Fairclough Construction Group Plc

Fairclough Construction Group Plc

28 Southampton Lane
London WC2A 1AR
England

Public Company
Incorporated: 1959
Employees: 17,000
Sales: £635 million (US$1.04 billion)
Market value: £473 million (US$695 million)
Stock Index: London

Fairclough Construction Group is one of Britain’s prominent construction companies. Its growth from a small, local stone mason firm into the nation’s most important public works and civil engineering contractor has been a steady, if slow and gradual, process.

Leonard Fairclough was born on November 17, 1853 in Adlington, Lancashire. He apprenticed with a local builder, eventually qualifying as a craftsman mason. By the age of 30 he started his own business in a tiny workshop in Adlington. Within 10 years, however, Fairclough employed enough people to justify building houses for them, a common practice in that era.

Gradually increasing the size of his contracts and expanding the region in which he operated, Fairclough picked up jobs in textile-producing towns and villages all across Lancashire. Monument and artistic masonry was the primary emphasis during the company’s early years, along with the construction of chapels, schools, mills, shops, clubs, and small roads and bridges. While building an extension to a public building in Chorley, Fairclough was appointed main contractor and placed in charge of subcontracting. This is one of the first instances of a contracting system now standard in the industry.

At the turn of the century, Leonard Miller Fairclough joined his father’s company as an apprentice and worked 12-hour days in its stone quarries. Working his way up the management ladder, Leonard Jr. became a director of Fairclough in 1917. Leonard Sr. died in 1927, and his son was then named governing director of the company, a position he held until 1959. Leonard M. Fairclough is usually credited with directing the company’s gradual transition from a regional masonry operation into an influential civil engineering contractor.

Although Fairclough was constantly expanding, throughout the 1920’s most of its business consisted of relatively small-scale projects. In the 1930’s, however, this changed. Working with local utility authorities to replace antiquated sewage systems across the countryside, the company laid pipes, dug trenches and dredged canals. Fairclough also won contracts for upgrading and maintaining power stations and factories, and building bridges of increasing size.

During World War II, Leonard M. Fairclough was appointed a regional leader under the Ministry of Works Emergency Organization. His responsibilities including training and directing demolition and engineering teams to deal with the immense damage caused by enemy bombing raids. Also, the government contracted the company to build camps for housing prisoners of war.

Fairclough was kept extremely busy after World War II, as the nation turned to the construction industry for help in repairing its war-torn infrastructure. The newly nationalized operations, including coal, gas, and electrical utilities and railway systems, were funded by massive government reconstruction programs. One large contract for Fairclough involved remodeling 31 railway bridges near Manchester, built as part of the system’s conversion from steam to electric power.

Fairclough built its first bridge in Lancashire in 1904, and by the 1950’s had accumulated a wealth of experience in the field. For this reason, the British government chose the company to build the small but significant inaugural strip of its planned network of Motorways, near Preston, Lancashire. The company’s house journal confidently stated that, “An ounce of Lancashire experience on this eight and one-half miles with its 23 bridges is worth tons of theoretical argy-bargy about the pros and cons of Motorways.” This experience quickly paid off as Fairclough was awarded contract after contract to design and construct miles of motorways, including scores of bridges.

By 1983, the company had completed more than 300 miles and over 1000 bridges on the Motorway project. Two of these bridges, noted for their engineering and construction, span the River Mersey, linking Cheshire and Lancashire: the Thelwall Viaduct, a one and one-quarter mile bridge which soars 75 feet above ground to cross the Mersey and the Manchester Ship Canal in one stretch, and the Widnes-Runcorn bridge, the longest single-arched steel span in the United Kingdom.

For all of its large-scale projects, Fairclough remained in the crowded echelon of mid-sized construction companies throughout the 1960’s and most of its business was still confined to the northwest region of England. However, having become a public company in 1959, and increasing its capital by the issue of stock over a 10-year period, Fairclough bought C.V. Buchan & Company, of Stone, Staffordshire in October 1970. This firm had worldwide experience in tunnelling, as well as a successful precast concrete plant; Fairclough management turned it into the largest concrete-segment producer in the U.K. The Fram Group, purchased in 1972, expanded Fairclough’s range of operations into mechanical engineering, increased its geographical boundaries, and doubled the company’s revenues. Sir Lindsay Parkinson & Company was acquired in 1974, adding marine experience and opencast mining to Fairclough’s list of services. Parkinson helped to expand the company’s overseas operations to include more projects in Africa and Eurasia, and also brought ownership of the Wentworth Golf Club in Surrey. In 1978, the firm procured the constructional engineering firm Robert Watson & Company Ltd., of Bolton, Manchester and Bristol, Avon. This transaction led Fairclough into manufacturing structural steel and platework; one of the largest contracts in recent years involved the erection of a new terminal at London’s Heathrow Airport.

These four acquisitions during the 1970’s led to the development of eight divisions: Fairclough International Construction; Fairclough Scotland; Fairclough-Parkinson Mining; Fairclough Engineering; Fairclough Civil Engineering; Fairclough Precast; Fairclough Building; and Fairclough Projects. Between the early 1970’s and 1980’s, Fairclough’s Civil Engineering division alone constructed the United Kingdom’s largest sewage system in Glasgow, drove its largest-diameter water tunnel at Sheffield, and developed its largest service reservoir at Prescott. Leonard M. Fairclough, having left his post as director in 1959, lived to see only a part of this impressive growth. He died in 1976.

In 1970 Fairclough had pretax profits of £1.2 million, turnover of £23 million, and assets under £3 million; by 1981 pretax profits were £13.4 million, turnover £245.5 million, and assets a healthy £59.5 million. In 1982 Fairclough achieved record profits, despite the worldwide recession. This success resulted in an increase in the amount of cash available, which is why the company bought a 15.3% interest in French Keir and approximately 14% in William Press, two British construction firms, in the early 1980’s.

In November 1982, a holding company for Fairclough and William Press was formed, and a board of six directors was drawn up, three from each company. Called AMEC, it looked like a successful merger; a London Times correspondent envisaged, “... Press’s strong presence in the industrial sector complementing Fairclough’s experience in work for the public and private sectors.” The merger created the fifth largest construction firm in Britain in terms of capitalization.

The rationale for a merger was that Press had a much larger international client base than Fairclough: international contracts accounted for 30% of its total business in 1982 as compared to Fairclough’s 15%. The company was also heavily involved in the British energy industry’s conversion from coal to natural gas, and has built some of the largest oil terminals and pipelines in the U.K. In addition, it operates over 70% of Britain’s offshore field developments in the North Sea.

Nonetheless, despite its promise, the holding company achieved negligible profits during its first three years. There were two reasons for this: the reduced amount of work available in the offshore and process engineering sectors, areas where slumping gas prices helped to delay the arrival of the recession; and Press’s apparent mistakes in management and financial accounting at one of its subsidiaries during the early 1980’s, which accounted for millions of pounds in losses due to either late or incom-pleted projects.

Generally, Press and Fairclough operate as independent companies, thus despite Press’s lingering financial difficulties, Fairclough’s continued profit growth accounted for AMEC’s slight annual increase. Beginning with 1986, however, the group emerged from its doldrums when pretax profits jumped more than £5 million to £30.5 million. Bill Morgan, current chairman of AMEC, has reported that both Press and Fairclough have full order books for the late 1980’s, and although there has been a slight downward trend in contracts for the public sector over the last few years, growth in power plant construction and the defense industry contracts should more than compensate for the difference.

Principal Subsidiaries of Fairclough Construction Group pic

Fairclough Building Ltd.; Fairclough Civil Engineering Ltd.; Fairclough Estates Ltd.; Fairclough Parkinson Mining Ltd.; London Fairclough (Hotels) Ltd., Cyprus (75%); Rearden Plant Ltd.; Robert Watson & Co., Ltd.; Wentworth Club Ltd.; John Howard & Co. Ltd. (41.3%); Howard Doris Ltd., Scotland (25%); Gulliver Consolidated Ltd., Zimbabwe (45%).