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When John Stanion is asked what he is like as a boss, he fires back: 鈥淚鈥檓 very good at delegating.鈥� One would hope so. The chairman and chief executive of Vinci Plc, the UK contracting arm of the world鈥檚 largest construction firm, commutes from Gloucestershire to Hertfordshire every day, sits on six boards, and is planning an international expansion while keeping abreast of the grand strategy being plotted in Vinci鈥檚 French headquarters. 鈥淚鈥檓 in Paris about once every two weeks 鈥� weather permitting,鈥� he says raising his eyebrows at the snow swaddling his Watford office.

This may sound a like a lot to fit into the working day, but the 57 year old points out that Vinci Plc accounts for a mere 鈧�1.1bn (拢1bn) of the group鈥檚 鈧�33.5bn turnover. It does, however, mean that Stanion is extremely well placed to comment on the trials of steering a moderately large UK contractor through the treacherous waters of 2010, and also on the course being charted by Vinci Group, which is presently ranked by the Financial Times as the 259th biggest company in the world. The UK company and its parent look set to adopt different approaches to weathering the storms ahead, but one thing鈥檚 for sure: neither looks likely to lose its reputation for spotting a bargain.

The parent company鈥檚 last posted results, for the nine months to 30 September 2009, show that revenue fell 4.6% (it was 鈧�23.6bn compared with 鈧�24.7bn at the same point of 2008). The largest area of decline has been in France (鈧�14.6bn compared with 鈧�15.6bn). International revenues have remained flat at 鈧�9bn. So, the group has proved resilient despite the collapse in private sector demand. Its order book is looking healthy, too. By September, this was 4% higher than it was on 30 June, at 鈧�24.2bn; 鈧�13bn of that is made up of international work.

This solid financial base is allowing Vinci p猫re to contemplate further acquisitions. And buying other firms, particularly those in emerging markets, is something that this firm does very well. The price paid for this talent is a company structure that resembles the Habsburg family tree, within which, at the latest estimates, 164,000 employees are undertaking 246,000 projects. Thankfully, if you zoom out far enough the structure is relatively simple. The firm is split into four business lines: construction, which is worth 鈧�15.7bn, roads, which is worth 鈧�8.2bn, concessions 鈥� that is, PFI-style projects that Vinci manages after constructing them 鈥� 鈧�4.8bn and energy (鈧�4.6bn). Each of these lines has operations all over the world, although the firm still makes 63% of its income from France (see the charts below).

The UK strategy

Stanion鈥檚 branch office is growing rapidly: turnover is 拢1bn, up from 拢778m last year thanks to its takeover of Taylor Woodrow鈥檚 construction arm, but he is wrestling with the same problems as any of his UK peers. On redundancies, for example, he says 鈥渓ike everyone else鈥� that he hopes the worst is over 鈥渂ut inevitably as projects come to an end and we don鈥檛 replace them 鈥� well, it鈥檚 an age-old issue in construction.鈥�

As a consequence, the group is facing 2010 with the same strategy as most other firms 鈥� to survive. 鈥淭here is a real sense of uncertainty at the moment,鈥� Stanion says. 鈥淲e have a government that is dysfunctional in many respects and we have resistance by any politician to come out and say exactly what they鈥檙e going to do.

鈥淣obody should delude themselves that there isn鈥檛 going to be a period of difficulty ahead. Our job is to understand that and work out how to survive.鈥�

We have a government that is dysfunctional in many respects and we have resistance by any politician to come out and say exactly what they鈥檙e going to do. Nobody should delude themselves that there isn鈥檛 going to be a period of difficulty ahead

In the UK, the main thrusts of the strategy are threefold: to expand into growing sectors, to take advantage of acquisition opportunities, and to open international offices. Which growing sectors? Stanion reels off new-build nuclear power stations, nuclear decommissioning, facilities management and transport and infrastructure, including London Underground and Crossrail. He is quick to add that calling these sectors 鈥済rowing鈥� takes a little bit of faith given the state of the exchequer. Transport in particular is vulnerable to a retrenchment in public spending.

Of course, Vinci鈥檚 acquisition strategy will have to conform to this plan, which means that Stanion is looking for 鈥渞egional contractors, energy and transport engineers and facilities managers鈥�. He adds that there are no targets visible at the moment, and that 鈥渁cquisitions will be made as and when the right opportunities arise鈥�. But he does hint that this may not be in the too distant future: 鈥淲ith so many mid-sized construction firms facing difficult trading conditions at the moment, it鈥檚 likely there鈥檒l be more of those opportunities coming up.鈥�

One benefit of being a relatively small company is agility. The group has made six acquisitions in five years, including Taylor Woodrow in 2008 and failing East Anglian contractor Haymills in August last year. This has led to accusations of an aggressive approach to growth 鈥� something Stanion is quick to reject: 鈥淲e鈥檙e not 鈥榓ggressive鈥�. We鈥檙e proactive when opportunities arise. We don鈥檛 have a policy of aggressively acquiring companies for the sake of it. We make acquisitions that fit strategically with our business model.鈥�

Stanion adds that his present management team can now make rapid judgments about the value of contracts and companies. A good example was Haymills, which was in administration for about half a hour before Vinci picked it up 鈥� not bad for a target with a turnover of 拢181m.

The third major strand of the strategy, international expansion, is a bit of a departure for the UK business. Stanion is quick to point out that Taylor Woodrow, which it acquired in 2008, has plenty of experience, mostly in the Middle East, so expanding overseas will be made easier. Stanion also knows the area well: between 1976 and 1982 he worked for former German contractor Philipp Holzmann in Iraq and Saudi Arabia (see CV below).

He explains why expansion has not been put into action before now: 鈥淪even days after we acquired Taylor Woodrow, the news of the Lehman Brothers collapse broke. Everything changed. Construction output is now down by about 25% since 2007. There is a possibility this will continue and so part of the response, as well as strategic moves in UK, is to go into the Middle East construction market.鈥�

Stanion says Vinci Plc is focusing on infiltrating markets where British companies have traditionally worked successfully and names Qatar, Abu Dhabi and Saudi Arabia as targets. Libya and Egypt are also possible destinations. 鈥淚 have no ideas on numbers yet,鈥� he says, 鈥渂ut I do have ambitions. The new offices will be a mixture of UK and local staff. We need to keep close control of the cost base so hiring locally makes sense.鈥� The offices are due to be up and running before the end of the year and the message is just to watch this space.

The parent鈥檚 strategy

We鈥檙e not 鈥榓ggressive鈥�. We鈥檙e proactive when opportunities arise. We don鈥檛 have a policy of aggressively acquiring companies for the sake of it. We make acquisitions that fit with our business model

Like its British arm, Vinci Group will be focusing on growth markets such as energy, nuclear power, waste, water, roads and airports. Vinci鈥檚 major test for 2010 will be to balance the traditional building side of the company, which is declining in importance, with its relatively high-margin work overseeing airports, roads, car parks and telecoms networks.

鈥淐oncessions have a longer investment cycle, require high investment and deliver high margins. In the past, construction firms have gone into property and housing to enhance margins. Vinci doesn鈥檛 do that. It invests in these long-term concessions over several years.鈥�

Alastair Stewart, an analyst at Investec, says: 鈥淰inci is a fantastic group and has done very well in construction. But where it is doing really well is in concessions, particularly in France. They basically have a licence to print money. And it is the strong construction side of the business that has given them the ability to build up the concessions side. It makes them attractive to the governments giving out the work.鈥�

When it comes to acquisitions, for the parent company the processes tend to be lengthy and pre-planned, rather than opportunistic. There has been a long gestation period with all of the group鈥檚 high profile deals, including transport infrastructure operator Autoroutes du Sud de la France (ASF), Europe鈥檚 second largest toll roads operator, in 2006 which resulted in Vinci becoming the world鈥檚 leading concessions and construction group.

The deal it is now focused on is to buy Cegelec, an electrical engineer owned by Qatari Diar. 鈥淭he proposal is that they will sell in exchange for 31.5 million Vinci shares,鈥� says Stanion. 鈥淭hat will make Qatari Diar the second largest shareholder in Vinci behind staff in a deal that would increase our revenue by $3bn (拢1.8bn) and make us one of the, if not the, leading electrical engineering businesses in Europe. That sort of thing doesn鈥檛 come out of the blue.鈥�

An area for improvement

Vinci may have topped the European contractors鈥� league, but Stanion says being a small part of a huge company 鈥� and one that has grown through numerous acquisitions 鈥� can be a problem when it comes to transparency and democracy. In particular, the group has a reputation for making big decisions that come as a surprise to onlookers and rivals 鈥� and its own staff. Stanion agrees that communication is an area that needs work.

鈥淲hen you have a company that has been put together from other companies, the people involved have different experiences and expectations about what they should know,鈥� he says. 鈥淭aylor Woodrow, for example, always had a very intense dialogue with staff, more so than we鈥檝e ever had here. We鈥檝e got work to do in terms of communication with the staff. Another problem is that the speed at which things can happen, as a result of our reactive strategy when it comes to acquisitions, has left people feeling uncertain, understandably.鈥�

Never without a plan, Stanion says that his strategy to combat this will be to hold roadshows around the country. He will visit every region to answer questions and explain issues, targets and plans to employees in small groups. This is something Vinci staff can look out for in the next two months, including those in any firms that it picks up between now and then 鈥�