Schüco Partner Magazine
Our plan is to offer developers a one-stop shop in renewables
Simon Gladwin is the Managing Director of EAG, a Schueco specialist contractor partner based in Mildenhall, Suffolk. Founded in 1983, the company grew from a small roof glazing firm putting conservatories onto the sides of Little Chefs into a business that by 1999 was turning over many millions of pounds. Following a period of retrenchment after 2000, Simon (with three other colleagues) led a successful MBO in 2005.
Was EAG using Schueco when you joined the business?
I joined EAG as a project manager in 1996 and we were using Schueco then. It was the preferred route although we did use other systems with mixed success. And probably for the last eight or nine years we have used 99% Schueco. That’s where we are now.
What made you decide to use Schueco systems almost exclusively?`
We have never been and never will be, the cheapest in the market place. We want to be known for quality and I have to say that in that context being known as a Schueco Partner helps. People associate a German brand with high quality – which is what Schueco systems are – so you don’t have to do much more selling.
Where was your work coming from at that time?
There were a lot of shopping centres, places like Bluewater were being built – we did the entire roof on that, worth about £10 million. Cribs Causeway in Bristol, Castle Mall in Norwich – both massive jobs. The Oracle in Reading. Big, big jobs, four- or five-million pound roofs and that’s going back 10 years.
What were the challenges you faced at the time of the MBO?
The MBO took a year from original discussions to actually signing the paperwork. We didn’t plan it that way but that’s how it happened. Challenges? Preparing a credible business plan, agreeing a market value with the owner, raising the funding – and doing all that while taking care of the business day-to-day and keeping everything totally confidential so that the 100 other employees didn’t get the jitters!
How big is the company now?
Last year we did just over £22 million. This year it’ll be about £18 million which isn’t too bad in the light of what’s been happening in the industry generally. When we bought the business in 2005 it was doing £10.7 million which increased to £17 million thanks to business secured before the MBO.
What were the key factors post the MBO that contributed to the growth and success of the business?
In essence it was the strength of the business plan that we hammered out in preparation for the MBO. When we put that document together we were absolutely married to it, there was no ‘let’s put this down to convince the bank manager’ stuff. And the second key factor has been the delivery of the plan, and making sure that we don’t stray from it.
How many are on the EAG payroll now?
All told, just under a hundred.
Does the company specialise in particular areas?
In the last few years we have got into ‘total envelopes’ – typical value, three to four million. But we are renowned for specialising in roofs which traditionally have been pivotal in growing the business. For example, we did a roof last year which was worth £7.5 million – just one roof on a shopping mall. But of course shopping malls aren’t being built in big numbers now – ten years ago there were lots of them.
How does the company win work?
We tend to negotiate most of our business with repeat customers who require multi-discipline projects to be delivered by one specialist. There are people who send us blind enquiries, but in truth we probably don’t succeed too many times with those. It’s the people who we’ve worked with before and can negotiate with after we’ve bid for a job that produce the bulk of our business.
Why do you think those main contractors want to work with you?
Typically – and even more in the last year – I would say because from their point of view, we eliminate risk. In many cases, they’ve had to let people go because of the credit crunch and they’re saying ‘Look, I don’t have the where-with-all to manage your works so I need you to do what you say you are going to do’. Put simply, they trust us to do the job.
Have you ever lost business or turned down business on price?
Yes because we’ve never sold ourselves on price. Generally, we’ve also always insured our debt – ever since someone went bust on us shortly after the MBO. But things are really tight now and this year we have taken on work without insurance simply because in the current climate so many insurance companies don’t want anything to do with construction.
Does Schueco help you win work?
Yes, they do. Number one is their marketing which is very good, a lot better than we could ever achieve – we definitely gain a lot from that. Schueco are also very good at recommending fabricators for different projects to architects and main contractors. That certainly brings in enquiries, as does the fact that our relationship with Schueco goes back a long way. It’s clear to an architect sitting round a table that EAG knows the systems and that we have the experience to put them together properly. And of course Schueco’s prominence in the industry is very helpful in itself.
How would you describe your partnership with Schueco?
I’d say it’s good. We have a fairly level management technique here: if we have a problem we tell people! But we don’t have the same level of need as somebody who is just starting out with Schueco. We’ve got a wealth of experience in the business, a lot of expertise in design and a technical factory full of equipment. If we do call Schueco, it’s because we’ve got a problem and we expect – and generally get – a positive response.
What does Schueco bring to its partnership with EAG?
I believe the best things are the new products and systems.
I have the distinct impression that the UK is five years behind Europe in technology: products you see in Europe appear here three or four years later. The parallel operating windows, the PV – all of that stuff we see at exhibitions – eventually turn up in the UK with all the wrinkles ironed out. I think that’s great.
Have you embraced unitised?
Yes we have. We have done half a dozen very successful jobs in unitised and we continue to invest in the technology; in fact we’ve committed ourselves to building a whole new factory due to be ready early 2010. The idea is that we move a section of our current business in there in order to set up and operate a permanent unitised line here. The new facility will be something like 22,000 square feet. We’ve got all the overhead cranes, all the infrastructure and machines here, plus we’ve got the expertise. What we do need of course is some unitised work! Unfortunately many of the larger projects, for which unitised is ideal, have been put on hold for the moment.
Let,s talk about the current market: what have been the major changes over the last 18 months?
The first one is contract values – they’re substantially down. As it happens, all of our work this year was secured 18 months ago so we haven’t had an immediate problem and in terms of profit, this year is our most successful year ever. 2010 is a different story but, that said, we’re probably already about two-thirds full, which is encouraging. The margins are not what they have been, but we shall still make money so we’re not panicking. And thankfully – through good luck rather than good management – all the debt from the MBO has been paid off and we’ve built up a cash fund as well. We don’t have overdrafts – we haven’t had for years – and the consequence is that we’ve got a well funded business that is generating cash and that’s very, very important at the moment.
Are you contemplating any major changes over the next 12 months?
We’ve probably made those already. In July we made some redundancies in the delivery team - site managers and project managers and designers. We were running out of work, quite frankly, and we didn’t want to have to resort to buying work just to keep those people busy. The redundancies took £600,000 worth of overhead out of the business – which is significant. When things get better, my hope is that we’ll be able to bring some of those people back.
Let’s also talk about renewables and integrated PV systems. Does EAG have any plans to move into this area?
Yes, we do have plans and we’re very excited about PV – in fact, we’ve put aside a large amount of money in next year’s budget to get PV off the ground. I would also like to get into ground-source heat pumps and all of the solar renewables. At this stage we don’t know if we are going to have a separate company doing that, but we do feel there’s a large market out there and we’ll certainly be using Schueco products. We are going to include PV on the facade of our new building and we’re going to go for accreditation early in 2010. Quite where that takes us I don’t know: probably initially into the domestic market as a prelude to tackling larger jobs in the commercial sector.
People seem to think that PV could have a big effect particularly in the design of facades. Is this your view?
Yes, because building design is being driven – quite rightly – by building regulations. If you’re building today, you have to include a range of renewables to cut the carbon footprint. Our plan is to offer developers a one-stop shop in renewables and the fact that the feed-in tariff is being introduced this year is hugely important – it’s going to be a game-changer as it’s been in Germany over the last eight years. I would argue that if you’ve got £10,000 in the building society at the moment, put some PV on your own house and get yourself an 8% return rather than 1% from the bank or whatever it is now.
It’s not easy to get homeowners to spend money to save money …
No, but what you’ll get is big house builders saying this 100-house development has got to have PV. That’s the market we’re after.
Finally, where do you see specialist contractors like yourselves in five years’ time?
I think we will have to be more technically astute. I think we are going to have to deal with a lot more than just cladding and keeping the water out. Things like natural overnight cooling, solar control, natural ventilation, PV and so on, are going to create huge opportunities for the complete envelope contractor. There’ll be a lot of technical enhancing of the façade: I think it’s very exciting and while I don’t expect much industry growth in 2010, I’m pretty sure that these sorts of developments will lead to renewed growth in 2011.