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Fri March 29 2024

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The return of SGB

24 Mar 14 The best-known name in British scaffolding is set to make a comeback. David Taylor reports

Harsco Infrastructure’s UK website currently contains the following tease: “Surprise - Harsco Infrastructure UK has some exciting news for you”. It then adds, conspiratorially: “Pssst...it’s the worst 
kept secret!”

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’s UK operations director
John 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 – even refusing to confirm that a major announcement was imminent. However, he did say: “SGB is almost a household name; it’s got a 100-year history and it has huge value”. And he added that the company still owns the rights to the name. Why this is of any significance at all is that Harsco Infrastructure, the UK’s 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 construction industry. Founded in 1919, SGB effectively invented scaffolding as we know it today. Its landmark invention was the Universal Coupler – a product which has remained virtually unchanged for almost a century.

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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. 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.

“The Australian market is very similar to the UK, and so is the Middle East,” says Simpson. “We have, more than our fair share of the Middle East market. “But elsewhere in Europe, labour and the hire of scaffolding is split,” he says. Scaffold suppliers neither erect nor hire equipment and do not employ their own erectors, which is the norm within the UK. 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. Indeed, small companies seem to proliferate. Harsco/SGB certainly sees itself as a market leader but Simpson won’t hazard a guess at his market share: “There’s 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’s fair to say there are few doing more than we do, though.” Harsco/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 – often known as ‘town-work’ – which covers everything from house-building through to commercial new-build and RMI projects.

Then there is industrial access – a contract service tailored to the special requirements of clients in the petrochemical, steel and power industries. Thirdly there is hire and sales, supplying scaffolding and associated equipment to third-party customers, including other scaffolding contractors. In addition, the business includes one of the UK’s leading hirers of mast-climbing platforms, Mastclimbers, and a major shoring and formwork division. The tie-up with Brand Energy will give this side of the business a boost, says Simpson: “Brand Energy includes Aluma Systems, the largest formwork and shoring company in the world. “That strengthens our industrial business enormously,” he continues, adding that the merger will promote his company’s formwork and shoring division to the global premier league. 

However, despite its prominent position in the UK scaffolding industry, Harsco/SGB is not the most robust player in the market – not by a long way. As our Company Watch analysis reveals on
page 30 of this issue, despite its £60m- plus turnover, Harsco Infrastructure Services made a huge £16.2m operating loss in 2012. And with a Company Watch financial “Health Score” of just 4 out of a possible 100, some serious restructuring has to be on the cards. So far, however, the new owner appears to be adopting a light touch, though Simpson doesn’t want to tempt fate by saying he has been given free rein. However, he confirms that “investment is forthcoming” and that he hasn’t been told he can’t spend. Nevertheless he is under no illusions about the fragility of the UK construction industry. “Things aren’t great in the UK at the moment,” he says. 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. “It will take some time before we notice much change,” he says. 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. “Scaffolding depends a lot on small-scale RMI and housebuilding and it should have benefited from the upturn in the housing market,” says Hartley. “But if you strip out housebuilding, other sectors aren’t quite so encouraging.”
The period of growth immediately 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: “Skills shortage. There’s a shortage of skills at all levels,” he says. Hartley agrees: “It’s a very labour-intensive and fragmented industry. The labour force is a bit ‘in-and-out’ – very fluid,” he says. 

Simpson says that his company is doing its utmost to bring new blood into the sector: “We have a lot of 18+ apprentices in the business and will continue to support training wherever possible,” he says. “We are the largest employer in the scaffolding industry, but we can’t do it alone. There are a lot of companies out there who aren’t investing enough in training.”

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