There are three main reasons why I was attracted to becoming the CEO of the Clarison Group:
- First, the UK façades industry is large and fragmented with scope for consolidation and room for some large professional domestic players to emerge.
- Secondly, it is an industry that is likely to go through change and with change comes opportunity.
- Finally, the four companies that have come together to form The Clarison Group are already high performing businesses with strong brands.
1. The UK façade industry is large and fragmented with scope for consolidation and room for some large professional domestic players to emerge.
The UK façade industry is a large £3.5n plus industry that is highly fragmented. There are very few domestic players larger than £15m turnover. As a result, many of the larger projects, which are bigger than the size of most UK companies, forces main contractors and developers to seek capacity globally, particularly players from Europe and the Far East, which come in and out of the market and bring additional risks to projects. There is space for some larger, more professional UK companies which I believe would be welcomed in the supply chain. I would like the Clarison Group to become one of them.
As the industry modernises and professionalises, I believe that it will naturally consolidate, and we will see fewer, larger firms which is what one tends to see in other industries. There are several drivers for consolidation:
- First, the transition towards off-site construction and a greater proportion of unitised façades. Unitised façades involve a greater investment in early design and production and require more space and fabrication equipment, so the players will need to be larger.
- A second driver is the benefits that come from the vertical integration of design, fabrication, and installation. At the moment, there are several players that are disintegrated which don’t have their own design or fabrication capability. As such, they rely on bilateral trading arrangements to bring everything together. For effective Design for Manufacture & Assembly (DfMA) a very high level of collaboration is needed between design and fabrication. This is much more difficult to achieve when the design, fabrication and management of installation are performed at arm’s length by different companies relying on commercial agreements between them. Vertical integration requires greater scale which will be another driver of consolidation.
- A third driver is the need to invest in technology for digitisation which smaller firms will be less able and/or willing to do.
- Finally, I would expect supply chain management practises, common in other industries, to be adapted in the construction industry as clients and contractors realise the benefits of working with fewer, larger, and more professionally managed partners.
2. It is an industry that is likely to go through change and with change comes opportunity.
I foresee change coming from four main causes. The first of these are the changes that will come from the aftermath of the Grenfell enquiry, the second the supply chain changes as the industry engages in more offsite production, the third is digitalisation and the fourth are the changes that will be needed to achieve the UK’s carbon reduction and Net Zero commitments by 2050.
i. Aftermath of the Grenfell Enquiry
What is being discovered from the ongoing Grenfell tragedy enquiry is that there needs to be a steep change in the professionalism of the construction industry with a particular emphasis on the building envelope.
Building owners and main contractors are already experiencing the complex challenge of obtaining EWS1 certificates for their façade systems to enable the properties to be mortgageable. In situations where multiple sub-contractors were involved in the design and construction of sub-elements of the façade, without clear accountability for the system as a whole or for the interfaces, there is rarely a single “go-to” firm to assist the building owner to gain an EWS1 certificate.
A solution going forward would be to have clarity of accountability for the whole system. So, rather than appointing different trade specialists for the structural framing solution (SFS), the insulation, the render or rainscreen, the glass reinforced concrete (GRC), the windows and/or curtain walling, and the rainwater pipes, with the related scope gap and interface risks, one company is appointed with responsibility and accountability for the whole system. This could provide opportunity for The Clarison Group companies to use their design and build expertise to be engaged in full, through the wall, façade solutions.
The façade industry needs to build trust. To achieve this, the industry will need players that recognise the responsibility for what they design and are held accountable for the safety of building occupiers and users. For too long the construction industry has focussed on the lowest cost which has led to shortcuts and bad working practices. The Clarison Group of companies have deep technical competence and are built around core values that drive compliance and safety.
ii. Supply Chain Partnerships to achieve more off-site construction
There is a continued expectation that the current project-based construction process will shift to a product-based approach. Instead of building uniquely designed components on site, more production will be at off-site construction facilities.
The complication for most developers and contractors is that they do not have, and cannot afford, to invest in all the different off-site facilities required. They also don’t have the specialist know-how and R&D capabilities to develop the most effective and efficient products and sub-assemblies.
Some firms may set out to achieve the know-how and capability by vertically integrating the supply chain and having the specialists in house. But for most developers and main contractors the solution will be to partner with players, like The Clarison Group companies, that have them. This is similar to what happens in industries, such as shipbuilding or car manufacturing, that have standing supply chains.
To build the trust and collaboration that is needed to achieve the highest levels of innovation, developers and main contractors will need to focus on fewer but deeper supply chain relationships which, in turn, will drive consolidation (and increased professionalism) in the specialist trades like facades and envelopes.
The construction industry, due to its fragmented nature and being late to invest in a backbone of enabling IT infrastructure, has been slow to embrace digitalisation compared with other industries. However, digitalisation will bring value to the construction industry through better collaboration, greater control of the value chain, and a shift towards more data-driven decision making. Covid-19 has already accelerated the adoption of digital technologies, but there is more to come in areas such as smart buildings and infrastructure incorporating the Internet of Things (IoT), proper use of Building Information Modelling (BIM) to create digital twins so that projects are first built virtually before repeating it for real on site and the re-engineering of traditional procurement models.
iv. Road to Net Zero
The need to measure and manage embodied carbon and provide Environmental Product Declarations (EPDs) is a second major driver for change. The UK Government has legislated to reach net zero greenhouse gas emission by 2050.
The UK construction industry has already begun this journey with many tier one main contractors setting their own road maps. Many have set out to be even more ambitious than the UK Government’s targets such as Skanska’s goal to achieve Net Zero by 2045 and Lendlease’s commitment to absolute Zero Carbon by 2040, eliminating all emissions, including Scope 3 indirect activities, without the use of offsets.
To achieve these goals, these contractors will need to work with supply chains that are working to the same aims. Again, this is an opportunity for The Clarison Group to take advantage of the need for change and to differentiate.
3.The four companies that came together to form The Clarison Group are already high performing businesses with strong brands.
All the companies in the Group are strong performers, as demonstrated by the turnover and profit growth in 2020 versus 2019, despite the Covid-19 pandemic which saw the closure of construction sites in Ireland for a period and disruptions in the UK.
Alucraft is already the market leader in Ireland, Alucraft Systems and EAG have a significant presence in the UK market, and the combined Group is the strongest domestic player in the UK & Irish markets. The industry needs capacity, and The Clarison Group has the largest in-house capacity in the market:
- The largest domestic production capacity of 430,000 hours.
- The largest factory footprint at 25,000m2 plus an additional 20,000m2 of storage space.
- In-house architectural sheet metal manufacturing and accredited powder coating.
- Over 450 employees across six locations.
- Over 100 directly employed design and engineering staff.
- Loyal client base with repeat projects.
- Supply chain partnerships with industry-leading suppliers.
- Largest partner of Shueco in the UK and Ireland.