Complex projects and long-term focus have put PM on top of world
Retaining independence key to award-winning company
Published 18/03/2010 | 05:00
AROUND the world in 80 days was once considered fast, but a tour of PM Group's Cork offices accomplishes the global circle at a speed that would put the famed book to shame.
Adorning PM's walls are colour pictures of massive developments stretching from Poland to China, encompassing everything from Dublin Airport's Pier D to a futuristic pharma project in India.
PM boss Pat McGrath describes each project with an almost paternal pride, beaming from ear to ear as he outlines PM's engineering, architecture and project management feats.
"We like to remind the employees here they're part of something much bigger," he says as he reluctantly tears himself away from the images.
Indeed they are. From an almost standing start in 2004, PM has developed a network of 20 global offices, including a recently established outpost in India. Overseas projects made up about half of PM's total revenue last year, and are expected to contribute 70pc of the group's income in 2010.
The international expansion is of far more than passing interest to the Irish employees. Upstairs, staff in the Cork office are working on an Abu Dhabi data centre. In Dublin, PM staff are working on a Saudi Arabian food plant.
"I'd say very shortly there could be a couple of hundred jobs in Ireland that wouldn't be there unless we had won work overseas," Mr McGrath says, reflecting on the fate of PM's peers, particularly those who sold up to international players during the boom.
With 75pc of the group owned by employees and shareholders, PM's key players also had many opportunities for a big payday in the Celtic Tiger years.
"Staying independent is what has saved our bacon," says Mr McGrath, who joined the company as employee number five in 1976.
"If we'd sold to an international firm, they'd only have wanted us for what was happening in Ireland, and we'd be a skeleton of what we are today."
Instead of reducing down to a "skeleton", PM employs 1,740 people, down only marginally from a peak of 1,800 in 2007. Some 960 of those workers continue to be based in Ireland, many of them working on international projects.
The group's resilience in the face of a construction collapse, which has seen scores of engineers, architects and project managers hit the dole queues, won national recognition last week when Mr McGrath's company scooped the overall prize in the Ulster Bank Business Achievers Awards.
The PM boss, though, is quick to point out the differences between his company and the other similar-sounding businesses that have been decimated by the economic collapse.
Founded back in 1973, PM began life offering high-level advice to multinationals coming to Ireland and later expanded into engineering, architecture and project management, all the while maintaining a focus on life sciences and other complex projects.
The building boom of the 2000s largely passed PM by -- "our sweet spot was always complex projects, we were never going to be able to compete on price for something like a shopping centre" -- and the company instead focused on developing enduring relationships with major clients.
"Our two biggest client sectors are multinationals and the State -- the good thing about those is you always get paid, eventually," adds Mr McGrath.
The nature of PM's business also means the group tends to gravitate towards projects that run for years rather than months. "Those types of project keep moving along whether you're in a boom or not," says Mr McGrath.
"These are long-term decisions people are making to build a hospital or a pharmaceutical plant, rather than short-term decisions to avail of some particular economic trend."
That long-term focus means PM's business depends on "mega economic trends" such as global demand for vaccines and healthcare, trends that are still overwhelmingly moving in the right direction.
"Most countries want to have a healthier population, so we need more vaccines," says Mr McGrath. "Even some of the emerging economies want to invest an enormous amount in new hospitals."
The nature of PM's business also made going overseas necessary progression since multi-nationals "like to work with other international firms".
"If they give you a major job in Ireland, they have to invest a huge amount of time and effort in teaching you, so if they're going to build a similar plant in China, they want to know you can follow them," he says.
"We realised we would lose market share at home if we weren't prepared to offer services to the multinationals in eastern Europe or Asia, or wherever."
The international push began in earnest in 2004, when PM could see that many of its multi-national clients were setting up new plants and facilities outside of Ireland. Since then, PM has built up a network of 20 offices dotted across the globe.
The most recent additions are Brussels and India, and Mr McGrath is keen to make head-way into the Chinese and US markets before the year is out. Against all that expansion, PM has jealously guarded its small company feel. Mr McGrath's office is the epitome of understatement; the 62 year old does his extensive business travel in the economy cabin and fights it out for a parking space with the rest of his staff.
"We're very ambitious, but we never wanted to lose the run of ourselves," he says, referring to the ethos of PM when it was founded.
Mr McGrath is also quick to point out that PM's business over the past few years hasn't all been plain-sailing, despite the expansion. Winning contracts takes mammoth effort and margins have gotten tighter, prompting a recent round of pay cuts across the group.
Sales for 2009 just about matched 2008's €250m level, but last year's after-tax profits were down about 8pc at €4.9m. Earnings in 2010 could be down as much as 20pc, Mr McGrath says, as the company invests heavily in overseas openings.
"You never like to see profits going down," he adds, "but if we get our cost base right and continue to push the boat out winning international projects, we'll benefit from the upswing."