Working at full capacity, a strong order book through to 2010 and good prospects; these are rare statements in the current climate for construction companies.
However, although the property downturn is proving punishing, particularly for housebuilders, the impact of the credit crunch on construction is very uneven.
Significant capital investment projects, particularly those that are publicly funded, regeneration-orientated or linked to sectors such as oil and gas, transport and leisure, have far longer timescales than residential building and, thus, are less affected.
Consequently, North Yorkshire-headquartered Severfield-Rowen, the UK’s biggest structural steel company, has seen its order book strengthen slightly in recent weeks from the £450m ($895m) it reported in May.
The company is also looking at establishing operations in potential overseas markets such as India, the Middle East and North America.
“We still have some good prospects for beyond the order book,” says Tom Haughey, chief executive. “We are negotiating some big contracts at the moment. We are hopeful some of these will materialise over the next couple of months.”
Severfield-Rowen, which designs, fabricates and erects structural steelwork, made a pre-tax profit of £38m on £300m turnover in 2007.
The company employs slightly more than 1,300 and is still recruiting.
Half of its workers are at its headquarters and home base beside the A1 near Thirsk, with the rest split between Bolton and Northern Ireland, where Fisher Engineering was acquired last year for £90m.
Severfield-Rowen has a reputation for high-profile projects. These include Heathrow’s Terminal Five – the biggest contract to date in its history worth more than £80m – Arsenal football club’s Emirates stadium, Birmingham’s new acute hospital and the 2012 London Olympics stadium, where construction work is due to begin this autumn.
Tennis fans will be keen to know it is well on schedule to complete, before the 2009 Wimbledon Championships, the ingenious retractable roof that will cover the centre court should rain threaten play.
This complex structure of lattice box girders and tubular trusses, each supported at their ends by a set of wheels that move along a track, will enable a folding fabric concertina to be stretched in two sections over the court, meeting in an overlapping seam above the middle.
Severfield-Rowen is fortunate at present in having minimal involvement with residential building and significant involvement in the most robust areas of development activity.
However, it has still not escaped the negative sentiment engulfing the construction sector. Its comments in January that the froth had come off the market for commercial office space and speculative warehouse development immediately knocked a third off its share price, which had almost quadrupled in the previous five years. The shares have been unable to retrieve all the lost ground and have recently traded close to their year low.
Investors’ nervousness has also hit the share price of Tolent, the north-east construction company.
The shares lost a third of their value in 48 hours last month after it reported “disappointing” trading in the first four months of 2008 and said two provisions totalling £950,000 – one due to a residential developer’s £750,000 debt – would hit its first-half results.
Metnor, another quoted north-east construction business, has also seen substantial share price decline over the past year.
In the current climate, publicly funded regeneration projects with their long-term timescales offer useful underpinning for construction companies.
Stockton-based Jomast Developments, for example, last month won planning permission from Hartlepool council for Trimcomalee Wharf, a £100m mixed-use waterfront redevelopment described as the “final piece of the jigsaw” at Hartlepool Marina.
Kevan Carrick, of the Royal Institution of Chartered Surveyors and a partner in JK Property Consultants, says the long timescales of regeneration mean participants expect to “suffer the troughs and enjoy the peaks”.
“The bigger projects take a long-term view,” he says.
The latest RICS UK construction market survey, for the second quarter of 2009, shows the north of England, covering the north-east, Yorkshire and Humberside and the north-west, recorded the least heavy falls in construction work in the UK and a slower pace of decline.
The most recent RICS commercial property report similarly showed the north-east was relatively strong. In recent weeks, says Mr Carrick, the banks in London have indicated the supply of money for projects this year is limited.
“We are really constrained by the supply of money; as soon as finance is more readily available it will pick up again,” he says. The big question, he adds, is the risk problem.
“Many will be looking for development work to be led by occupiers, part pre-let.” And that raises the wider question of potential occupiers’ fears about rising overheads and economic downturn.