Harsco Infrastructure鈥檚 UK website currently contains the following tease:聽鈥淪urprise - Harsco Infrastructure UK has some exciting news for you鈥�. It then adds, conspiratorially: 鈥淧ssst...it鈥檚 the worst 鈥╧ept secret!鈥�
It is indeed an open secret that Harsco Infrastructure (a name, by the way, that has absolutely no resonance in the UK construction industry) is to revert to its old and far more familiar monicker of SGB.
Despite this being common knowledge throughout the industry, Harsco Infrastructure鈥檚 UK operations director鈥↗ohn Simpson was doing a good job last month of pretending that the cat was still in the bag.
He skilfully avoided confirming or denying the rumour 鈥� even refusing to confirm that a major announcement was imminent. However, he did say: 鈥淪GB is almost a household name; it鈥檚 got a 100-year history and it has huge value鈥�. And he added that the company still owns the rights to the name.聽Why this is of any significance at all is that Harsco Infrastructure, the UK鈥檚 biggest scaffolding and access business, has recently changed ownership. A name-change is practically unavoidable if Harsco is no longer the owner, even though the company has the right to use the Harsco name for another year.
Harsco sold the business into a joint venture with fellow US industrial group Brand Energy & Infrastructure Services in October last year. The new owner is private equity firm Clayton, Dubilier & Rice (CD&R) which bought both Harsco Infrastructure and Brand Energy at the same time and has merged them to create one huge scaffolding and formwork giant.
The SGB name (it used to stand for Scaffolding Great Britain) is, as Simpson says, a powerful brand in the UK聽construction聽industry. Founded in 1919, SGB effectively invented scaffolding as we know it today.聽Its landmark invention was the Universal Coupler 鈥� a product which has聽remained virtually unchanged for almost a century.
Throughout the 20th century, SGB established a pattern for scaffold components and scaffolding design that it exported around the world. Today, it is still active in 32 countries around the globe.聽Not surprisingly, the SGB tradition readily established itself in Commonwealth countries, the Middle East and other far- flung regions with close ties to the former British Empire. But it has never penetrated mainland Europe, where the scaffolding industry is markedly different.
鈥淭he Australian market is very similar to the UK, and so is the Middle East,鈥� says Simpson. 鈥淲e have, more than our fair share of the Middle East market.聽鈥淏ut elsewhere in Europe, labour and the hire of scaffolding is split,鈥� he says. Scaffold suppliers neither erect nor hire equipment and do not employ their own聽erectors, which is the norm within the UK.聽A severe recession usually clears out the weaklings from an industry, leaving the stronger and healthier players. And although it has struggled, Harsco Infrastructure has hung in there, as have a surprising number of smaller scaffolding contractors.聽Indeed, small companies seem to proliferate. Harsco/SGB certainly sees itself as a market leader but Simpson won鈥檛 hazard a guess at his market share:聽鈥淭here鈥檚 something like 953 scaffolding companies in the UK and a lot are too small to file their results at Companies House, so estimating market share is difficult. It鈥檚 fair to say there are few doing more than we do, though.鈥澛燞arsco/SGB is one of only a few companies worldwide to cover the full range of access services. In the UK its business can be divided into three main areas. First there is construction scaffolding 鈥� often known as 鈥榯own-work鈥� 鈥� which covers everything from house-building through to commercial new-build and RMI projects.
Then there is industrial access 鈥� a contract service tailored to the special requirements of clients in the petrochemical, steel and power industries.聽Thirdly there is hire and sales, supplying scaffolding and associated equipment to third-party customers, including other scaffolding contractors.聽In addition, the business includes one of the UK鈥檚 leading hirers of mast-climbing platforms, Mastclimbers, and a major shoring and formwork division.聽The tie-up with Brand Energy will give this side of the business a boost, says Simpson: 鈥淏rand Energy includes Aluma Systems, the largest formwork and shoring company in the world.聽鈥淭hat strengthens our industrial business enormously,鈥� he continues, adding that the merger will promote his company鈥檚 formwork and shoring division to the global premier league.聽
However, despite its prominent position in the UK scaffolding industry, Harsco/SGB is not the most robust player in the market 鈥� not by a long way. As our Company Watch analysis reveals on鈥╬age 30 of this issue, despite its 拢60m- plus turnover, Harsco Infrastructure Services made a huge 拢16.2m operating loss in 2012.聽And with a Company Watch financial 鈥淗ealth Score鈥� of just 4 out of a possible 100, some serious restructuring has to be on the cards.聽So far, however, the new owner appears to be adopting a light touch, though Simpson doesn鈥檛 want to tempt fate by saying he has been given free rein. However, he confirms that 鈥渋nvestment is forthcoming鈥� and that he hasn鈥檛 been told he can鈥檛 spend.聽Nevertheless he is under no illusions about the fragility of the UK construction industry. 鈥淭hings aren鈥檛 great in the UK at the moment,鈥� he says.聽The recovery is being led by the housebuilding sector, which is good for the scaffolding industry, but other sectors are still well below capacity, says Simpson. 鈥淚t will take some time before we notice much change,鈥� he says.聽This is echoed by Andrew Hartley, an analyst with market intelligence company AMA Research.
AMA last reported on the scaffolding sector a year ago, when it forecast a 1% growth during 2013 and a modest recovery during 2014/15.聽鈥�Scaffolding depends a lot on small-scale RMI and housebuilding and it should have benefited from the upturn in the housing market,鈥� says Hartley. 鈥淏ut if you strip out housebuilding, other sectors aren鈥檛 quite聽so encouraging.鈥濃�═he period of growth immediately聽following a deep recession can be a dangerous time with a risk of over-trading by under-resourced businesses. Simpson has no doubt about what poses the biggest threat to his sector: 鈥淪kills shortage. There鈥檚 a shortage of skills at all levels,鈥� he says.聽Hartley agrees: 鈥淚t鈥檚 a very labour-intensive and fragmented industry. The labour force is a bit 鈥榠n-and-out鈥� 鈥� very fluid,鈥� he says.聽
Simpson says that his company is doing its utmost to bring new blood into the sector: 鈥淲e have a lot of 18+ apprentices in the business and will continue to support training wherever possible,鈥� he says.聽鈥淲e are the largest employer in the scaffolding industry, but we can鈥檛 do it alone. There are a lot of companies out there who aren鈥檛 investing enough in training.鈥�
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