黑洞社区

When you think of a chief executive, an image may pop into your head of a sedentary German car-driving man (usually a man) whose main hobby is golf.

Perhaps that鈥檚 a little unfair 鈥� although in a recent interview Balfour Beatty boss Leo Quinn did reveal a liking for BMWs and the odd round on the links. Certainly what you don鈥檛 expect is a chief executive who turns up to client meetings on his bike, and spends his leisure time planning to scale an 8,000m Himalayan mountain.

But that鈥檚 what Bruno Dupety, the chief executive of Vinci鈥檚 UK arm, Vinci Construction UK, does.

Last year, Dupety was ice climbing on Ben Nevis, going up a gully called Point Five 鈥� which many mountaineers consider to be one of the hardest in the world, with a top grade rating of V, indicating its difficulty. He tells a story that 100m below the summit the going got incredibly hard and there was nothing for him and his climbing mates to fix their ice screws into. 鈥淭he drop was 500m.鈥� He makes a noise with his mouth, to mimic a fall. 鈥淚f for any reason 鈥� that was the end. That was very scary. When you鈥檙e in that situation, you鈥檙e very focused on what you do.鈥�

The 60-year-old Frenchman has had to apply that same focus to his present job, after being parachuted into the role more than two years ago by Xavier Huillard, the Paris-based chairman and chief executive of the 鈧�38.5bn (拢33bn) turnover Vinci group. He had quite the challenge to overcome that time, too.

Man with a plan

When Dupety arrived in England back in October 2014, the UK part of the firm was preparing to announce massive losses on a number of schemes, especially its deal to expand the tram network in Nottingham.

Dupety says the scheme is expected to see total losses come in above 拢150m and edge towards 拢200m. 鈥淲e signed a bad contract and we didn鈥檛 have the right people to manage this contract,鈥� he says. 鈥淗onestly, we didn鈥檛 understand the difficulty of the project 鈥� 17km of track in a city where you have to do everything and have the agreement of every stakeholder. It鈥檚 impossible.鈥�

We should promote the industry, make young people dream. In France, construction isn鈥檛 the last choice of the engineering student

Signed in 2011, the deal Vinci struck was to double the existing network, which had originally been built by Carillion seven years earlier. Vinci鈥檚 bit has been operating for nearly two years now but the firm still has to come to a final settlement with the scheme鈥檚 ultimate client, the city council. Dupety wants the job out of his hair this year. 鈥淲hen you finish a job, you need to sort out everything. It will take a while but 2017 we need to finish all that stuff,鈥� he says.

He wants to emphasise that this sort of contract is a blip. 鈥淚t鈥檚 an accident, forget it. Nottingham is an accident.鈥� Asked how a firm manages to lose the sort of sums Nottingham has haemorrhaged, he replies: 鈥淚f I had the answer, I would tell you. I don鈥檛 know. When you start losing, it鈥檚 always getting worse.鈥�

When he arrived at the UK business, Dupety was shocked by what he found. 鈥淭here were two parts in the company. One part was good, one part was totally out of control.鈥�

He lists the bits that were doing OK: development, FM, the north building division and the civils business of its Taylor Woodrow arm, whose name Vinci has retained since buying it nine years ago. 鈥淏ut there was the building division in the south, which was not operating efficiently. It was not good. They took projects at very low prices and then the subcontractors鈥� prices went up. We were squeezed between low prices and escalating costs. I had to change and restructure the team.鈥�

There were two parts in the [UK] company. one part was good, one part was totally out of control

Casualties included UK managing director Andrew Ridley-Barker, commercial director Paul Tuplin and John Stanion, a 22-year veteran of the firm, who Huillard brought Dupety in to directly replace. When Dupety joined, the firm said Stanion had retired 鈥渨ith immediate effect鈥�.

Dupety鈥檚 turnaround plan 鈥� which he has dubbed 1-2-3 鈥� seems to be working. In 2014 and the following year, the UK construction business racked up aggregate losses of close to 拢290m. When it files its 2016 results at Companies House, the firm will post a small profit on a turnover of close to 拢1bn, giving it a margin of 1%. That would mean profit after tax would be around 拢10m.

That is the first bit of the 1-2-3 plan 鈥� so-called because of its aim to get margins up from 1% to an eventual 3% 鈥� sorted but, unlike ISG鈥檚 chief executive Paul Cossell, who last month said contractors should be aiming for margins of 5%, Dupety says 1-2% is the best most can hope for 鈥� 3% would be rare. Is that somewhat pessimistic?

He鈥檚 just being realistic, he says. The UK construction market, he reckons, is one of the most difficult in the world. 鈥淲hen you are a main contractor, the trend from the client is to push all the risk onto the shoulders of the main contractor. The acceptability of the market in terms of profit in our business is quite low.鈥�

He says clients in France, home of Vinci UK鈥檚 parent company, are more willing to accept margins of the kind ISG鈥檚 Cossell thinks are achievable but adds: 鈥淚f I said in France, you can make 10% they鈥檇 say 鈥榶ou鈥檙e crazy鈥�. Asking for 5% [in the UK] is the same in my view.鈥�

The right people

Before coming over to the UK (and Vinci UK鈥檚 main base is, some might think, a rather unglamorous trading estate in Watford for part of a 鈧�38m turnover business) Dupety was put in charge of the merger of Vinci subsidiary Freyssinet, a structural and civil engineer that worked on Cardiff鈥檚 Principality Stadiu, and geotechnical specialist Bachy Soletanche in 2009, with the enlarged business posting revenue of 鈧�3.2bn (拢2.8bn) in 2015.

It was then on to the UK, which is Vinci鈥檚 biggest market after France and Germany. Dupety鈥檚 international experience perhaps helps him see this country鈥檚 issues more clearly.

UK construction鈥檚 profit problem, he says, is tied up with its image problem. A civil engineer by background, who completed a masters in engineering at Berkeley in California, he says: 鈥淚n the UK, this industry doesn鈥檛 attract the best students. In France, it鈥檚 not the same. In France, you have very good students who go into construction. Here, the good students want to go to finance, law. We should promote the industry, make young people dream. When you see what we are doing it鈥檚 an achievement 鈥� a tower in London, bridges, tunnelling on Crossrail. In France, construction isn鈥檛 the last choice of the engineering student.鈥�

It鈥檚 a problem that might get worse with Brexit. After last year鈥檚 referendum, Dupety, who was heading to Europe on the Eurostar as Nigel Farage was clearing his throat for his victory speech that June morning, checked to see how much overseas labour was on his sites. It came in around 30% but he says a number of trades 鈥� concrete frames and steel fixing 鈥� are heavily dependent on eastern European labour. Brexit hasn鈥檛 given him too many headaches 鈥� yet 鈥� but he sees problems for the industry in years to come. 鈥淲ho in this country at the age of 15 or 16 wants to pour concrete?鈥�

He certainly doesn鈥檛 foresee EU nationals heading home in droves. After the Brexit vote, he spoke to a managing director at Vinci鈥檚 subsidiary in Poland. 鈥淚 asked: 鈥榃ill they go back to Poland?鈥� and he said no because the wages are less in Poland.鈥�

He says what firms now need is for Theresa May鈥檚 government to stick to its big-ticket infrastructure and housing pledges. 鈥淗S2 should go ahead. The industry needs a little bit more visibility ahead. When you have visibility you can be more efficient.鈥�

The next steps

Dupety is clearly keen to keep close tabs on the business that he has shored up. He visits sites once a week and is known for being hands-on. Last year he was at the AC/DC concert at the London stadium to see for himself how his team, which has a 25-year deal to look after the venue, was doing. And he recently held a board meeting at the London home of the ICE, which Vinci鈥檚 FM arm was at the time refurbishing.

In terms of strategy, Dupety says he is happy with a turnover of around 拢1bn and has no real plans to increase its share of the London building market, which is limited to the New Covent Garden market mixed-use scheme and expanding Chase Farm hospital in north London. Its other schemes in the capital are mainly civils such as the Victoria station upgrade and Crossrail, where it is working on tunnels and building a new station at Whitechapel.

The firm was making 鈥渂ig losses in London鈥� a few years ago and Dupety doesn鈥檛 want to revisit that. 黑洞社区 in the regions such as the North is less risky while Dupety also moved to head off more headaches by shutting a UK operation that was bidding for work in the Middle East. 鈥淭his particular market is quite difficult so I decided to stop it.鈥�

Dupety鈥檚 time so far in the UK has no doubt been shaped by the problems at Nottingham 鈥� he refers to it more than once as an 鈥渁ccident鈥� 鈥� and for him 鈥渇ixing鈥� the UK business means one thing. 鈥淥ur priority is to have a sustainable construction business, to show that we are not going to suffer anymore,鈥� he says. 鈥淲e had a problem and the chairman asked me to come and fix it.鈥� By the looks of it, he has.