Out of all the hundreds of thousands of labourers in the industry, a few thousand take degrees. Out of them, a few hundred start a business. But only one has turned that business into a global power in his own lifetime: Ray O’Rourke. We spent three years chasing him to ask how he did it. He finally caught him in Dubai …
We’re speeding along one of the immaculate freeways that criss-cross Dubai when Ray O’Rourke suddenly gets animated. “Look at that. Would you just look at that? Now, what do you think of THAT?” He is gesturing wildly towards a forest of tower cranes coming into view ahead of us. “Believe me, you won’t have seen a site like this one before,” he trills, rubbing his meaty hands together in anticipation.
Minutes later, O’Rourke, his engineer son Cathal (pronounced Carl), Peter Rogers of developer Stanhope and I are standing at the edge of the biggest hole we’ve ever seen. It’s about a kilometre in diameter: at a guess, it’s five times the size of Heathrow Terminal 5. There are 42 cranes around it. Flitting about between them is an army of 6000 operatives, most from India. They seem oblivious to the choking dust and 45° heat. This is one of Laing O’Rourke’s most impressive projects – a £350m contract, in partnership with local outfit Al Naboodah Contracting, to deliver reinforced concrete structures for Dubai airport’s third terminal. O’Rourke knew we’d be impressed, of course – especially Rogers, who is one of his most faithful clients. It’s why he brought us here.
I’ve tagged along because I want an interview. I’ve been chasing O’Rourke since 2001, when he pulled off the extraordinary coup of buying Laing – the greatest name in British contracting – for £1. Unfortunately, my subject didn’t feel the need to be interviewed. He was quite happy to get on with business away from the prying eyes of the press. The business in question was the transformation Laing and his 23-year-old concrete business, O’Rourke & Son, into one of the industry’s fastest-growing and most innovative companies. And he’s nervous of interviews because he doesn’t want to reveal his hand, or to tempt fate by predicting triumphs.
Now, finally, he has agreed to let Building in. There were two conditions, however: that Rogers be present, and that it would be conducted during a tour of his projects in Dubai, both fine by us. The trip includes the airport and, er, a giant Snow Dome. This is the crazy world of Dubai, remember. So here we all are, glazed in sweat, pursuing O’Rourke from one jaw-dropping site to another under a remorseless July sun. As we stand there, O’Rourke’s eyes gleam at the ambition of the place, which he visits every two months: “If you don’t like the scale of the vision here, if the plan to build 100 towers doesn’t get you going, you’ll never be excited by anything in construction.”
From tiny acorns …
It’s been quite a journey for O’Rourke, from the green fields of his County Mayo birthplace in western Ireland to Arabia’s field of dreams. But O’Rourke is reluctant to say too much about his early life, or give away many personal details, such as his age. “Oh, you’re not going to put in all that ‘O’Rourke, 57’ nonsense are you?” Still, from what he does mention, there doesn’t seem anything remarkable about his early life – nothing to suggest he would become one of construction’s great entrepreneurs.
As a teenager, he worked as a labourer before taking an HND in civil engineering at what is now the University of East London. He spent three years at Kier, and – after a brief spell as a mini-cab driver – seven at Murphy’s. In 1978, he quit his comfortable,
£15,000-a-year job to set up O’Rourke & Son with his brother Des. It was a gamble. He had just £11,000 of work, and the office was a utility room off his garage. On one occasion, his sidekick Bernard Dempsey, now deputy chairman, had to apologise to a client on the phone about the noise from a nearby JCB starting up. It was actually the family washing machine.
From the outset, O’Rourke broke the subcontractor mould, offering a broad package of services that included flooring products and installation services. His big break came at the Broadgate office scheme in the City of London in the mid-1980s, where he first met Rogers, a forward-thinking client who enthused about his designs and precast concrete solutions. Rogers gave him the chance to take on greater responsibility. “Why did we pick Ray 20 years ago?” Rogers says. “Because he did things differently, and he was succeeding. He’s still doing it now.”
Throughout the 1980s and 1990s, O’Rourke took more work in-house, employing engineers, buyers, planners, surveyors, and adding M&E, fit-out and curtain-walling expertise. But once his turnover hit £300m there was, he says, “no more we could achieve as a specialist”. By 2001, it was time to broaden horizons; it was time to swoop on Laing.
The big deal
That deal gave O’Rourke the most famous name in the industry. He not only bought for £1 Laing’s main construction business, which was shattered by its losses on Cardiff’s Millennium Stadium and the National Physical Laboratory, he was also paid £30m to cart it away. Since then, O’Rourke has set the contracting arm on a path of renewal, ostensibly by taking it back to its 19th-century roots. “Laing started by building houses in Scotland. It didn’t start with a chief executive and a limo,” O’Rourke points out. Laing O’Rourke’s growth has been remarkable. Turnover doubled between 2002 and 2003 and is now £1.7bn. Pre-tax profit is £70.4m. Earlier this year, it came 21st in “Profit Track 100”, a ranking of fast-moving companies compiled by Pricewaterhouse Coopers and published in The Sunday Times. “By and large, we have so far achieved what we wanted to achieve,” says O’Rourke.
The merger of Laing and O’Rourke & Son wasn’t a straightforward process in the early days. “Initially, the people in O’Rourke were quite fearful of Laing, and the people in Laing were quite fearful that we’d ask them to do things out of sync with what they were used to.” The wariness subsided as the group grew.
If he’s won over the staff relatively quickly, winning the acceptance of other contractors may take a little longer. Close colleagues say O’Rourke would love to be treated as an equal by the same majors who gave him such a hard time when he was a subcontractor, and the more they deride his achievements, the greater his pleasure in showing them he’s arrived. Publicly, O’Rourke is unfailingly courteous towards his rivals. “I’ve always enjoyed competition, and I respect our competition. We have worked for all of them. If the likes of Bovis and McAlpine ask us to tender now, I’d do it. We have no notions of grandeur. We are in business to do business. I do not spend any time worrying about being accepted. We will stand by our projects.”
As for all the tales of buying work, he just looks at me for several seconds, before winking and gesturing towards a draft copy of his financial results, the strength of which suggest quite the opposite. Some contractors say they won’t tender for some jobs if Laing O’Rourke is on the list. But as a client, Rogers is adamant that there’s nothing funny going on. “I don’t think Ray’s cut margins. He’s picked projects carefully, and priced them carefully.”
Doing unto others …
What about other specialists? Surely it must be tempting, now he’s a contractor, to dish out the same treatment as O’Rourke & Son once received? Not at all, he says. “We have great respect for our supply chain. If we have an argument, we get our heads together and get the problem resolved.” Indeed, if O’Rourke had his way, monikers such as “main contractor” would disappear, to be replaced by the less adversarial-sounding “constructor”. On his favourite projects, he says, “the promoter and the deliverer become one”, which give him a strong “emotional attachment” to the job. He adds: “Terminal 5 is as much our project as it is Tony Douglas’ [T5’s managing director]. We live it, and believe in it, and have ambitions to deliver it ahead of our milestones.”
All this talk of harmony doesn’t exactly square with the traditional image of O’Rourke as a pugnacious, even ruthless, operator. There’s a thin line, though, between aggression and simply straight-talking, which O’Rourke readily admits is his style, particularly when dealing with clients. “Negotiations have to be a two-way street. You have to demonstrate clarity and integrity, and you have to know when to walk away – when there’s no empathy.”
Laing O’Rourke is certainly a company built in its leader’s image. O’Rourke keeps it that way with a daily routine that would break men with less drive and ambition. One of his favourite Irish sayings is “eating’s cheating; sleeping’s cheating”. On that score, he gets away with nothing. His day starts at 5am. He has a quick breakfast at 5.30 before his driver takes him to a project, the office, or to see a client. He says: “I don’t believe in email; it’s too impersonal and allows you to wriggle out of problems. I don’t believe in lengthy reports or proposals. I’m available for the business unit leaders on the mobile from 5am to 10pm and we talk and make decisions. That’s lean and agile. I’m comfortable discussing strategic or site issues. I like Jack Welch,” he says, referring to the legendary General Electrics boss, whom he resembles in more ways than one, “I like being able to go deep down [into a business] and having a look.”
Even with a 17-hour day, though, O’Rourke can’t do it all, and, since he obviously dotes on his wife and three children, he wouldn’t want to. It’s vital to have a circle of like-minded colleagues around him. These are the people he calls “my guys” – with whom he shares professional ambition and personal affinity. Denise Kingsmill, for example, the former Competition Commission deputy chair, told Building last week that she loves rugby, which is also one of her boss’ passions. O’Rourke recruited her personally, and that’s typical of his approach – in this case, one gleaned from Bill Gates. Never be fooled by his self-deprecating blarney about being an “uneducated Irish subbie”: O’Rourke includes the Harvard Business Review among his bedtime reading.
Staying close to the ground
One of the unique features of Laing O’Rourke is its management structure, which is partly a legacy of the problems O’Rourke inherited after the takeover. “Within Laing there was an under-led, over-managed group of people,” he says. “They had been rewarded with titles rather than proper financial remuneration. We have created a very flat structure. The engine room is not the boardroom, it’s in the projects.”
At Laing O’Rourke, there are just four grades of project leader, and the top tier of business-unit leaders report directly to the client. These managers are also responsible for the wellbeing of the staff: despite having nearly 17,000 people on the payroll, Laing O’Rourke’s human resources department is tiny. And there’s no main board. “Boards don’t do very much”, says O’Rourke. “We are not into hierarchy. It’s not allowed.” When he throws a party, which is often – such as the annual company bash for 1600 staff at the Grosvenor House Hotel – there is, pointedly, no top table.
One consequence of this horizontal structure is that O’Rourke himself, as chairman, never loses the ability to influence events on site. He feels that too many construction bosses are chateau generals. “Most contractors are probably not run by the right people. They are not engaged in the process and what’s going on. The premier business schools will say that you can teach management techniques. But if you look at people like Lord Weinstock at GEC, he came through the ranks and created a huge business – and you saw what happened when he left.
“I would not find it difficult to run a project. That would be an exciting thing to do. Just because you have the title of chief executive doesn’t mean you shouldn’t go near the front.” He also expects his employees to be equally flexible, able to move upwards, downwards and sideways within the organisation at any time.
As for all the tales of buying work, he just looks at me for several seconds, before winking and gesturing towards a draft copy of his financial results
Laing O’Rourke is a strange mixture of a sophisticated international business – encapsulated in MOVE, the mind-boggling visionary mission statement on its website – and the old family firm, with its distaste for anything that smacks of corporate pretentiousness. Horrified at the vast sums that some contractors had paid to design their logos, O’Rourke did the Laing O’Rourke one himself – “in about 10 minutes”. It looks good too, particularly illuminated on the giant cranes standing proudly on the Dubai skyline.
As Rogers points out, it is by retaining many of the features of his original business philosophy that he been able to grow his business so successfully. “It’s just a matter of scale,” he says. “Ray was basically ‘man with wheelbarrow, will place concrete’. Now he’s translated that on to an absolutely enormous scale. People say he’s an upstart, and he’s got too big for his boots. But all he’s done is focused on the product, on health and safety and investing in the right equipment for the job. And it works.”
O’Rourke trumpets the global nature of his strategy. “There’s a myth that international businesses are different,” he argues. “We certainly have to break that down. If we have ambitions, we have to be global. We have to be where the opportunities are.” O’Rourke has been helped by inheriting Laing’s international arm, and he favours fast-moving but immature markets such as India, China and, of course, Dubai. Whatever the project, he insists that “we should have a common culture anywhere in the world”.
This was apparent from our tour of the Dubai sites, especially the airport job. At 4.30 on Saturday afternoon, we watched about 30 Indian workers begin a marathon, 10-hour session pouring 4500 m3 of concrete, with only a flimsy canopy to shield them from the pitiless sun. As the concrete began to flow, the putrid smell of the cement fumes was almost unbearable in the heat. But the workers – on just £6 a day – toiled on, without a murmur of complaint, supervised with a light touch by UK managers, who appreciate their methodical, if somewhat slow and inflexible, nature.
Surveying his kingdom, O’Rourke ponders a question about the strength of his global ambition. “If you don’t have high ambitions you won’t achieve anything,” he replies. “When you look at Bechtel, you think it’s a worldwide business. That has to be what you measure yourself against.”
Not mean, just lean
Another of O’Rourke’s favourite refrains is that “it’s all about the people”. Everyone says that, of course. But O’Rourke has put his money where he mouth is. It was his operatives at Terminal 5 who hit the headlines last year with that legendary £55,000 pay deal. One rival contractor reckons the pay of Laing O’Rourke staff is, on average, 10% higher than the norm. And the company shares a third of its pre-tax profit with employees. The pay of new recruits will have to improve too, O’Rourke says, if firms are to attract the brightest and the best. “We’re our own worst enemy. We bring a bright person out of university and pay them £7000. Yet they can join a bank on £35,000. It’s a joke.”
Better training and safer site conditions will also be needed to persuade people that construction is a viable career. O’Rourke is committed to create what he calls “a learning environment”. He has set up Laing O’Rourke Learning World. This will provide everyone from joiners to engineers with the opportunity to improve their business skills by, for example, taking an MBA at a leading university. O’Rourke is in the process of establishing framework agreements with a number of institutions.
There is much that O’Rourke would change about construction. Safety, for example. “The problem is that the labour force is not required to take the responsibility for safety that they should.” The company has numerous schemes including one on the Dubai sites in which one member of the safest teams wins £1500 – a lot of money for workers on £6 a day.
He’s passionate, too, about harnessing technology. “We have to take the snobbery out of IT and get to the meat and potatoes. If we can get three- and four-dimensional modelling, we’ll get a product that’s right first time. That will take us to the level of the automotive and shipbuilding industries.”
The level of waste incurs his ire: “Current processes are responsible for waste in excess of 20%. That’s everyone from the promoter, his legal team, institutional investors, financial houses, cost consultants, designers and constructors. We are all in this together; but everyone thinks it’s someone else’s fault.”
In particular, this adversarial culture pervades the design process, O’Rourke feels. He would like responsibilities between designers and contractors to be more clearly delineated. “The designers are too protective of their position in the process, and most people on the design side are rather poorly paid. If we can get designers to provide concept drawings – like fashion houses do – and pass the design development on to constructors, we can reduce a lot of conflict.” At Dubai Airport, the amount of steel rebar was plainly excessive, but as Laing O’Rourke was obliged to stick to the architects’ designs, he had little scope to explore alternatives.
The age of empire
It’s easy to see where all this is leading. Just as O’Rourke & Son expanded 20 years ago by taking the concrete package in-house, O’Rourke is itching to do the same thing as a general contractor.
In the past year, he has enhanced Laing O’Rourke’s core project management and framing expertise by snapping up two firms from Carillion, Crown House Engineering and Expanded Piling.
It would not be a huge surprise to see Laing O’Rourke broaden its range of specialist services through further acquisitions. Possessing all the major contracting disciplines would certainly help meet the demands of his mission statement, included in a handbook to Terminal 5 staff, to “make Laing O’Rourke the worldwide contractor of choice”.
O’Rourke won’t comment on rumours that his ultimate goal is to create a £5bn business, but says: “We will continue to have ambitious plans for the group. Where we’ll be in five years, I couldn’t tell you.” But expansion is a given: “If a company does not grow, it dies,” he says. “It has to have ambitious plans. In growing you create career paths for young people and diversify. Growth is nothing to be afraid of.”
O’Rourke himself can’t go on forever – although he looked as fit as a butcher’s dog in Dubai and showed no signs of slowing down. One option is to float the business, but he has a visceral aversion to the pomposity of stock market life. “I don’t think the City is a great place for a construction company,” he says. He could sell up, although Rogers is convinced that he’s in it for the long haul.
More likely, he will groom a successor. There are already a number of candidates within the group. And if he does have an eye on forming a great construction dynasty, like Laing, he must consider his 27-year-old son Cathal, who is an engineer at Terminal 5.
Not that O’Rourke is ready to hang up the gloves yet. “Ray can take Laing O’Rourke to great heights as long as he doesn’t get sidetracked,” says Rogers. “As long as he keeps visiting the sites and as long as he keeps spreading the message. He’ll need a professional team around him – good people who can stand up to him. I wouldn’t bet against him.”
One of O’Rourke’s passions is flying. He loves jetting around the world, and has a pilot’s licence to fly twin-engine King Air light aircraft. Flying, like construction, is a test. “When you’re flying a plane,” he says, “it’s fine while you’re going along smoothly. But what do you do when you encounter some turbulence? Do you keep going? Or bail out?” A tough decision for some, but there’s no question what Ray O’Rourke would do.
They say build, we say how high?
There are more similarities than you'd first realise between the canny Irishman turning Laing O'Rourke into one of the world’s great contractors, and the Arab princes masterminding Dubai's expansion. Not wealth, perhaps, but in their ambition and bravery. Sheikh Ahmed bin Saeed Al Maktoum, president of the department of Civil Aviation, is presiding over the £2.5bn expansion of Dubai Airport over the next four years.
"The government's plan is to have 15 million hotel guests, and growth of not less than 20% a year," he says, lighting up a cigarette. "We also established that there is currently 6 million ft2 of retail. In the next four or five years, that will rise to 29 million." Dubai's population is just 750,000.
The Maktoums are banking on Dubai's natural geographical advantages to fuel these grand ambitions: "Dubai is a hub. It's a big logistics centre for the region. It's the ideal place for company headquarters," says the Sheikh.The airport will serve as Dubai's entrance lobby. "You will see very few airports that are as spacious, yet friendly. It will be one of the largest in the world. The interior design will be beautiful," he says.
A sense of urgency is everywhere in Dubai. There are few restrictions of any kind on development. The attitude of the government towards landowners is that "it’s their property, and nobody can tell them what to build, only how high they can go."
Even these height restrictions seem fairly loose. "We must use the land the best way we can," says the sheikh. But he's also aware of the power of "an icon, a landmark". Dubai’s planned 725 m Burj Dubai tower is to be the tallest in the world, unless Abu Dhabi can trump it. But in this mad race for supremacy, there is already talk in Dubai of an even taller skyscraper – 1100 m high.
The authorities are not complete bystanders though. "If the private sector is hesitant, because [a project] might be a bit risky, that’s when we see the government taking over," says the sheikh, puffing on a second cigarette. "For example, take The Palm [whose latest 700 luxury apartments were snapped up in 72 hours earlier this month]. Dubai lacks beaches. The Palm increases the size of beach front by 60 km."
Dubai's construction output will rival the UK's by the end of the decade, unless al-Qaeda target the city, as has been suggested on some extremist web sites. But even the Maktoums are concerned that development should not be entirely untrammelled. "We do have conservation areas," says the Sheikh. "We want the younger generation to see some sand and camels."