Hard lessons learned

Six years ago it was in trouble, running into debt and shedding scores of jobs as it struggled to find a foothold in the brave new world of public private partnerships where businesses team up with government and local authorities to manage facilities.

Now its order book is running into the billions and its workforce is leaping by hundreds on a monthly basis.

All a far cry from the Oxfordshire company, set up by William Amey in 1921 after he realised the value of gravel deposits.

Historically, its base has always been in Sutton Courtenay, and it still retains a facility there, although the gravel extraction side of the business has been sold off.

In 1972, Ron Amey agreed to a takeover by Hanson, with the company renamed Amey Roadstone Construction. It had become a public company in 1959 when it was involved in the construction of the M1 motorway.

In 1989, the company returned to private ownership and became known as Amey again, but six years later, relisted after undergoing a management buy-out.

It was towards the end of the following decade that Amey entered the most turbulent period of its existence. Under then chief executive Brian Staples, the head office was moved to London, and it transformed itself again from construction to overall services provider specialising in the public sector.

Around this time current chief executive Mel Ewell joined the company as operations director.

“At the time, the concept of public private partnership was a revolution. It was a bear market and the City wanted companies that could show dramatic growth,” Mr Ewell recalled.

“But that very quickly changed to a focus on cash and Amey had overstretched itself.”

Two profit warnings were issued between November 2002 and January 2003, and Mr Staples left the company to be replaced by Mr Ewell. In May 2003, the company was bought by Spanish company Ferrovial for £81m.

Mr Ewell said: “The core business was healthy, relationships with customers were good and there was a sound cash generation. But we were bidding for too many very large private finance initiatives.

“What we did was stop the haemorrhage of cash. We took a lot of overheads out, one of which was shutting the London office and coming ‘home’.”

Mr Ewell puts a lot of stock in the fact that Amey is now back in Oxfordshire, specifically in two buildings on the Oxford Science Park.

“Oxfordshire was the heart and soul of the company. A lot of senior management were still based here and the legacy had stayed with us.

“Bringing the company back was an easy decision.”

Once the new base was established, the process of getting back to basics gathered momentum. Amey is now what is termed an “asset management company.”

It designs and maintains assets, predominantly in roads and rail and the infrastructure that surrounds them. on behalf of local and national government — for example, the Highways Agency and Network Rail.

Mr Ewell explained: “By definition we are a service business. We don’t construct, we service and manage on behalf of other people.”

What is known as the ‘Birmingham Box’ — the M42 and parts of the M5 and M40 — are looked after by Amey. Its contractors care for the verges, crash barriers, information systems and even the emergency support vehicles.

Also in Birmingham, a major contract has been won to upgrade street lights, roads, bridges, tunnels and high streets over a period of 25 years.

Similarly, Amey has been responsible for new track and signage on the West Coast mainline and it also owns a majority share of the Tube Lines contract, the largest PFI in the country.

Away from transport, the company has also been winning contracts from local authorities to maintain the infrastructure of schools, and even to provide IT services and catering. Recycling is also an emerging market.

The tunraround in the company’s fortunes has been remarkable. This year it is predicting profits in excess of £100m on a turnover of £1.5bn. That contrasts with a loss of £8.3m in 2002.

So far this year, £3.8bn worth of contracts have been won and the forward order book is close to £7bn.

More than 2,000 staff have been employed this year, taking the total workforce beyond 10,000, and by next Easter, this is predicted to be 12,000.

In Oxford alone there are 600 staff, making it one of the county’s major employers, and more than 30 vacancies currently available.

Mr Ewell said: “We learned a lot of lessons from 2002. This time we are growing with absolute visibility. There are very good dynamics in the business in terms of cash flow and functions such as human resources, and information technology are in good shape.

“We don’t get involved in short-term contracts. Ours are complex and long-term with long-term income streams.”

This might explain why Amey is thriving in a recession. Long-term deals with the public sector have shielded it as the Government ploughs in cash.

This situation will not last forever, as Mr Ewell recognises, but he believes that the firm will continue to prosper.

“The recession brings into sharp focus where you need to introduce innovation, add value or look at better ways of delivering services.”

He firmly believes in the efficiencies to be gained through public private partnerships.

“We are receiving more and more inquiries from public sector organisations looking to do things more effectively. If you can deliver the same service for less, then that is an opportunity.

“The opportunity for growth is enormous and there is a lot more we can do.”

And that can only be good for Oxfordshire. In terms of the community, Amey now runs the Duke of Edinburgh award scheme in the county and the numbers passing through have almost doubled.

An added incentive is that with a gold award, youngsters are automatically given an interview with the company for a job.

“If you show that level of determination, then you possess the characteristics we are looking for,” said Mr Ewell.

“If you are going to have a business in the local community, then you have to find ways of investing back into it.”