The boss of a 130-year-old South West construction company has said there is “growing concern” in the industry over the rising cost of raw materials amid the war in Ukraine.
Mike Hedges, a director of fourth-generation, family-run business Beard, said the war in Europe had caused the wholesale price of materials such as steel to increase “considerably” week-on-week since February.
The Swindon headquartered company, which also has offices in Bristol, Guildford and Oxford, is behind some major property projects across the South of England, including the restoration of Cleveland Pools in Bath - the UK’s oldest lido - the refurbishment of the Royal West of England Academy in Bristol, and the Museum of Natural History in Oxford.
Mr Hedges, who has been with the business since 2015, said the company had managed to work with its supply chain to fix some rates - but for other construction firms it might not be as easy.
“We have managed, in collaboration with our customers, and being open and transparent, to fix some rates with the supply chain and secure some early authority from customers when we needed it to mitigate some of the issues,” explained Mr Hedges.
“We had a project in Bristol and we procured a glazing system from Poland, and some of the components were coming from Ukraine. We had to change that and go with an alternative supplier, which was UK based.”
In July, the UK construction industry declined for the first time in 18 months, according to the S&P Global/CIPS construction purchasing managers' index. It was the first decline since January 2021 - and the worst reading overall since May 2020.
Mr Hedges said local lockdowns in China were also putting pressure on supply chain capacity. “It is difficult to see how some of the increased costs aren’t going to get embedded,” he said. “I don’t think prices will start coming down, but I think it will start to settle.”
Despite new challenges facing the sector following the pandemic, including inflationary pressures, Mr Hedges said Beard’s “financial security” had allowed the historic firm to “deliver well” over the last two years. The £30m-turnover company has not been immune to the impact of the Covid crisis - but having cash in the bank has enabled the business to continue operating as usual.
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“We are fortunate to have financial security and that makes a big difference as we have no debt in the business, so we are not as worried as [some other firms] which have perhaps got some borrowing with interest rates increasing,” he told BusinessLive. “The construction sector was fairly well supported by central Government [during the pandemic] and we had the confidence to carry on working.”
Although there were some initial interruptions to Beard’s programme over the first six weeks of the first lockdown in 2020, of its 42 projects the company, incredibly, only closed four - and even those reopened within a month. Mr Hedges said there was “a level of anxiety about the virus” at Beard, like in many other firms, but the board had forced themselves to talk about Covid as early as February 2020.
“Nobody believed it would turn out the way it did. We added it to the board agenda to work out what we would do. By the time March 23 came around, we had already stress-tested our IT systems and the previous year we had invested in video conferencing facilities and software that allowed people to work remotely, which all worked well.”
The leadership team, added Mr Hedges, was also “very visible” during that time.
“We were going out across the sites, safely, to make sure people were ok. Because labour was slightly reduced we were enabling the staff to have a rota system so not everyone needed to be in every day. Really good communication was key; we had appointed a new head of communications in Jan 2020 and that really helped.”
Fast-forward to 2022 and Beard is thriving. Unlike many businesses in the region that are struggling to recruit, the firm has not had the same problem. The company has an apprenticeship scheme and also takes on graduates through its close relationship with Oxford Brookes University and UWE in Bristol. It has also taken on staff from competitors that have not fared so well during the pandemic.
“In Bristol and the rest of the South some of our peers have sadly gone into administration and there are people who have become available as a result of that,” explained Mr Hedges.
Beard has ambitious plans for the next three years, including becoming safer and greener. The company has a decarbonisation strategy in place already - and over the last two years has eradicated 9% of carbon from the business (measured per £1m of turnover). And it’s not off-setting either, that is being greener within the firm, according to Mr Hedges.
Strategies include reducing transport, encouraging the use of electric cars, installing electric charging points in the company's offices and ground source heat pumps in others, as well as the use of solar panels.
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“Lots of businesses achieve net zero by offsetting it elsewhere; we want to do it responsibly and do our part to limit global warming,” said Mr Hedges.
In June, the company announced it had bought 180 acres of woodland near Bristol for an undisclosed sum. The purchase of Wrington Warren - a rolling expanse of trees, bowers and pastures under the Mendip Hills - is part of a long-term strategy by Beard to minimise its environmental impact. The business already invests in UK forestry and has pledged to achieve net-zero carbon emissions by 2050.
It also has plans to expand the business across the UK - although Mr Hedges says it is “too soon” to say where in the country Beard might extend its geographical reach.
In an industry that has seen the collapse and disappearance of large numbers of companies in the last two years, Beard appears to be bucking a trend in terms of its financial stability. So what's its secret?
“The secret to our longevity is that we have a very simple business plan which is part of the success,” Mr Hedges said. “We compete with ourselves year on year to try to be better, and it’s about delivering for customers.”
He also puts success down to the fact the business is still family run. The company is now headed up by Mark Beard, whose grandfather worked at the firm until he was 103. His father also worked for the business well into his 80s.
"When you look at some other family businesses, they get to a generation and sell or float and it is never quite as good after that point as when it was family owned," added Mr Hedges. "At Beard, people feel really valued in the business. We are friendly, efficient and committed to the future."
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