Case Study 3: Northern Construction

Northern Construction was established nearly seventy years ago in the North of England. The company origins lied in contracting for small works for the steel industry. Construction is one of several businesses within a larger group and accounts for £113 million of the annual group turnover of £130 million. Now Northern sees themselves as an established leader in the waste management sector.

The company was described to be well-positioned to move into waste management as a result of its track record in the process industry. Both sectors have similar work procedures, liability requirements, and rigorous health and safety standards. In particular, Northern sought to partner with overseas waste technology consultants who were actively seeking local and reliable construction partners. Northern has established a partnering company with one technology consultant, and also were involved in several joint venture schemes with others. This enabled them to position themselves as leading contenders for future work within the sector. Northern's reputation within the process sector also enabled them to sign exclusivity agreements with key technology consultants. However, the company's annual turnover has fluctuated in recent years. Within the waste sector, it often took 3-4 years development work before a project began on site. This inevitably caused Northern consistency problems regarding turnover, workflow, and overheads. Improving the company's regional business was singled out as one potential solution. Whilst Northern continually focuses on large complex projects in the targeted specialist sectors, the company also has to focus on its regional business for the growth of smaller projects. In particular, Northern operates on a centralised-management model. All operations are run centrally from head office under the direct control of the group directors. Northern's three existing local offices had not been accorded any autonomy and had no real presence in local networks. Developing a regionally-based business model was therefore suggested as Northern's medium-term plan for increasing their penetration in local markets (see Figure 3).

Case Study 3
 
Figure 3: Northern's Evolving Business Structure