Neil Martin: Steady as he goes

Neil Martin has been in charge of Lendlease’s European construction business since 2013 – the longest tenure of the Australian-based firm’s division. He started out in construction 26 years ago in 1990 with Bovis joining one of its myriad divisions nine years prior to Lendlease acquiring the firm from ports and ferry operator P&O. Martin subsequently spent five years in Australia with Lendlease’s global leadership team before returning to London to head the European construction business, which at the time was facing financial challenges and had seen its revenue drop by 59% in the previous three years.

The business has recovered under Martin, reporting in its latest annual results for 2015 a 19% increase in turnover to £525m, up from £441m for the previous year, and an operating cashflow of £29.5m, up from £3.9m in 2014.

Part of this recovery is due to the construction business benefiting from work from Lendlease’s development arm which is delivering the regeneration of Elephant and Castle and Stratford’s International Quarter, but it has also bagged jobs such as the £192m role on Great Portland Estates’ mixed-use Rathbone Square development.

More recently Lendlease has been battling it out with other contractors for some prestigious builds, including Google’s new £650m King’s Cross-based HQ; a scheme for the richest man in Asia, who is behind a £1.5bn redevelopment of St John’s Wood Barracks into high-end housing; and a role on the government’s six new large-scale prisons programme as part of its £1.3bn revamp of the prison estate.

Martin therefore was the perfect person to be interviewed by Building editor Sarah Richardson for the magazine’s second annual Building Live conference. Below are the highlights.

MARTIN ON … the market

Sarah Richardson: How are you finding the market at the moment and have you seen much change since the Brexit vote?

Neil Martin: It’s going to be choppy over the next few years and I think we’ll go up and down as we trigger Article 50 and we get through negotiations … Hopefully there’ll be some opportunities in there for the slight of foot.

I don’t think the Bovis I joined could exist in today’s world – it would have had to evolve and change. Those colourful characters perhaps couldn’t exist

Martin on working for Bovis when he first joined

SR: You’ve been at Bovis and Lendlease now for almost 19 years. So what would you say the biggest difference is between the company now and back when you joined?

NM: When I joined it was in divisions and those divisions were really quite something … quite strict – you were meant to be in one division your whole life. [They were] run by very colourful characters, Ron Pace, Les Chatfield and others … It was fun, hierarchical – jump and the question was how high – and it was good and it had a great brand, but then if you fast forward to where we are now you’ve got to come 30 years forward, so you can’t really compare because the world’s changed so much. I don’t think the Bovis I joined could exist in today’s world – it would have had to evolve and change. Those colourful characters perhaps couldn’t exist so much in today’s world.

SR: You’ll be aware of the lingering perception, not among everybody, but among certain sections of the market that Lendlease construction could still be destined to become purely Lendlease’s in-house builder. So what’s your answer to that?

NM: Our in-house development team provide us with a book of business that I am truly grateful for. But it will never be more than 40% because we’re too big. Construction’s too big. Lendlease can’t supply the amount of work that would support our construction business. At best it gets to 40%, but generally it’s less than that so it means we’ve got to win 60% externally. And I really like that because as I say you’ve got 40% at the start of the year or somewhere between 30% and 40%, which is great, which is quite comforting. So that helps me to sleep at night.

SR: In the marketplace you’ve been seen as one of the blue chip builders like Sir Robert McAlpine. Would you still put yourselves in that bracket?

NM: We never like to compare ourselves. We’re a main contractor and there are other main contractors … It’s a given most contractors can build … question is how you go about that process and I like to think we’re on our own in that space … but I’m always going to say that.

MARTIN ON … being part of Lendlease

SR: Do you think being a part of Lendlease has ultimately turned out to be Bovis’ benefit?

NM: Absolutely, there’s no doubt about it. It’s no secret we had a tough time middle of the 2000s and you’ve got to question whether the balance sheet would have withstood that without Lendlease behind it. There’s also global experience. Lendlease has done everything from tunnels, roads, railways, the highest residential building in America, it’s got huge global expertise, there’s probably nothing it hasn’t built or done in its network. So we would have never have had that. The other thing about Lendlease and it’s probably true of all parent companies, because it’s got the relevant funds under management – about £22bn – it has great access to capital and networks. There aren’t many capital players that Lendlease doesn’t know or can’t have chats with and open the door. So when you start looking at what we can use and how we can use it, it puts us in a really great position.

My personal view is we should have dropped the Bovis brand the moment we got bought. When Lendlease took over Bovis, it confused the hell out of a lot of people

Martin on whether Lendlease was right to drop the Bovis brand

SR: When Lendlease eventually dropped the Bovis brand which was in 2011, there was inevitably mixed reaction in the sector and nostalgia. Do you think Lendlease was right to drop the brand?

NM: My personal view – my view of this not the company’s view – is we should have dropped it the moment we got bought. I think when Lendlease took over Bovis, it confused the hell out of a lot of people – who was taking over who. … I just think we should have integrated the brands, the systems, worked much harder at our communication plan around what we were and who we were.

SR: Bringing us up to date, then, you’ve been heading up Lendlease’s Europe construction business since 2013. Before that I think the average tenure in the role was less than two years. Why do you think you’ve survived?

NM: I took over when the market was slightly turning, so that was a bit of fortuitous luck … There was a lot of warmness towards us [from clients]; we just needed to get, perhaps, our internal organisation sorted to deliver for those clients and I was lucky enough that I’d been around the business.

As you said I’ve done a lot of roles so I knew Lendlease really well, I knew what it wanted, sought answers where we’d made mistakes and the things we hadn’t done properly.

MARTIN ON … the future

SR: What’s the ambition for the business from here?

NM: I’ve always been in favour of margins. I’d love to have a business that turns over £100m and makes £50m profit rather than £1bn and £50m. So I think it’s about margin. Revenue’s important because of course it’s cash and employment.

If you just look at our own organisation I think there’s challenges around how you retain and attract people and how you nurture talent. Part of that’s wellbeing and diversity – we still haven’t got as much diversity as I’d like although we’ve made great progress.

I have a gut feeling, I think most people do, that our industry will be disrupted and I know we find that hard to understand, but I’ve no doubt our industry will be severely disrupted. The question is when … So we’re doing a lot round innovation and hubs. I can’t help thinking as a company and maybe as a wider industry there’s something around a better way of procuring what we do. We’re still a very fragmented industry and it upsets me when I think about our industry in the widest sense.

We also score 4.2 on the average index out of 10 (that’s really low by the way) of attractive careers – that’s terrible – and so could I be part of trying to change that? I’d love to change that. These are the big themes for me. Nothing too ambitious.

I have a gut feeling, I think most people do, that our industry will be disrupted – I’ve no doubt our industry will be severely disrupted

Martin on the need for innovation

SR: So where do you see the biggest areas of opportunity over the next couple of years?

NM: It’s about making sure we understand who our clients are and what they really want and really becoming truly customer focused – it’s easy to say, more difficult to do, but truly how do you eliminate waste on our side to make us more focused for clients and we’ve then got to think what the market’s going to do.

The government is going to talk about infrastructure more and that’s definitely going to be a part – so therefore what part can we play in that and how do you play to that?

There’s a massive housing crisis and while residential can be tricky to deliver there must be a better way of trying to deliver that product. So, how do you do that? Comes back to innovation and other ways of perhaps manufacture-led design and how do you do that.

Those are for me the areas we’re going to start looking at more heavily.

SR: Going back to your Australian parent. How much autonomy do you have from Australia?

NM: I don’t [have to go back to Australia] so maybe I’m missing something here or maybe that’s why I’m still here because they don’t know I’m still here … I have all the levels of authority that I need to execute [my business plan], so I don’t need to go back.

SR: What do suppliers need to do to impress you to be part of your pipeline?

NM: We’ve got some great suppliers. Don’t forget, we’re just a management company so without our supply chain we wouldn’t be able to achieve anything that we do.

For me there are a couple of key things: one’s safety. A real genuine culture of safety not just inductions but prove to us and show us what’s your process … The other bit is of course the quality-driven agenda. So how do they make sure they can deliver quality? You want to make sure that should anything go wrong, people are there during the construction and thereafter.

The bit we need to do better on – as it’s quid pro quo – is that we need to get much closer and tighten up our supply chains. We’ve still got quite a large supply chain so what I’d like to do is tighten it. We’ve got a project at the moment where I’m trying to get into a situation where we can sole source it because when you talk to a lot of our supply chain, their view is that you don’t get us involved early enough, we’re buying thousands of whatever it is. If we got in early, you we could help you spec it, you could then access our supply chains. For us the challenge is to get them early on on our deals.

MARTIN ON … his best moment

SR: What’s been the low point and the high point?

NM: When I was in Australia, one of my roles was in charge of safety globally and while we’ve been fatality free for three years I had to investigate a fatality and I assure you, you never want to be there, you never want to be there talking to the family, the contractors that were there, writing the report and talking to the authorities. I wouldn’t wish that on anybody. That happening was the worst moment of my professional life and I shall never forget it.

On the positive side when I was 16 I didn’t genuinely believe I would be sat here running what was Bovis now Lendlease construction across Europe. When I started my career I was ambitious but I didn’t think it would end up here.