'Let it snow?' No thanks! Suffolk business leader braces himself for Brexit and bad weather
PUBLISHED: 07:30 27 November 2018 | UPDATED: 12:10 27 November 2018
After being badly affected by last winter's 'Beast from the East,' the last thing that John Breheny, the chairman of the Breheny Group, wants to see this Christmas is snow.
“During last winter’s Beast from the East, snow was on the ground for a week and then it was wet afterwards, and as we have all our own staff on site, we were still paying them but not earning as a company,” he explained. “You plough on and try to get it done, because timetables to finish jobs don’t go back so you still have to make up the time.”
The Needham Market-based firm, which specialises in major infrastructure projects such as highway and bridge construction, has just published its annual results, showing turnover of £103.2m to 31 March 2018, which is down from £114.9m in the previous 12 months.
Pre-tax profits also dipped to £278,009 from £1m in 2017.
Mr Breheny admits the Beast from the East did dampen the company’s results. But he added: “I’m not concerned, as long as we’re over the £100m mark.”
The construction industry has been rocked this year by the collapse of Carillion, in the largest ever trading liquidation case ever in UK history. Was Mr Breheny surprised by the company’s downfall?
“There had been rumours within the industry – we heard that they weren’t doing particularly well,” he said. “When they went, it was a bit of a surprise how bad it was. They had about £29m in cash and owed billions to creditors.
“It was difficult getting money out of them, they didn’t have a good reputation as payers We worked for them for one job, about four years ago. You’d do 30 days of work, put your valuation in and then 120 days later, you got paid. So that’s 150 days from the start of your work to your first payment.”
Shares in the government contractor Interserve tumbled to a 30-year low last week as it announced debts would be up to £650m by the end of the year, and there are concerns that it could suffer the same fate as Carillion.
Mr Breheny says the biggest challenge his industry is facing is profitability. “It’s hard to make money out of construction, and I think potentially there are other firms that might suffer the same fate as Carillion.”
Mr Breheny, who is 53, follows steadfast rules to ensure that Breheny Group’s accounts stay in good shape. “You always have to manage your cash flow, you make sure you have a good decent amount of cash flow coming in. You are cautious about what work you take on. You try to find stuff with a little bit of a margin in it, and you don’t try to win loads and loads of work.”
Breheny Civil engineering was started in 1963 by John’s father Jack Breheny, who was born in Ireland as one of seven children. He left home at 21 with £2 in his pocket and ended up in Suffolk at the end of the war, launching the family company with a single item of plant: a back hoe excavator - a far cry from the business’s situation today where it owns in excess of 3,000 pieces of equipment.
Mr Breheny took over as chairman when his father died in 1999, growing the company to employ 460 people and up to 200 sub-contractors at any one time.
Breheny Group now includes not just Breheny Civil Engineering but two other subsidiaries that have started up this year - a groundworks business, Terrasite, a multi-utilities business, Networx Utilities.
The company’s vital role in the local economy was recognised in July, when Breheny Civil Engineering was named Business of the Year at the Suffolk Business Awards.
Mr Breheny senses an air of uncertainty in the housing sector at the moment caused by Brexit, but he’s hopeful that it’s only temporary. “We do a lot of work for housebuilders and people have slowed down a bit in buying houses, so some of their work has now been put on hold,” he explained.
The Breheny Group does employ “a few” people from the EU, particularly on sites closer to London, but Mr Breheny isn’t too fazed about potential labour shortages post-Brexit.
“I think in terms of the free movement of people, the people who are already here will stay. So I think going forwards, we’re OK. Our core workforce is indigenous.”
The company is currently doing work on an internal drainage board on the Queen’s Sandringham Estate, and has just finished a job worth just over £12m on the Bury St Edmunds Eastern Relief Road that opens up the Moreton Hall area.
“We’re going to price a job for a new junction on the M11 which is worth over £40m, that’s one of the big jobs in the pipeline,” he said. “In Suffolk, we have tendered for Henley Road on the Northern Fringe development, and also there’s a job at Stowmarket which is on hold at the moment, for Hopkins Homes, which we think we’ve won.”
Mr Breheny jokes that given his weather concerns, he’d like to do “civil engineering in the summer and ski instructing in the winter!” “But no, of course we will plough on through the winter,” he added.
At the moment, the company has offices in Kent, Cambridgeshire, Hampshire and Oxfordshire as well as Needham Market, and Mr Breheny says with a smile that it would be “lovely” to have an office in Sydney, Australia. “We have looked at the odd job abroad but it’s never come to anything yet. I’d never say never.”