Interview with WSP's Paul Dollin: Cheer leader

Paul Dollin has only been at WSP for four months, but sitting in the company’s Chancery Lane office, he already seems remarkably at ease. Perhaps that’s because there’s one question, at least, that he’s expecting. “Put it this way, if I had a pound every time I’ve been asked it since I’ve been here, I wouldn’t have needed the job,” he says.

The question, of course, is how WSP compares to Atkins - its rival engineer, its closest peer on the London Stock Exchange and Dollin’s employer for the past 11 years, latterly as managing director of its design and engineering business. “You know, although we do similar things, we’re pretty different. And that’s about history and heritage. WSP came from the private sector and breeds a different culture as a result of that.”

Different is also a word you could apply to Dollin. In a corporate world, where many managing directors seem almost interchangeable, the new head of WSP’s UK business stands out for his straight talking and roguish personality - a juxtaposition of extreme confidence and self-deprecation.

But does this character - who once gambled all his money in a start-up business venture, harboured dreams of becoming a nuclear physicist, and is just shy of his 40th birthday - have what it takes to achieve what he has been hired to do: in his words, “make the UK division of WSP bigger and better than it is today”?

Dollin is in no doubt about his first priority at WSP - and that’s to better position the UK business for the current market. “Recessions can produce a lot of navel gazing, but we’ve got to get into the position where we recognise this is the market we’re in, not use it as an excuse and start finding clever and innovative ways to improve the business despite the difficulties,” he says.

WSP delivered a steady performance in its last set of results - for the six months to 30 June, group turnover was £354.4m (£376.9m in 2009), and profit before tax and exceptional items was £17m (£17.7m in 2009). Of this, the UK accounted for £4.4m on turnover of £111.8m.

Dollin says that in the short term, he is focused on “improving efficiency and the company’s margin and cash position”. This last is something he feels particularly strongly about, after an ill-fated attempt at running his own consultancy in the City in the nineties. “I had great fun for a short period and learned lots of hard lessons,” he says with a smile. “That included the importance of cash. We didn’t run out of profit, we ran out of cash. And there’s nothing like spending your own money to remind you of the good old saying, ’revenue is vanity, profit sanity, and cash is king’.”

To achieve these aims, he says WSP will take a more focused approach to the sectors it works in. This will include a push into infrastructure, namely the rail and energy markets. “I think we can do a lot more in rail. Our culture is based very much around working in the private sector, so as some of the public and quasi-public clients in sectors such as rail are
struggling with funding, we can help because we’re used to working for quite challenging and demanding clients, and coming up with innovative solutions.”

He says the company’s skills are readily transferable to growth in the energy sector. “We’ve got lots of good civil skills we’re used to employing in the transportation field, and know how to deliver a cost-effective solution. That will be applicable in a lot of large-scale thermal opportunities - read nuclear.”

He says the UK division will harness WSP’s global expertise in this area - the company is working on the Olkiluoto power station in Finland - to aid its push into the market. WSP is not yet tied into alliances, but Dollin says he “will look at opportunities as they come up”. These might be “more European than they are UK”, he adds, reflecting the uncertainty that surrounds the new build programme under the new government.

Another area where WSP is making a move is the green retrofitting sector. The company recently formed a joint venture with Brookfield - Brookfield Green - to push into the market, and Dollin identifies this as an area where the company can really move forward. “Capital has dried up, but people still need quality accommodation, whether residential or commercial, and people will be looking at how they can adapt their existing assets. Obviously, there is a big driver now on being compliant and minimising the impact on the environment.”

The company, like a growing number of firms in the consultancy sector, is also operating a small management consultancy arm. “It offers us a good opportunity because it’s something we do already, particularly around advisory services for raising funding and structuring deals. Obviously, finance with a technical bent is going to become increasingly important, as there’s not as much money around as there used to be.” Doing more in these sectors, particularly infrastructure, means the company will become more selective in the property sector - traditionally one of its main stamping grounds. The commercial glamour projects, such as the Shard, which have become synonymous with WSP’s engineering skills are also inevitably going to take a back seat in the current climate.

“I’d love to be able to say there’s a market for lots and lots of Shards around the UK - but it might be a little bit limited,” says Dollin, who lists the Renzo Piano-designed tower as his favourite building. “But,” he almost shouts in his enthusiasm, “the world market is there! We work round the world from the UK as well, and where we have world-class skills, or are following existing clients around the world, we’ll do it.”

Dollin believes it will be 2013-14 before there is a private sector market in the UK “that works again”, but says he is seeing signs of green shoots. “People will start thinking about investing today to get in a position for that sort of timescale in property. Whether it will offset any downturn in the public sector - well, it’s difficult to say it’s going to balance that out.”
WSP’s UK business is roughly evenly balanced into thirds between the public, private and regulated sectors, which Dollin describes as “a good platform”.

Although, like all firms, WSP has been hit by public sector cuts - Dollin attributes 50 redundancies made in July to the public sector downturn - he does not expect “much more material impact” on the business. He will not rule out more redundancies, though, and says, “Job security is a concern for everyone, and you can never say never”. But he emphasises that he wants to take the focus “off downsizing as soon as there’s not enough work, and focus on winning the work”. He adds: “We’re a people business and we need to fight for job security, because without our people and motivation we don’t have much.”

After significant international expansion, the UK now only makes up 30% of turnover for WSP as a whole. But Dollin insists the market is “very important” to the group. “We’re a UK listed business, and there are lots of skills we’ve got in the UK that will help us to develop and grow other geographic regions around the world.” When asked if this proportion could change in future, he smiles with characteristic assuredness. “I’m here to grow the business and make more money. So fingers crossed for WSP that it stays at 30%, because everyone else will be growing their part of the business at the same time.” He pauses: “You never know, we might become bigger again.”

Here he points to WSP’s track record for expansion. “WSP has grown enormously. It understands how to grow through acquisition and organic growth. By doing some relatively simple things that I’ve talked about, we’ll improve our cash position and make ourselves much stronger. We’ll go through the current UK market ups and downs, and in a year or so we’ll come out in a good place and be looking for growth again.”

Dollin says he is “not surprised” by the consolidation now taking place within the consultancy sector. “It’s been talked about for as long as I can remember, and it’s actually quite nice when it starts happening as it’s not just about a talking shop.” He says he fully expects CH2M Hill, the US engineer, to continue its hunt in the UK after its failed bid for Scott Wilson, and says he has “no doubt” that the current trend for purchases by overseas firms, and those from the US in particular, will continue.

So where is WSP in all this? “WSP is mindful of it. We have to demonstrate through performance that we are delivering value to our shareholders, and we’ve got to look for growth. But, he insists, “WSP is not for sale.” From his point of view, this is definitely a good thing. “I wouldn’t want to wake up American tomorrow. It would really defeat the point of coming to WSP. And I don’t think we need it - we can do well on our own.”