Steve McGuckin, the consultant’s UK boss, explains the thinking behind its international growth plans - and dismisses all talk of US takeovers
If you want to grow a building consultancy by 50% within five years, Steve McGuckin is a useful man to have on board. When it comes to the construction business, McGuckin knows his stuff. He has a first-class degree in architecture and qualifications from the London Business School and MIT. Add to that a 20-year career spanning Mace, Land Securities and now Turner & Townsend, and he has most bases covered.
He was promoted to UK managing director of T&T three months ago and is responsible for reshaping the group in the UK. Here, he talks about the potential impact of the consultant’s international growth plans, as well as commenting on this week’s rumours of US firms circling UK consultants, such as Scott Wilson.
McGuckin believes T&T has “a good base to bounce off” for international expansion. The group’s turnover outside the UK amounts to £84m - almost 35% of its £245m overall turnover - and it operates in 21 sectors in 29 countries from 63 offices.
This reshaping is the right thing. we are facing the world as it is seen through the eyes of the client
But despite already having this global presence, the growth strategy is ambitious. “There is no reason why it shouldn’t be 50% bigger within five years,” McGuckin says. “100% even, as a stretch target.”
The plan is to reshape the international business’ three focus areas to reflect the changing shape of the global economy and emerging markets. This will involve a move away from traditional property services towards infrastructure and natural resources.
At the moment, 23% of the business focuses on infrastructure, 15% on natural resources and 62% on property. By 2015, McGuckin says, the split will be closer to 35:25:40.
The key growth areas will be South America - especially Chile, Brazil and Argentina - the US, Canada and the Middle East, and it will be a mix of organic growth and acquisitions. Turner & Townsend Canada merged with Toronto-based CM2R in April, for example, and now has offices in Toronto and Calgary.
“Our strategy is not to arrive in a country with a man, a desk and a phone but to build alliances with clients and local firms as a way of establishing offices,” says McGuckin.
He points to one of the factors that sets Turner & Townsend apart: it offers joined-up services in different sectors rather than separate disciplines. “For all the key sectors - oil, gas and energy, to name a few - we have excellent programme managers, cost managers and management consultants,” he says. “Plus we have 25 years’ experience working overseas, which helps.”
On this week’s rumours of US firms closing in on UK acquisitions, he says: “UK based companies with quality people and clients will be an attractive target, particularly while infrastructure investment remains strong.” However, he dismisses the suggestion that T&T will be bought, saying that flotation is still the preferred route to fund growth when “the conditions are appropriate”. The company has already attempted such a move but was forced to abandon it in February 2008 due to the turmoil in the financial markets.
The home front
It is the firm’s UK strategy that lies at the heart of McGuckin’s role. The business is turning over about £127m, an 11% increase on 2008. As well as overseeing the group’s work on the Shard at London Bridge, McGuckin is responsible for pushing ahead with a revamped company structure aimed at aligning services better with client requirements.
The driver behind this mirrors the international strategy - a move away from traditional skills towards specific sectors. So rather than offering teams of cost or project managers, the consultant will provide teams of people with a mixture of skills, focusing on key growth areas.
“At least a quarter of the UK business is now in infrastructure,” says McGuckin. “So that’s one of the areas we will be focusing on - looking at transport and utilities.
“This reshaping is the right thing to do. It means we are facing the world as it is seen through the eyes of the client. Clients want to buy a ready-made team that will provide cradle-to-grave services.”
He believes it is not just clients who will benefit from the new shape of the business. It should also drive recruitment within the consultant in the coming months.
“We are planning to recruit again this year. There is still a bit of pressure on margins but now is a great time to be bringing in new talent. I haven’t seen such a good pool in 20 years,” he says.
“Over the next five years the UK will be on a growth trajectory, though over the next year the emphasis will be on a smooth reshaping of the business. So maintaining revenue rather than growing it might be a more realistic ambition. But there will be some recruitment in our growth sectors.”
McGuckin is clearly intent on making sure the UK doesn’t get left behind in T&T’s whirlwind international expansion.
Turner & Townsend at a glance
Turnover £245m (2008: £212m)
Pre-tax profit £20.8m (£17.1m)
Total number of employees 2,461 (2,252)
Order book £341m (£357m)
McGuckin on …
The London commercial market and private sector recovery
“The private sector is in recovery but it will take a few more months yet before we can see anything clearly. But there is a strong investment market out there. I would say the mood is cautiously optimistic. It’s a question of people putting toes in the water, not jumping straight back in. There are schemes like the Shard and the Pinnacle going ahead and evidence of others lining up. I hope we’ll also see smaller regeneration developments emerging.”
The public sector market
“People tend to think of T&T as being very public sector based when in reality the public sector makes up less than 30% of our workload. Money will still be spent, just in different ways. We are working with city councils, helping them rationalise their property portfolios and advising on outsourcing.”