Since Construction Industry News spoke last May with Des Moore, CEO of the TRAD Group, the Group has had to contend with a number of well-known external factors that have played havoc with the wider marketplace.
“As a sector, we are all now trading in a real period of uncertainty. The overall effects of Brexit, clearly the most potentially disruptive event of last year, actually hasn’t been as severe as we and many others expected, especially given the effects on the exchange rate. Regardless of these challenges, the TRAD Group as a whole is continuing to trade favourably. Certainly the momentum has gone out of the market to a large extent but it’s slightly exceeding budget, and there’s every expectation that this shall continue in the current calendar year.”
“The high-end residential properties sector has certainly been affected by the increase in Stamp Duty,” explained Mr Moore. “Consequently, there has been a noticeable reduction in appetite for high quality residential projects and the market is definitely cooling. As a result we’ve reduced our focus on this area within the business.” Another significant and wider-reaching factor that has been affecting the marketplace, has been the continuing fall-out following the vote for Brexit. “It has probably had the biggest impact on the Group overall, primarily in our Hire & Sales business,” adds Mr Moore. “The dramatic drop in the exchange rate has also had a major impact on us as we have equipment coming from China paid for in dollars and equipment coming in from Europe paid for in Euros. Consequently, costs increased substantially, which led to significant cuts in margins almost overnight. It’s obviously taken us some time to filter that out and price increases only began to be implemented from February onwards. Additionally, the cost of materials and products in general have gone up, not just construction products.
“Despite this, we remain fairly robust in all areas at the moment. We’re certainly not becoming complacent and we continue to be mindful of the downturn in the high-end residential market – a situation we don’t envisage will be changing any time soon; there could well be further decline before any improvement is seen. There is definitely no real appetite for speculative commercial new builds either, so the general consensus is that 2017 will be fairly flat with 2018/19 remaining relatively cool as well.
“The high-end residential properties sector has certainly been affected by the increase in Stamp Duty. Consequently, there has been a noticeable reduction in appetite for high quality residential projects and the market is definitely cooling. As a result we’ve reduced our focus on this area within the business.”
Des Moore, CEO of the TRAD Group
“Hopefully the slack will be taken up with the potential increase in house building on the back of the money that the government has pledged to this area, particularly as there is still huge demand within the market. There is also great speculation about there being a major uplift in Infrastructure investment over the next four to five years – in my experience, when certain sectors are in decline, others tend to perform strongly to balance it out. We’re fortunate in that we’re flexible and robust enough to roll with the punches, while still being agile enough to capitalise fully on opportunities when they arise.
“Our model for the TRAD Group of Companies is to diversify over a variety of sectors; as opposed to many scaffolding companies that seem to be drawn into concentrating on just one. In contrast, TRAD Scaffolding and to a larger extent the TRAD Group, have always tried to diversify across three to four primary sectors, so that when one market is underperforming, typically another is doing well. The climate is continually fluctuating and demand increases and lessens accordingly – it certainly makes sense to be involved in a broad range of different markets to both spread risk and maximise opportunities for growth.”
To further strengthen its ability to secure work, TRAD has continued to invest strongly in its Infrastructure and systems, largely as a result of the ongoing cash injection following the acquisition by the ALTRAD Group, which in itself has been an astonishing success story. Founded by Mohed Altrad who was born a poor Syrian Bedouin, before moving to France at the age of 17. He invested in a bankrupt scaffolding manufacturer in France in 1985 and developed the Altrad Group through a combination of acquisitions and organic growth. It’s meteoric rise ever since means that it is now a major player in the construction equipment market and Oil & Gas sectors, with 150 subsidiaries and 22,000 employees worldwide helping to generate an annual turnover of €2.5bn. With the combination of both reassuring influence and financial support, it has been such a positive force for the four business entities of the TRAD Group, as they each continue their own development.
Reflecting his high standing within the business world, Mohed Altrad was named EY Entrepreneur of the Year in 2015 and has written three acclaimed novels including his autobiography Badawi, which is on the French National Curriculum.
“We’re always looking to invest in any new products that will not only assist our clients in increasing their margins and market share, but also improve their business operation generally. We’re forever looking for more economical ways of working and for products that will improve competitiveness. As a Group and, as the ALTRAD Group in general, we have a significant investment in R&D and new products across the range.”
Des Moore, CEO of the TRAD Group
Already present in the rugby world – Mohed Altrad is the President of Montpellier Hérault Rugby Club – the Altrad Group shares the values of challenge, effort and solidarity, and will be supporting the French Rugby Association in their bid to host the 2023 World Cup.
“We’re always looking to invest in any new products that will not only assist our clients in increasing their margins and market share, but also improve their business operation generally,” adds Mr Moore. “We’re forever looking for more economical ways of working and for products that will improve competitiveness. As a Group and, as the ALTRAD Group in general, we have a significant investment in R&D and new products across the range.”
Further evidence of the TRAD Group’s forward-thinking approach saw the opening of its latest TRAD Safety Systems site in Bristol. This has been performing reasonably well in accordance with expectations; TRAD Deck in particular which has always been a great product and has had strong growth, especially with house building contractors. It’s a first class-leading product so it would have been expected to see a major increase in enquiry levels anyway.
“Looking to the year ahead, we still have a fair degree of organic growth available to us, for all current TRAD entities within existing locations and even more at TRAD Safety Systems which has even greater potential to expand. Three of its Depots are reasonably mature, but the three that have opened recently still have a fair way to go in terms of the attainable market share in their areas. We think there may be possibly one or two more locations for TRAD Safety Systems Depots, however in this current year we will consolidate and review again in 2018.
“Overall it is looking positive, with a degree of uncertainty – it’s not as bleak as everybody presumed when Brexit actually happened and this is typical across a number of sectors.”
Despite market uncertainty, the ALTRAD Group factor will continue to be a reassuring influence moving forward. “They have always financially supported any project or product that has been put forward as long as it has been backed by a good business plan – there’s never been an issue with that – it’s the ALTRAD philosophy and it always has been. The ALTRAD Group itself will continue to expand by way of acquisition and organic growth, doing so significantly over the last two to three years in particular with turnover having increased almost threefold.”
With there being plenty to be positive about, TRAD has ensured that it hasn’t lost sight of one of its most important assets, its people. “Training is the primary focus for TRAD this year and we will be increasing our investment across the board, particularly in the scaffolding division. We will further invest in our highly innovative System Scaffold, Plettac Metrix; launched around 18 months ago, which continues to gain market share. The system is helping our Contractors perform much more competitively in what they do in terms of speed of erection, dismantling and adaptability and is a major boost to our clients. From a Group perspective, the aim is to maintain steady growth over the course of this year and protect our margins in the face of any uncertainties.
“From a personal perspective, I have recently joined the board of Directors of Build UK and in November will be inaugurated as President of the NASC. Being involved in such well-respected organisations has given me further insights into the Industry and has enabled me to be at the top table, allowing me to discuss and advise on future policies for the Industry in general. I now possess a much clearer picture of the issues and challenges that the whole Construction sector is facing and it has been invaluable in enhancing my knowledge of the problems that Contractors face and what can be done as a Sub-Contractor to assist them, whether through further training or the addition of new products.”
With such a growing level of expertise coupled with a sound infrastructure, the TRAD Group certainly looks in great shape moving forward and well placed to confront head-on any challenges that present themselves in the months ahead.