exposure there, but clearly there are some difficult times ahead.”
With turnover of about £120m and 600 staff – 40 of whom work in OSM – CCG is one of Scotland’s largest privately-owned construction firms. Its two equity directors, chief executive Alastair Wylie and financial director Bernie Rooney, created the company through the 1998 buy-out of a small plumbing business that has since grown into eight divisions spanning various elements of building and manufacturing. Murray, a town planner by training, joined the company from publicly-quoted Beazer Homes in 2000, when CCG’s annual sales were around the £20m mark.
Coming from a plc, the “flip into the privately-owned environment” was rather alien, but he soon grew to appreciate the innovation within CCG. The OSM facility is one of just a handful in the UK for closed panel production, which means that insulation and windows are installed in a controlled environment, easing proper fitting and improving energy efficiency. Speed is another factor – one wall of a home can be finished from scratch in just three hours.
These are supplied throughout the UK for both CCG projects and external clients. Should they wish, customers can also have external claddings pre-installed.
“The construction industry is slow to embrace change, but this kind of factory is where construction needs to get to,” Murray says.
“CCG is not afraid of change and innovation. It also has an embedded training culture. Year on year come rain or shine or recession, we have got a regular apprentice intake.”
Apprentices make up 10 per cent of the workforce, significant in an industry rife with skills shortages. Murray says bricklayers and plumbers are in particularly short supply.
Although most of the group’s turnover comes from housing, CCG is also involved in construction projects such as school extensions, care homes, student accommodation and community centres. Current contracts have a combined value of £52m, while live residential housing projects, including OSM, are collectively valued at £100m.
As part of the award-winning City Legacy consortium – which also included Cruden, McTaggart & Mickel, WH Malcolm and Glasgow City Council – CCG built 237 of the 700 mixed-tenure homes that form the hub of regeneration efforts in the city’s East End. CCG was last on and first off the site, completing its part in 15 months, with a typical terrace of eight townhouses up and watertight in ten days.
Winning that bid was a “tremendous fillip” to all the partners involved, Murray says. At its peak, the project supported 650 jobs through the consortium partners and multiple sub-contractors during the grip of the downturn.
“CCG’s research and development in setting up OSM meant we were a step ahead of the market in the bidding process,” Murray says.
“It was quite a challenge when we had developed that to then share it with our architect and two of our competitors, but we did it because we are a pragmatic company.”
30 SECOND CV
Born: 1960, Glasgow
Education: Bishopbriggs Academy; Glasgow School of Art
Ambition at school: Anything but a town planner
Can’t live without: My family
Kindle or book: A book
Favourite city: Paris
Preferred mode of transport: I like to drive. I am not the healthiest of individuals
What car do you drive: A Mercedes
What makes you angry: Sloppiness and anything that slows down necessary progress
What inspires you: Improvement and innovation
Best thing about your job: The variety in the property sector is an ongoing source of fascination