Company focus M&E contractor Hills has clawed its way into profit after two years in the red

David Hill, the chief executive of M&E contractor Hills Electrical and Mechanical, is used to making controversial changes. In 1976, as an office manager in his father Ben’s business, young David was asked to throw out the company’s paper accounts and program a computer to do the job.

“It was probably the first machine in the county with a floppy disk drive,” he says, wincing. “It took me all Christmas to program it. When I went back in January and announced we had computerised accounts, seven women walked out straight away.”

Thirty years on, Hill has just implemented a fresh batch of changes at the company, which since he took the helm 1995 has grown from a £23m-turnover business working in the Walsall area into one of Britain’s largest privately-owned M&E practices, with battle honours including the Swiss Re tower and Bovis Lend Lease’s Manchester Civil Justice Centre.

The firm’s results for 2006 show a return to health after two years in the red, with a pre-tax profit of £306,660 on turnover of £69m.

The recovery was the result of a change of direction by Hill. In the past the firm’s policy was aimed at increasing revenues; recently, however, he has cut turnover to stabilise it.

“When my father ran the business, he had a maxim of doing only one thing at a time, which made expansion difficult,” says Hill. When he took over after his father’s death in 1995, Hill quickly changed that. “We expanded geographically, opening a couple of offices a year, and we were obsessed with turnover,” he says.

Hill wanted the firm to make sales of between £96m and £100m, which it did in 2003, booking a £400,000 profit besides.

But there was a high price to be paid for all that cash. “The wheels fell off the wagon the following year,” Hill says. “We lost a lot of money. The company was full of entrepreneurs, everyone was pulling in different directions and the contract control wasn’t good.”

The then managing director of the firm left “by mutual consent”, and Hill assumed greater control of the business. He decided to operate without a managing director, and put in place more centralised systems to control contracts, with the separate offices consolidated into three regional hubs.

We had different airstreams for well dogs, sick dogs and humans

David Hill, chief executive, hills electrical and mechanical

The result is that sales have stabilised at about £70m, and Hill is now trying to focus the firm on office and retail fit-out. “We wouldn’t rule anything out, but theoretically there’s profit to be had in those areas,” he says.

Hills carries out a lot of data cabling, which has led it to work for financial institutions including the Bank of England. “We rewired the bank top to bottom,” says Hill.

Through projects like this, the firm has developed a reputation for tight security controls. “Security was everything on the project, as you’d expect.”

As a specialist company, the firm has also worked on its fair share of quirky jobs. It has just completed a headquarters for the Guide Dogs for the Blind Association in Forfar, Scotland, which demanded highly specified accommodation including dog showers and raised heated flooring.

“We had to have different airstreams for different types of animal – well dogs, sick dogs and humans,” says Hill. “It might sound bizarre, but the separation was crucial for the client, and it was a hugely interesting project.”

Wary of repeating past mistakes, Hills’ focus is now on steady rather than breakneck growth, and as such, its chief executive has no plans to operate beyond the UK or to enter the takeover market.

Hill is even more adamant about one other thing – the firm will remain in his hands.

“If we do get takeover approaches, we give them short shrift,” he says. “As you can probably tell, we’re fiercely independent.”

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