Graham Shennan on Morgan Sindall's merger

When I arrive at Morgan Sindall’s surprisingly funky head office off Oxford Street - more like an architect’s than a contractor and civil engineer’s - I am, to be frank, a little bit nervous. The last time I spoke to Graham Shennan was on the day two Morgan Sindall businesses merged. The headline of my article that followed focused on the likelihood of back-office redundancies at the new company, an angle I knew the firm was keen to play down. Given the man’s tough reputation, I am more than half expecting him to call security.

The incident doesn’t go unmentioned, but it’s okay - I can relax. “Your article was really good,” he says, before adding: “I thought the headline was a bit harsh.”

It’s not surprising the coverage is a sensitive issue, though. The merger, of contracting subsidiary Morgan Ashurst and civils firm Morgan Est, was announced in April and was accompanied by a flurry of rumours and speculation. It was said that the move was a response to trouble in the businesses, a defensive measure, it was whispered, to cut costs in a tough market.

Since then the Kier veteran has had to work flat out persuading people otherwise - that the restructure was about enabling the firms to grow more quickly, dropping unnecessary brands to offer customers a less confusing picture. In particular, he says, the new firm can meet the needs of large customers with both civil engineering and building requirements. Stories about redundancies just don’t help.

So can he persuade me that, following one of the deepest recessions for 80 years, the company line is the truth and merger was intended to position the company for big projects and not simply a reaction to market contraction? Shennan says: “Our objective is to grow. I’m not saying it’s going to be exponential growth because we’re in a difficult world, the UK construction market has definitely got a year or two of tough times in it. With infrastructure you pick up one or two of the big jobs and it can have quite a big impact on your business - we could have two or three bumper years out of Crossrail.”

Shennan is actually quite persuasive. Certainly the merged firm, Morgan Sindall, at a stroke became one of the top tier of construction firms in the country with a current turnover of £1.5bn and a vast sectoral reach. Shennan talks about conversations he had before the merger with big clients, such as Network Rail and BAA, that need contractors capable of both building and civils work. “At Network Rail at a very senior level they’re happy. The likes of BAA, they were quite critical of us as a group [in the past], in that [they said] we were making life complicated for them. So our move has been welcomed there with open arms. Steve [Morgan, BAA procurement director] has been very pleased, and he knows that it has in part been in relation to things he has said.”

Rail is, in fact, one of Morgan Sindall’s top targets - but it’s hardly alone in this. Shennan insists his firm has one of the biggest capabilities for rail work in the UK, including electrification, but simply isn’t well known enough. “We’ve been under-punching our weight in a couple of sectors, and I would include rail there,” he admits. Morgan Est was on several Network Rail frameworks, but seemed to lose out on the big contracts, most recently the high-profile rebuilding of Victoria (£695m) and Tottenham Court Road stations. “Well, you can’t win them all,” he says. “Our share is still small. Even if markets dip off you can still grow by growing market share. I think we weren’t giving the customer a clear enough message about our capabilities.”

The biggest prize, as probably the largest tunnelling contractor in the country, is clearly Crossrail. The major contracts, worth in the region of £2bn each, are due to be e-tendered in the next two or three weeks. But what are bidding contractors being told about the scheme’s future? “We’re hearing absolutely nothing,” says Shennan. “We’re still being told it’s full speed ahead get on with it. But they [the coalition] have done a great job of softening us up, so anything that comes through will not be a shock.”

The new firm has other targets in its sights as well. Energy - in particular, nuclear power - and a host of other regulated infrastructure markets such as water, gas and energy transmission are all on the list. Focus will also be maintained on Morgan Ashurst’s traditional strengths - airports, hospitals, schools and supermarkets - notwithstanding the inevitable fall-off in government work.

Shennan is straight-talking, but doesn’t come across as hard-boiled despite his reputation. But there is clearly some steel in a man who, despite claiming to have ceased being personally ambitious in his thirties, finds himself in charge of a £1.5bn-turnover business. So why does he do it? “It’s just what I do, really. I’m really excited by the potential of what we can achieve together. It’s the guys on the ground who know so much. I know nothing about, say, utility servicing, I know nothing about a lot of things, but if we can get the people that know to really engage, and add their ideas it’s those guys who’ll give us growth.”

His vision doesn’t rule out acquisitions in the future, though there is nothing immediately in the offing. However, he is wary expansion overseas. “We believe there is still growth to be had in the UK. We’ve seen a lot of high-profile people charge into the middle east, and quite a few have come out with their tails between their legs, with big debts. You do it for the wrong reasons, and it can be quite painful.”

The reasons behind this bode well for the future of the business. Shennan is an optimist who thinks more can be gained in exploiting a stable market his firm knows rather than jumping on the bandwagon of a growing economy somewhere he doesn’t understand. And, for the record, that still means structuring the company for growth.

Photography by Victoria Nightingale