A foreign concept

Just what brings foreign contractors flooding to our shores? What convinces them Britain is a land overflowing with opportunity?

Before I get accused of xenophobia or siding with the BNP, let me make it clear: I'm not talking about itinerant Polish plumbers or the Romanian carpenters who did such a great job on the Scottish parliament. I'm talking about the heavyweights of international construction who seem to believe the streets of London - and presumably the rest of Britain - are truly paved with gold.

From Europe, we've had Bouygues, Vinci, Skanska, Hochtief, HBG and Ferrovial. From Japan, there's been Kajima; from the USA, Bechtel, Fluor Daniels and Jacobs; and from Australia, of course, Multiplex and Lend Lease.

For a small island with a mature infrastructure, little land left to build on and notoriously slender margins, it seems a curious destination for companies with international ambitions. Our EU membership means our continental counterparts are likely to regard the UK as fair game, but it's a long way to come from Japan or Australia.

Kajima is an interesting example. It arrived in the late 1980s with a great idea for system-built supermarkets. Its first store went up in record time and the shock waves rippled through the UK construction market. Here was a serious threat to our livelihood, an invader to our shores showing us - and our potential clients - just how clever it was. Britain's traditional construction methods suddenly looked very dated.

That was 20 years ago. Today, many of Britain's supermarkets, and most other buildings, are still being constructed the way we've always constructed them. Meanwhile, Kajima's fortunes have faltered in the UK and the company seems poised to pull out of the market.

Bouygues had a rather shorter journey to Britain and was helped on its way by EU procurement rules that mean any public sector project in the EU is open to any contractor from any member state. It scored an early success, beating Bovis to the PFI project for the Home Office. Since then, it has had other PFI wins, notably in healthcare, where it now has a useful 5% market share.

But Bouygues, like many of its British competitors, has learned the hard way that there are no quick fixes in PFI. Managing construction costs is critical to long-term profitability and, to do that, the design has to be right at the outset and it has to be affordable.

If you are an overseas contractor and you want to crack the UK market, the best way to do it is with the help of a homegrown company

Then, of course, you have the Aussies. Let's start with Multiplex, a contractor we teamed up with in 1999 to bid for Wembley stadium. The rationale was simple: Multiplex had successfully constructed the main arena for the 2000 Sydney Olympics and was keen to break into the UK market. Bovis was on the verge of floating on the London stock market and wouldn't be big enough to build Wembley on its own; it made sense to team up.

The parting of the ways came when Wembley rejected our joint bid as being too expensive. Bovis was adamant that the price reflected the risk and we weren't prepared to do it for less - Multiplex was, and the rest is history. There's been plenty written about what's gone wrong at Wembley so I don't propose to dwell on it here.

We never did make it to the stock market. Another ambitious Australian, Lend Lease, impressed with our skills in building Bluewater and the global reach of the company, bought Bovis from P&O and Bovis Lend Lease was born. Suddenly, from being a British business competing against an influx of overseas competitors, we too were foreign-owned.

With Lend Lease at the helm, we have found many areas of mutual self-interest. Our parent has real expertise in high-rise construction that is going to be much in demand in London over the next decade and I like to think we've exported some expertise of our own, particularly in retail construction and health and safety.

It's an international merger that has worked, as has the Dutch company HBG's acquisition of Higgs and Hill and Vinci's takeover of Norwest Holst. When you look at Building's business barometer league tables, it's clear that if you are an overseas contractor and you want to crack the UK market, the best way to do it is with the help of a homegrown company.

As Multiplex can testify to its cost on Wembley, there is no substitute for local knowledge. Construction will always be a local business, whatever country you're in and the companies that make a success of themselves overseas are the ones that harness that local capability and make it work to their advantage.