Tyler reveals Balfour Beatty’s American dream

Sitting in his office behind Victoria station in London, Ian Tyler, Balfour Beatty’s chief executive of three months, exudes an air of calm efficiency.

It is not surprising that he feels comfortable in the top position: he has been groomed for it since his predecessor Mike Welton promoted him to chief operating officer in July 2002.

Tyler says his plans for the giant contractor are to stick to its construction roots and geographical markets so as to maintain its strong financial position. Balfour, which has high-profile projects such as BAA’s Terminal 5 to its name, made an underlying pre-tax profit of £150m in 2004, up 15% on 2003.

Where he gets more radical is in his ambition to build up the US business – despite Balfour’s “substantial” losses there in 2004 – and its European rail operations. At the moment the US business accounts for 20% of the company’s operations, compared with 70% for the UK and 10% for Hong Kong and Dubai.

Tyler does not fear the fate of rivals such as Jarvis, Mowlem, Alfred McAlpine and most recently Gleeson, which have all taken big hits on problem contracts. He admits industry margins are thin, but believes contractors can perform well in a difficult market. “We have seen margins increase,” he says. “We’ve done that by selecting longer-term contracts. Yes, I’d love margins to be double what they are now but that’s just the market. We chase work with a minimum 3% margins and we’re generally achieving that.”

Tyler clearly believes success relies on hard work, but he does not dismiss the role of luck, particularly in his own life. On Boxing Day last year he, his wife and two young daughters, were relaxing on the beach in Thailand when the tsunami struck. Fortunately, they were on a sheltered area of the beach when the waves hit. Their hotel was destroyed, but Tyler and his family were able to make a getaway by car to Bangkok.

We chase work with a minimum 3% margin and we’re generally achieving that

Ian Tyler, Balfour Beatty chief executive

Tyler plays down that experience, but some things do keep him awake at night, not least the health and safety of his staff. “The most disturbing thing about the industry is its ability to kill people,” he says.

“It’s a high-hazard business. The fact that our staff are put to work in these high-hazard conditions, and the consequences of any lapse of our systems, goes beyond the financial performance of the company. Clearly we have procedures in place, but the idea that someone goes to work in the morning and doesn’t come home at the end of the day is terrible.”

Health and safety is a sensitive issue for Balfour Beatty at the moment as two of its former senior employees are being tried for corporate manslaughter over the Hatfield rail crash. Tyler is unable to comment on the specifics: “It’s an issue that’s been going on for a long time. We wouldn’t wish to underplay it but it is well understood by our customers and employees and in that sense we have been able to cope.”

That philosophy rules out an entry into the Iraqi market. “We will not get involved there, purely on the grounds of safety for our employees.”

Speaking about his long-term aims in the USA, Tyler refuses to put a timescale on Balfour’s expansion plans: “Make no mistake, it is a very different market from the UK,” he says. “There are a lot of risks and we don’t want to build it up disproportionately quickly.”