10th Sep 2013
B.I. ELECTRICAL MAKE FRONT PAGE OF ELECTRICAL TIMES
While many are happy to merely consolidate, for the adventurous, foreign markets can offer huge growth potential to UK business, Tom James reports.
Next year marks the 25th anniversary for Northern Ireland BI Electrical Services, ranked as one of the UK’s most successful contractors. It is also predicted to be the year when China overtakes the US in terms of share of the global construction sector. Those two milestones are more intricately connected than you might at first think.
Rather than merely consolidate and celebrate the company’s rapid growth, the board is instead taking arguably the biggest risk in their history; expanding the business overseas, where UK skills are a much sought-after resource.
"We're in an extremely healthy position," explains Managing Director Ian Humphreys. "Our order book is full for the next three years and our client base is strong. Financial stability has allowed us to think outside the box and pursue our international goals.”
It’s by no means a short-term plan though, he insists. “Investment like this requires a long-term commitment and we want to gain a firm foothold on the international ladder this year."
A full service electrical engineering company, BI Electrical Services provides three key services: facilities management, electrical contracting and design and build. Since 1989 they’ve worked with local firms like BELB and SELB as well as major international players including Capita and KPMG.
The uncertainty of UK construction has not dampened Humphreys’ enthusiasm. In fact, it’s partly because of the stagnant UK economy that BI has explored the international stage. “I don't predict the industry returning to where it was in 2004/05 for another ten years, if it ever does," he remarks. "The board felt now was the right time to advance internationally and the support we’ve received so far suggests that’s the case."
Some may view overtures abroad, particularly Eastern markets, as a risky venture, not least because of cultural and linguistic barriers. Building solid foundations in new lands, though, has formed part of a lengthy planning process for the contractor, who have called on the expertise of Jim Speirs, Non Executive Director, to oversee BI’s expansion into the Asia Pacific, Saudi Arabia and the United Arab Emirates (UAE).
"Construction in China is growing year on year, and still at a colossal rate," says Speirs. “I’ve worked and lived in China since the 1980s, so I’ve been able to offer the right contacts and guidance for BI in these new markets. By 2014, China will have the largest construction share in the world, overtaking the US, so it’s a risk worth taking,” he adds.
Speirs is known internationally as a leader in his field, having held a number of high profile posts, including Chairman of the Ascertiva Group, who for the last 50 years has been custodian for the assessment, certification and verification of electrical safety throughout the world. He is currently President of the Chartered Quality Institute (CQI).
The regional significance and logistical accessibility of China formed part of the appeal of putting down roots in the growing superpower, which gives BI access to its other target markets, Asia Pacific and the Middle East.
The willingness of the Chinese government to support western companies that seek to assist it in construction projects is another factor behind BI’s confidence. "One of the real surprise outcomes of our research in China has been the reception we've enjoyed," explains Speirs. "Both industry and government have been extremely welcoming and offered great guidance on how to go about operating in there."
The reception at home was warm too, in terms of the commitment shown by the devolved Northern Ireland government to help businesses looking to market internationally. "We met with InvestNI in the early stages of planning,” Humphreys recalls. “They were excited by our plans and more importantly were willing to put their money where their mouth was, backing us to the tune of £49,000 to assist in our marketing campaign, which has allowed us to properly arm ourselves for the venture abroad. We've created a new website and commissioned a video that has subsequently been translated into Mandarin and Arabic.”
The financial backing at government level has allowed new jobs to be created at home - 26 posts are to be filled to develop BI’s administrative infrastructure in Northern Ireland to support the expansion overseas. The new vacancies are skilled, high value positions, including financial controllers, quantity surveyors and contracts managers.
The good news just keeps on coming. In the latest research by Plimsoll, BI were named as one of the strongest performing electrical contracting businesses in the UK. Out of 1,000 electrical contractors, the company is ranked 24th and in the top five best trading partners in the UK.
Our results last year were better than 2011, and we've smashed our 2012 figures, as reported in the Plimsoll research," Humphreys reveals. “We’ve also breached the £10m turnover mark, recording a 33% rise in pre-tax profits.”
The stability of mainland UK’s electrical contracting sector is proving shaky of late, by all accounts but it’s a perceived trend that BI is in a position to help reverse. “We were approached by a main contractor recently who said that they were fed up of working with electrical contractors that went out of business before a project had been completed,” Humphreys says. “They wanted to work with companies that were financially strong enough to stay in business.”
Its success at home and willingness to work overseas to improve industry standards abroad that has impressed the Chinese and the hunger BI has demonstrated in matching UK standards in the country gives the contractor the confidence that the international move is a shrewd one.
"The Chinese are working hard to drive up the quality of their work,” explains Speirs. “There's a perception internationally that quality is not what it should be, so they see BI has a good fit because the company’s ethos is quality driven.”
Humphreys adds: “Bringing our processes and methodology into their projects will raise standards and improve China’s image on the world stage. Our role is to help improve their skills base. The country has a huge labour force but is lacking some key skilled roles: contracts managers, foremen and quantity surveyors for example are what we can bring to the table and this will hopefully build relations long term.”
On a recent tour of a new hotel in Shanghai, the level of expertise that UK companies can offer was brought into sharp focus, Humphreys reports: "We were given a tour of the pump room and I was amazed at the quality of the job. Galvanised conduit was used inside and out and the same manufacturers were used for the installation as we use. But we could have completed the job in a different way, achieving better results and at a lower price.
“Their foreman was amazed that I’d noticed the level of detail that I did. The great thing was how eager they were to learn and pick up on what we were saying. There's clearly a hunger to excel in these areas, which is where our expertise comes into play, and why more UK firms should consider expanding abroad.”
So often it seems that SMEs are happy to maintain the status quo, sticking with what they know rather than looking outside their comfort zone. The risk with big investment or plying your trade abroad will always be present but the rewards are also potentially so much greater.
For BI, expansion overseas has been a calculated move: "There’ll always be a risk in working international markets but we've set a limit on our investment and we’ll only push this so far,” Humphreys states. “Success isn’t going to happen overnight, so we know we have to think long term but InvestNI has given us the tools we need to succeed.”
He adds: “Delivering projects in China takes double the time it does here, so it will allow for a period of transition, to help develop their operations. “Another positive for us is that the Chinese like our business model; they were taken with our desire to give back and help the growth of the industry. Also, China offers a lot financially. Even with a slight drop off in growth, they're still looking at a 10% increase year on year, and five of the world's top 100 construction companies are Chinese. The risk for us is one worth taking.”