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02/12/2008Gluttons for punishment

The end is nigh! Or, that’s what I keep hearing.

But don’t believe it for a minute.

We don’t have war, pestilence, death and mass destruction, or even soup kitchens. Not yet, anyway, not in the areas cutely known as the ‘civilized world’.

What we have are difficult times ahead. Difficult financial times which can lead to loss of homes, jobs, pride and every-day fulfillment. Some of that is due to the see-saw, roller-coaster economies of the modern consumer world - and most of it down to the reckless greed of those who chased bigger and bigger rewards at the cost of the aspirations of ordinary people. It was capitalism out of control. It wasn’t the stronger who became Masters of the Universe, but little bullying men in £1000 suits, hiding behind their stainless steel and glass desks, whilst recklessly playing the financial systems with other people’s money in the trough in which they stuffed their snouts.

The truth is that greed is good, but gluttony is the first step to perdition. So, while the bankers run for cover, as all bullies do, they leave the rest of us to pick up the pieces and step through the inferno while we try and sort out the mess they have left behind. But picking our way through negative equities, smashed pension funds, lost jobs and the paraphernalia of a financial holocaust means there is a chance that we will find ourselves, that we will get back to some of the decent business and governmental ethics that should protect us from those who steal from us under the guise of being professional advisors and experts in their chosen fields.

The classic example of this happened in the construction trade. Every level of this industry gulped down large and unnecessary profits. They forced the prices up, and used archaic and substandard work practices to milk as much as they could out of the ordinary homeowner. They used health and safety as a means to slow down work and ask for more money in return. They built small and pokey homes in which we were forced to live, helping destroy social and family values by cramming people like rats into ever smaller spaces. Their profits and take-home pay exploded, while the price of homes and buildings rocketed upwards. And when they were warned to ease back, that it could only end in tears, they laughed because they knew better and just went on hammering the ordinary citizen, knowing he had nowhere else to go.

And through all this, the government with its ‘experts’ and quangos on construction methods, ecology, saving the planet and every other strategy they could come up with, just yacked plenty in a myriad of conferences at five-star venues - and did nothing. Various housing ministers and their civil servant teams paraded in and out of Whitehall, each one promising the earth and delivering nothing. We even had a team come down from Caroline Flint’s office (remember her) to say we were further ahead of everyone else with our building techniques, and close to achieving Code 4. They promised they’d be in touch. Where are you, fellas? It’s six months on and I’m still waiting.

I don’t want to start up again attacking those who are laughingly known as ‘tradesman’. The decorators, plumbers, carpenters, et al. They were just the bottom of the pile, just learning from their bosses above and milking the system with more money for fewer hours, less work, and shabby products. In essence, the building trade was just another arm of those who took a lot and offered little. We all knew it would end in tears: we just didn’t know when.

Now I may sound like an old-fashioned communist, but I’m not. I believe in a capitalist society - communism and socialism was always doomed to failure. But under capitalism, however bad it is, it will always recover. That’s because it builds on peoples’ hopes and aspirations.

What matters now is that government, industry leaders and we, as individuals, learn from our mistakes. Government must support and draw guidelines for a stronger legislated business environment which allows creativity and enterprise to flourish whilst allowing those who take chances to have big profits whilst creating jobs and industries that grow with the needs of a global market. We have some of the world’s greatest brains in this country and, in my view, some of the best and most talented, hard working staff. We need to go back to the old- fashioned work ethic of offering a fair reward for a good day’s work. We need to lose the legislation that binds and drowns our decision-making endeavors in red tape, yet still insure the protection of our society.

We must discard Brussels and its business policy making and eternal directives, and focus on what we can do and plan accordingly. We aren’t an island any longer, but we don’t have to be perennially wedged between a rock and a hard place. We can be in Europe, but with our own identity and some of our old freedoms intact.

The building business - and it is a business - needs to decamp into the modern age. We need new thinkers, and newer entrepreneurs. Let’s not get the old fogies back when business picks up again. It can be a new dawn. And we can build eco-homes, larger family units, attractive buildings, lower cost homes on lower priced land, and places we are proud to live in.

But it won’t happen if we get through this, and just let the old ways creep their way stealthily back in again.

02/12/2008Showhome Magazine

How does one armed with the challenge of dramatically increasing output manage in today's market? Michael Dineen puts that question to Toby Ballard of Strongvox.

The news is, there isn't a cold war between the banks and the borrowers; indeed the banks are still on the lookout for new business among house builders - no matter what you may have heard lately in doomy economic commentaries.

Take Toby Ballard, managing director of Strongvox for example. The day I talked to him in his Taunton office he was actually looking forward to a social evening hosted by Royal Bank of Scotland.

In the event nothing dramatic occurred, but the fact that bank and client were not avoiding each other was news to me. In fact when I expressed surprise as he told me of the party he added that two other banks, HBOS and Bank of Ireland had also recently said that they'd like to talk about doing business with Strongvox.

The crack of doom seems to be farther off than I'd thought when I finished reading the pessimistic lemmings of the free press. The gates of economic paradise may not be as open as we're used to, but they are still ajar.

So, what does Ballard, in a new job and heading a new company, intend to do about the financial emergency?

It would be foolish to suggest he will ignore it, but while outlining Strongvox aims over the next year or so he admitted there may be a need for scaling down a touch, here and there.

Meanwhile this energetic 35-year-old has a cheerful expression firmly in place when he tells me, "It's going to be an interesting year - but bloody hard work!"

Hard work? Doing what?

"It's no good relaxing because the market is depressed. It is going to be a case of very hard work, getting back to basics. Firm control on cost cutting and on sales programmes.

"The presentation has to be right, the sales team motivated; they'll actually have to start selling rather than just waiting for people to come into the sales office with a reservation cheque!

"And when we make acquisitions we've got to be sure we've got it absolutely right with very thorough costings and detailed technical information. This isn't rocket science, it's pretty basic stuff, but it's amazing how easy it is to get things horribly wrong!"

Although he is young Ballard is not unfamiliar with hard times, for when he was finishing his degree course in valuation and estate management at Bristol in the late 1980s he already knew he was very unlikely to get a well paid job easily outside the groves of academe.

But property was in his blood - father a builder, grandfather an estate agent - and he landed his first job in his home town of Maidstone, as a trainee land buyer with Kitewood Estates.

Its speciality then was preparing land via planning negotiations and then selling it on to housing developers. It was good grounding for Ballard, but he really wanted to be a housebuilder, so he wrote, inter alia, to Philip Davies of Linden, and to his surprise received a phone call inviting him for an interview.

He remained with Linden under Davies's command for the next twelve years - "He kept you on your toes, that's for sure" - barring a very short spell with Bewlay whom he joined because he was impatient for a change and promotion.

"I'd been with them for only about four months when Chris Coates of Linden rang me saying he was opening a new office as managing director and needed a land director; would next week be alright!"

Thus at 25 he had earned directorship status, and less than five years after that he moved to Linden's Bristol office as MD. He was still under 30.

Clearly he was doing things right there between 2001 and 2007, for production rose under his leadership from 60 to 400 units a year.

Then came the Galliford Try takeover of Linden. For Ballard, used to a company in which he was involved in most of the key decisions, it was a move into a far larger concern - too large for his liking, though, he insists, a very fair outfit in their dealings with him.

Fortunately he had a stake in the Linden business, so when he was approached to join a new Prowting-backed firm in which he could take a 25 per cent share, he had no hesitation in making the move to Strongvox as MD.

An unhappy note is that one of the two former Prowting executives who set up Strongvox, Adrian Nicholson died suddenly - hence the opening for Ballard.

Readers will recall that Peter Prowting had sold out to Westbury, and it could be said that Strongvox emerged from two separate takeovers.

Bankrolled by RBS, a Prowting family trust and directors' personal investments Strongvox, with offices in a smart new business park on the outskirts of Taunton, is now set up to produce houses and flats with three sites in Taunton and others at Ilminster, Long Ashton, Bridgwater, Bristol and Yeovil.

There are three directors and a total payroll of 40 with construction, sales, technical, surveying, land and planning and site management skills. It is the kind of firm - not too small and not too large - which seems to appeal, even today, to bankers. And to Ballard, of course.

In a thoughtful soliloquy he seemed to be summing up the current situation for many in the industry today: "The situation is worrying, but I have looked at it and the interest rates are still low, people are still employed and in most places property is not over-valued; I'm probably being optimistic but I think when we get to September people will be saying it hasn't been as bad as they thought it would be, and we can get on with our lives."

He is hoping Strongvox will be producing 300 units in four years' time. The production of only 85 this year was already planned, before the credit squeeze.

"True we'll not be able to borrow as much as we once did, but there are still plenty of willing lenders out there."

And with an eye ever on today's harsh disciplines of cost cutting he concludes: "As long as we don't lose profit - if it's deferred I can live with that - but we have to work extra hard to keep those costs down.

"When it's your business with your money riding on it you haven't any choice, you have to work harder than ever on how to sell. Find new ways."

01/12/2008Millions pledged to lift the gloom

Darling promises further cash injection to help housing through recession.

Alistair Darling is to bring forward another £775 million for housing and regeneration, as part of a £20 billion spending spree to offset the shocks of recession.

The chancellor’s pre-Budget report promise came as the Housing Corporation published its bleakest ever assessment of the threat to housing associations from falling property sales and the global credit squeeze.

Associations have budgeted to make £1.2 billion from shared ownership and other property sales over the next 12 months, according to the latest corporation survey of developing landlords. If they cannot make those sales they will have to borrow more than planned, but the price of new debt is still rising dramatically, the corporation found.

Against this gloomy backdrop, Mr Darling announced plans to bring forward £3 billion from the government’s 2010/11 spending plans, to inject extra cash into the economy while he expects it to be weakest.

From this, £775 million will be spent on housing and regeneration before April 2010, which the pre- Budget report said would help ‘offset the impact of economic shocks on priority programmes’.

This includes £200 million for decent homes improvements, £175 million for major repairs to council housing, and £100 million for regeneration and infrastructure.
But only £150 million will be brought forward to build new social housing, which the Treasury said would fund up to 2,000 new homes.

The Royal Institution of Chartered Surveyors’ chief economist Simon Rubinsohn said this was equivalent to just one month’s output. The move was ‘regrettably lacking in clout and will do little to offset a pronounced decline in residential investment in the coming year’, he added.

National Housing Federation chief executive David Orr said the cash must be used to increase grant rates for associations. ‘Otherwise, the situation is so serious that associations simply won’t be able to build new social homes next year,’ he said.

The corporation’s latest survey, of 216 associations, found 9,955 unsold shared ownership homes on their books in October. But with 1,000 new shared ownership homes due to hit the market every month until April 2009, the number sitting empty was likely to rise, the regulator warned.

01/12/2008OVER EXPANSION IS NOT THE WAY!

I read every day about small and large businesses alike having financial difficulty, with redundancies being handed out like free coupons to hard working and loyal employees and it make me very sad.

There is a lot to be said for prudence and for not expanding your business beyond its means in the hope that the good times that we have all experienced continues, it is all to easy to spend money and be frivolous, some businesses I believe have been to keen to expand rather than look at the bigger picture and this has been there Achilles heel.

I have always maintained that service and high quality goods are the most important aspect of any business, yes, you have to be competitive but ultimately the customer is king and you have to serve them will 100% commitment and professionalism, if you don’t you will not survive.

This, I believe is part of the problem for some businesses, they have not looked after their customer base, they have not given the personal service that is required, they have not made themselves accountable and it has inevitably been part of their downfall, price is not always the issue, that is fact!

I am proud of all my staff, they are professional, serve our customers with care and understanding with no job being a chore, we make time to listen to our customers and give them the service that they need, we have many customers that have been with us for a long time, through good and bad times, some for as long as 14 years! some that have left have returned after trying a different company and realising that they just don’t get the level of support that we give.

We are still going strong, WE ARE SOLVENT and we have NO OVERDRAFT, we will still be here when this horrible downturn is over because we have managed our growth with our own investment and put funds to one side for a rainy day, let’s hope the clouds break soon and we see a glimpse of the sun!

Aidan Donegan

Managing Director
Case Studies