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Stars and stripes
Frank T MacInnis (pictured right) asked Tony Whale (left)

Frustration.

It is nearly two years since the man on the right of the picture above used the word to describe his feelings for Emcor Drake & Scull. He is Frank T MacInnis, the chairman and chief executive of Emcor Group, and his frustration was caused by his British subsidiary鈥檚 拢11.7m loss in 2003.

MacInnis鈥� response was to give the company the mother of all dressing-downs and to replace the management team led by Norman Critchlow. In its place he drafted in Tony Whale, the man on the left of the picture, who had headed up Emcor Drake & Scull鈥檚 engineering arm, to turn things around. And turn it around he has. Pre-tax profit is now just shy of 拢2m and the duo feel able to proclaim that its 拢2.4bn parent is the world鈥檚 largest specialist contractor.

Not that MacInnis is happy yet. He came close to selling the UK business in that loss-making period, and still hasn鈥檛 decided its fate: 鈥淚 haven鈥檛 changed my mind yet.

But I have concluded that the new management has earned the benefit of the doubt and the opportunity to rejoin Emcor as a contributing partner.鈥�

That is hardly a ringing endorsement, and it gets worse: 鈥淭he profits in 2004? They鈥檙e not good enough,鈥� before it gets better: 鈥淲hat I鈥檓 impressed about is the change of attitude 鈥� a disciplined approach to bidding, estimating and so on. Any company can find a way to make a little money. A change of attitude is something special.鈥�

Whale looks relieved. The company is in the middle of a strategic review, which will outline a growth strategy for the next five years. The UK business has been heavily involved in the review, suggesting that MacInnis is more pleased with Drake & Scull than he lets on. On a personal level, the two seem to get on, with animated conversations about their respective golf handicaps. Whale claims to be content with the criticisms: 鈥淭he US parent wasn鈥檛 satisfied and quite rightly so. What Frank is saying is that nobody鈥檚 off the hook: every Emcor company has responsibilities and accountability. I feel quite comfortable with that.鈥�

What Frank is saying is that no-one鈥檚 off the hook: every Emcor company has responsibilities and accountability. I feel quite comfortable with that.

Tony Whale

MacInnis was particularly disappointed with Drake & Scull as it had provided him with the business model that saved Emcor when he took over in 1994.

Emcor was in bankruptcy at the time and he saved it by following Drake & Scull鈥檚 example of having a facilities business as well as a contracting arm, allowing the group to win work when construction was in recession. That meant that it could afford to avoid risky building contracts during downturns.

MacInnis remembers: 鈥淚 said: 鈥楬mmmm 鈥�

I wonder if this could work in North America?鈥� At the bottom end of the construction cycle nobody should be in it. The risk鈥搑eward ratios are inappropriate for any company. That鈥檚 the problem with pure contractors. In those circumstances, they鈥檝e got no choice but to bid.鈥�

The strategy has paid off: the group has posted 39 consecutive quarters of profit, which is the kind of performance that blue-chip clients such as property group CB Richard Ellis and technology company Siemens look for in a supplier.

But MacInnis sees the review as the company鈥檚 鈥渃rossroads鈥�. Whale may be a little less polished than his boss, but in identikit dark suit, blue shirt and red tie he also echoes MacInnis鈥� sentiment: 鈥淭he potential is enormous. We鈥檙e capable of looking at everything from concept design to asset management.鈥�

The review marks the end of a transitional period for Emcor. Having come out of recession in the USA, the group is looking at forging strategic alliances with industrial companies. This is essentially an outsourcing market, with Emcor looking after these companies鈥� estates. However, its plans are rather more ambitious than just keeping the windows clean.

Any company can find a way to make a little money. A change of attitude is something special

Frank T MacInnis

Emcor鈥檚 argument is that every major industry, from nuclear power to pharmaceuticals, is being hit by the cost of installing and maintaining equipment. Western industries are particularly vulnerable to this as they frequently have huge investments in infrastructure that is becoming obsolete. To E E make matters worse, they may be competing with emerging economies in India and the Far East that are able to leap-frog them by installing state-of-the-art hardware. A telecoms company, for instance, does not want to have to write off tens of millions of pounds of investment by scrapping its copper wire systems.

Emcor鈥檚 plan is to specialise in maintaining and upgrading the old infrastructure so that it remains competitive long enough for the client to upgrade. MacInnis argues that this puts Emcor in a unique market position. He says the group鈥檚 closest competition emerges from the likes of automotive giant Johnson Controls and aerospace-to-specialist-materials group Honeywell, both of which have extensive facilities services arms. But MacInnis stresses: 鈥淲hat they don鈥檛 have is the scope of construction and engineering expertise that we have. We鈥檝e important capabilities in hardcore construction.鈥�

Whale is clearly impressed by his boss. He declares of MacInnis: 鈥淗e鈥檚 quite a character.鈥�

That MacInnis is quite a character doesn鈥檛 always come across, although his public relations team privately insist he is. What鈥檚 remarkable about this is that very often PRs are as damning about their clients off the record as they are painfully enthusiastic on it.

Certainly MacInnis is amiable and obviously highly intelligent 鈥� he skipped several grades when he was at school in his native Alberta, Canada 鈥� but he speaks in considered rather than dramatic tones.

Despite his conservative delivery, he enjoys a media profile in the States that UK contracting bosses can only dream about 鈥� he is doing this interview barely an hour after a 10-minute stint on CNN. Across the Atlantic, he regularly features as the guest spot on business programmes, and The New York Times has even run a full-length interview with him on the rights and wrongs of creating a US system of democracy in Iraq. It鈥檚 like The Observer asking Ray O鈥橰ourke for his take on North Korea鈥檚 development of nuclear weapons.

This shows the contrasting media image of the construction industry in the USA and the UK. As MacInnis puts it: 鈥淚t鈥檚 entirely appropriate that the chief executive of a company employing 27,000 people, generating nearly $5bn in revenue, is asked about issues broader than construction. The fortunes of our customers are driven by broad macroeconomic events.鈥�

His UK chief鈥檚 fortunes are more concerned with things at a local level, of course, but for the moment it seems that Whale is keeping his boss鈥� frustrations at bay.