Balfour Beatty looks for alternative markets as building work dries up

A THINNING list of private and publicly-funded building projects in Scotland is forcing construction giant Balfour Beatty to expand into new markets such as waste management, according to one of its top executives.

Bob Clark, who is managing director for Balfour Beatty Construction Scottish & Southern, said the company had been forced to be inventive to overcome a drought in traditional building works.

Clark, who is from Leslie in Fife but moved to London seven years ago, was in Edinburgh last week for an event to celebrate Balfour Beatty’s contribution to the £47 million revamp of the National Museum of Scotland, which saw it, among other things, excavate a cavernous new basement floor.

Clark said private sector work for office developments had almost completely dried up in Scotland. The business is on-site at one scheme in Hamilton but other than that Clark said: “I can’t even think of another commercial project that is in the office at the moment for tendering.”

Although it has been working on a number of long-term hospital and schools building jobs over the past couple of years – Balfour Beatty is behind a new £170m wing for the Victoria Hospital in Kirkcaldy – Clark said the company, like many of its competitors, has been diversifying into new areas.

“We’re having to go and find new markets. We traditionally weren’t involved in the waste market but because of European regulations in terms of land fill tax and the like, all local authorities are now having to look at how they’re going to deal with their waste. There’s quite a number of schemes out for bidding in the market just now.

“The other thing we’re having to do is look to see how we can use Balfour Beatty Capital better. That part of the business traditionally was a PFI [private finance initiative] investor but it’s also looking now at how it can help local authorities, higher education colleges and the like to bring to fruition some of their projects.”

In Scotland, Clark expects the building business to be flat this year and next before returning to “moderate” growth from 2013.

He said the Scottish Futures Trust, which has attracted criticism from the group’s chief executive for UK construction, Mike Peasland, was making progress although he did question why a large number of contracts for works such as the Edinburgh trams and the new Forth Road Bridge had been awarded to foreign firms or consortia.

“It’s something that plays out in Scotland that I don’t see everywhere else in the UK. We seem very keen in Scotland to open up our markets a lot more than other parts of the country seem to do.”

Although Balfour Beatty is traditionally associated with building, the group has other divisions, including engineering, investment and professional services.

Overall, Balfour Beatty Group is expected to hit sales of £11 billion this year – 50 per cent of which will come from outside the UK, Clark said.

Under the direction of group chief executive Ian Tyler, the FTSE 250 giant has been seeking to expand its overseas operations in order to mitigate the effects of a downturn in the UK and Europe.