Reidsteel is one of the few examples you will find of an engineering company that has turned down a multi-million-pound windfall in order to stay right where it is – in this case, the centre of Christchurch, Dorset.
Earlier this year the company revealed that it had reversed a decision to sell its existing site – for which it had secured planning permission for 170 new homes – and relocate outside the town centre. Developers had already put forward exploratory bids of more than £10m, a substantial sum for a company with an annual turnover of £30m, but when a site adjacent to its existing premises became available, the company reconsidered.
This article was first published in the September 2021 Top 100 Contractors issue of The Construction Index magazine. Sign up online..
According to managing director Simon Boyd, it makes perfect sense. “This is really good for the company and really good for the local economy,” he argues. “The prize for the company is that we can raise productivity by a minimum of 100% and we can improve our efficiency – again by a phenomenal amount – by having the latest technology and the latest manufacturing techniques.
“Through taking this option we can stay in our existing offices and get the new manufacturing facility up and running while still manufacturing on our old site. We can self-fund the development of the new offices and the demolition of the old ones. That’s much more viable than taking a quick buck. Simply not having to move is itself worth a small fortune.”
According to Boyd, the financial advantages of staying put far outweigh those of moving to a greenfield site earmarked for industrial development, even when the company had planning permission for 170 new dwellings. This permission was all the more valuable as there was no requirement for social housing, so every dwelling could make a profit.
The proposed move was never the first choice, it seems. The company did need to expand and had invested £1m in drawing up plans to move out of Christchurch because, Boyd says: “There seemed to be no option. We never wanted to leave the town because it’s a unique place and we were always worried about the effect on our people but we were constrained by the site.”
At this point it became uncertain whether the owners of the proposed new site would be able to deliver it and the land next to the existing factory suddenly became available. This was big enough to fit the new facility, which was already designed, so now Reidsteel is leasing these buildings with the option to buy once planning permission is granted.
“What’s the point in the financial reward we would have got from moving if it hurts our people?” asks Boyd. “Because our company is its people, and we’ve invested in their training and upskilling,” he says. “We’re putting our money where our mouth is, though there are financial advantages to this strategy.”
The vision is for both customers and staff to share the benefits of greater efficiency. The improved profit margin would deliver cheaper products to customers while staff share in the profits.
“Profit share pulls people back into one team, and that’s what we believe in and what we’re applying throughout the company,” concludes Boyd.
Meanwhile, it is clear that Boyd has long been frustrated by the limits for the existing facility. “The market for our greater capacity is already there and the work has already been rejected,” he says. He describes how the company was shortlisted for three bridges in North Africa totalling 28,000 tonnes of steelwork when the existing plant can, at best, only produce 100 tonnes a week.
“We could only fulfil a contract like that by subcontracting and that would increase our exposure and our risk, so we have to decline them, and we’re sick of doing that,” he says.
The projected improvements in efficiency are enormous. To name just two: weekly output will rise from 100 tonnes to 300 tonnes while the number of times a piece of steel is handled after coming through the factory door will fall from 16 to just three.
The types of job will change too, says Boyd. There will still be fabricators and handlers, but they will work more efficiently indoors rather than outdoors, while better paid, more productive roles will be created such as CNC operators. “We will need more people but not as many people per tonne of steel as we do now.”
Yet, tempting though these gains might be, the current climate is one in which many of Reidsteel’s customers are postponing their own development plans. As Boyd readily recognises, Covid and Brexit have combined to create shortages of raw materials as both mining and refining have slowed down.
But he is committed to the Brexit agenda, ‘taking back control’, and says that the result of the referendum in 2016 was crucial to the company’s decision to expand.
“We were stuck in a protective regime that didn’t allow us to flourish and damaged many aspects of our international trade. When the vote to leave came into reality, we pushed the button and started to invest in our future because we can see real opportunities in this country and across the world,” he argues.
“We’ve got about 60 buildings in the Caribbean, buildings in Nepal, Indonesia, Malaysia and Afghanistan, all built to British Standards and British codes.”
It is from markets like these, rather than Europe, that Boyd believes the company’s long-term growth will come and justify this bold investment.
This article was first published in the September 2021 Top 100 Contractors issue of The Construction Index magazine. Sign up online..
Company history
John Reid & Sons is an export-focused business that has been in the same family since it was founded more than a century ago – a rare beast in the UK economy.
Colonel John Reid founded the company in France when he was demobilised after the First World War, selling steel-framed barns. The story goes that the business diversified after aviation pioneer Louis Bleriot crash-landed in a field with one of these barns in it.
After using the ‘hangar’ (an old French word that, until then, simply meant a shed) as a workshop, Bleriot ordered three more.
The company focused on exports through the 1930s, constructing churches in Peru and stations on the Djibouti to Addis Ababa railway, until it was forced back to Britain, and to Christchurch, by the Second World War.
Based on a four-acre site near the town centre, the company has grown steadily so that it now employs more than 130 people and has a turnover of £25m. To date, it has exported to more than 140 countries and won the Queen’s Award for Exports four times.
More locally, it designed and built all-seater stands for football clubs such as Aston Villa and Notts County when the Taylor Report into the Hillsborough disaster led to this being mandatory.
Reidsteel’s speciality is disaster-resistant structures, designed to withstand the impact of hurricanes, tsunamis, flooding and earthquakes. But it also produces steelwork for other structures such as aircraft hangars, bridges and industrial units.
This article was first published in the September 2021 Top 100 Contractors issue of The Construction Index magazine. Sign up online..
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