Fri 2 Nov 2007
Builder's Breakfast with Ian Sutcliffe.
Ian Sutcliffe was delighted when the merger of George Wimpey and Taylor Woodrow catapulted Taylor Wimpey in the FTSE 100. But when it comes to hunger for the hundreds, the UK chief executive of the £5 billion giant does not stop there.Sutcliffe set himself a sporting target 17 years ago of playing the world‚s 100 top golf courses. He is on 82 and even if his job with Britain‚s biggest house builder slows him down, Sutcliffe is determined to get there in the end.
A golfing map of the world allows Sutcliffe to plan, just as the merger was planned meticulously and over time, identifying how best to integrate two of the industry‚s biggest players, balancing growth opportunities with stripping costs out, while keeping redundancies to a minimum.
"We needed to identify the best people for the jobs, which sites to transfer, offices to close. We are looking at initial savings of around £70 million, but this comes primarily from the procurement benefits, rather than the unfortunate redundancies," said Sutcliffe.
"It naturally creates worries and staff uncertainties. Few mergers go really well, but this was well received in the City and we were really fortunate with the attitude of people and the will to make it happen. With a merger, as opposed to a takeover, you have time to get the detail, planning and integration right.
There have been around 600 redundancies in the UK housing business, mainly from closing four regional
offices. The Taylor Woodrow head office at Solihull has also been closed and a new UK head office, currently at the Wimpey headquarters in High Wycombe, will be „somewhere south of the M40."
By chance identifying the senior positions in the merged company proved straightforward, marrying Taylor Woodrow's strengths, including their strategic land, brand awareness and customer service, with George Wimpey's strict control of build costs and processes, as well as a lean overhead structure. The balance of the new board between Taylor Woodrow and Wimpey executives may have been fortuitous, but it also avoids too much speculation as to who is really taking over whom, as there is never any such thing as an equitable merger.
The chairman of Taylor Wimpey is Norman Askew, former chairman of Taylor Woodrow. Peter Redfern of Wimpey becomes, at 36, one of the youngest chief executives of a FTSE 100 company, with Sutcliffe UK chief executive.
"We are committed to growing the business from the right platforms and will have £1.5 billion a year to spend on land, with 500 active outlets by the end of the year and not simply a bigger land bank for the sake of it. We are not speculators, hoarding land. If we are ready to go, we go and half of our land has detailed planning" said Sutcliffe.
Wimpey lost out to Barratt in the battle for Wilson Bowden, but this merger propels Taylor Wimpey above both Barratt and Persimmon to the top of the new homes tree at around 22,000 UK completions a year with another 9,000 to add in the desperately ailing US market, as well as projects in Spain.
"The UK is our engine room for growth with a commitment to grow the margins."
Sutcliffe is very pleased to see housing at the Government top table. "There is a big affordability issue and a lack of land. Central Government, Local Government and commercial objectives have to be aligned. Every stakeholder needs to be involved and it requires bold action."
A quoted house builder as a commercial entity has responsibilities to customers, communities and shareholders, with the ultimate task of providing sustainable products that people want to buy, but frustrated because that provision is dictated by a local authority not necessarily sharing the same goals.
"We must make sure our own house is in order, with the right quantity and quality of homes and high levels of consumer satisfaction," said Sutcliffe.
He is acutely aware of the environmental agenda, especially with the merged company responsible for around 10 percent of the UK‚s targeted annual new homes output.
"We have got to find the right materials and build methodology without pushing prices further. There is no disputing the environmental importance, but it would be counter-productive to try and get there too fast when there is still much to learn and test."
Sutcliffe, 48, is conscious of the criticism that Œsuper-housebuilders‚ dominating the market will dim design innovation and restrict consumer choice.
"To an extent consolidation is driven by funds and it is an operational necessity to have a large land bank. But if as a result you build an amorphous product, customers will quickly reject it and business will suffer.‰
The consumer does not always want what the trendy architect thinks he wants. The four-bedroom detached property is demonised as an executive home‚ as if there is anything wrong with that. A lot of buyers want a four-bedroom home with a drive, a garage and a garden. It is called family housing and is rather important."
Taylor Woodrow's mixed-use knowledge will come in useful too, with sustainable residential, commercial and retail schemes clearly a big part of the future, says Sutcliffe.
"I see real value for us in our ability to compete for regeneration schemes. These are the risk and reward projects you need to take on if you aspire to grow."
If you thought the Taylor Woodrow George Wimpey merger was big, you should see the last one Sutcliffe was involved with. His background is in the oil business, working for Shell for most of his career. He was retail director for Shell in the UK before moving to Houston, Texas as head of their petrol stations in the US and latterly vice-president for Shell retail and was there at the time Shell merged with Texaco.
"That was a very good learning exercise. They were two different companies in the same sector, where culturally Taylor Woodrow and Wimpey are far more closely aligned."
His time in the US allowed him to tick off a few of those top 100 golf courses. Sutcliffe took his list from one compiled in 1990, when Pine Valley in New Jersey was number one.
"I've played Pine Valley. One I am still desperate to play in Royal Melbourne. I drove past the gates when I was at the Rugby World Cup in Australia in 2003, but did not have my clubs in the back. Careless," said Sutcliffe, who, while extremely happy and excited by the merged challenges ahead in the construction business, admits his dream job would be a golf correspondent.
Married with three children, Sutcliffe, who lives in Sussex, was amused to learn that a couple of magazine features on him at the time of the merger called him a Yorkshireman, when he is Liverpool born, although educated at Pudsey Grammar School and Leeds University.
"As you see from my background I am not a dyed-in-the-wool housebuilder, but there are people around me who are. There are less owner-drivers‚ now, touching every brick. You need to know how to run a big business and deliver the whole."
A mix of the two is surely the ideal, for passion and profit can go hand in hand. Sutcliffe is clearly a people person, believing very much in teamwork.
"There is no substitute for seeing people and sites and we have a lot of them!" Sutcliffe will be clocking up the miles and probably finds filling up with petrol more interesting than most. The jury is still out while this giant finds its big feet as a merged entity at arguably the most exciting and challenging time for housebuilding in a generation. Watch this space and as Taylor Wimpey's own new website says: 'our vision and values will appear here shortly.'
George Wimpey - A brief history
In 1880, George Wimpey established a stone working business in Hammersmith, London. George Wimpey and Company soon became a contractor for major building projects throughout London. In 1919, G W Mitchell purchased the company from the Wimpey family and in the 1920s started housebuilding.
As well as developing its own housing businesses in the UK, Australia and Canada, Wimpey acquired US housing business Morrison Homes in 1984.
In 1996, McLean Homes was acquired from Tarmac, followed by the purchase of Alfred McAlpine Homes in 2001. A year later George Wimpey bought Laing Homes.
Taylor Woodrow - A brief history
In 1921 Frank Taylor, aged 16, borrowed £100 to build two houses in Blackpool. Too young to form his own company, his uncle Jack Woodrow lent his name to the business and Taylor Woodrow was born. Frank Taylor made a 100% profit on his first venture.
In 1935 it became a limited company with a capital of £3 million and started building in the US. By 1954 Taylor Woodrow was running over 250 projects around the world. In 2001 the company acquired Bryant and two years later Wilson Connolly for £499 million, then the UK‚s largest housing deal.
First published in Show House Magazine November 2007.
The greatest care has been taken to ensure accuracy but some information contained within this article may have changed since it was first published.
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