Get a handle on challenges and focus on the solutions
Chris Kilpatrick, having brought his firm through the recession, is a role model for others whose companies may be in difficulty
Published 27/10/2013 | 01:55
THE dramatic downturn in the construction sector has sadly led to the closure of many building and building supply firms throughout Ireland
One company, however, that has successfully managed to survive the challenges of recent years is KCC Architectural Ltd. With offices in Dublin, Cork, Belfast, London, Scotland and Qatar, KCC Architectural supplies and installs a wide range of architectural products including doors and door handles, automatic door entry systems and electronic swipe card systems used in modern hotel bedrooms. In addition, the company supplies external building facades, internal wall partitions and stainless steel products such as handrails, balustrades and balconies.
While turnover has dropped significantly from the €30m achieved in 2007, the business is back in growth mode. Annual sales revenues will exceed €15m this year, and with 105 staff the company remains a significant employer.
As the company's managing director Chris Kilpatrick takes me on a tour of his expansive headquarters in Ballymount, Dublin, I am keen to learn how he successfully surmounted the challenges that have led to the demise of so many other companies in the sector.
It soon becomes apparent, as I listen to his story, that it has been his resilience and tenacity, as well as his decision to diversify into new products and new markets, that has enabled him to not only survive, but re-emerge, leaner and more focused than ever.
Chris grew up in Kilmacud, in Dublin. Having studied construction at Bolton Street College in the city, he got his first job as a quantity surveyor with leading building firm John Paul Construction. In 1984, when the country was again hit by recession, Chris, like many others at the time, was forced to leave Ireland in search of work.
He was lucky to secure a good job with a US construction firm – but the position came with one major drawback: it was based in Riyadh, in the Middle East.
"While I loved the job and the region, it wasn't an easy time for me personally as I was married and had to leave my wife and three-month-old baby girl behind in Ireland," Chris explains.
"It was different too, back then. We didn't have Skype or mobile phones, like we have now. We had to rely on letters and the odd phone call to keep in touch."
He did, however, gain valuable experience working on a wide range of building projects including the construction of the Brazilian embassy and Riyadh Zoo.
It was, however, a chance meeting with a man who sat next to him on a plane trip home that presented Chris with the perfect opportunity to return to Ireland.
The man turned out to be David Whitworth, the group MD of Laidlaw Ltd, a UK supplier of door products and security systems, who had set up a branch in Ireland. By the end of the plane journey, Chris had been invited to apply for the position of general manager of the business.
"At the time I joined the company, there were only five staff," explains Chris.
He quickly focused on growing the business, opening an office in Belfast in an effort to break into the Northern Ireland market.
In 1998, Chris led a management buyout that would see him take over the Irish business. "We bought at a great time," recalls Chris.
"The construction sector was really beginning to take off in Ireland."
He opened offices in Cork, Galway and Mullingar and steadily grew the company's market share nationally.
However, the rapid demise of the construction sector from 2007 onwards was something he hadn't envisaged.
"We were really caught off guard," Chris admits. "Because of all the talk at the time of a soft landing, we weren't expecting the scale of the downturn that transpired."
By 2009, Chris and his team at KCC were in no doubt about the severity and extent of the crash.
"We knew then that we needed to totally rethink our strategy if we were going to have any chance of surviving," he explains.
"We immediately implemented a radical redundancy and cost-cutting programme, reducing our employment levels by more than half – from 190 to around 85," he explains.
He took the difficult decision to close the Galway and Mullingar offices.
As luck would have it, he was, at the same time, studying for a Master's degree in Management through the Irish Management Institute and Trinity College, Dublin. His own business would become his most important college project and case study.
On the course, he studied Ansoff's growth model for businesses, which outlined a set of possible strategies to help companies grow, and he immediately began to apply these strategies in his own business.
These involved such steps as market penetration, where the company would focus, initially, on selling as much of its existing product range into its existing market.
The next strategy, called market expansion, was focused on the company selling its existing products into a new market(s).
The third strategy, product expansion, involved introducing new products into existing markets; and finally, diversification, which centred on introducing new products or services into new or existing markets.
"That's more or less exactly what we did," explains Chris. "For example, as part of our product expansion strategy, we set up a new service and maintenance division where we now service and maintain not only our own, but other manufacturers' products."
This new service division proved to be a great move and this year will generate a turnover of almost €2m.
Like many other supply firms in the construction sector during the crash, the company was hit with a series of bad debts, amounting to almost €3m, as a result of non-payment by large developers and building contractors.
"For a time, we were literally clinging on for sheer survival," admits Chris. "We realised then that, if we were going to survive, we needed to implement a radical change programme within the business itself as well as move away from our over-dependence on the Irish market."
Chris turned his attention to a market he knew well – the Middle East. Visiting a number of locations there, he opted to open an office in Qatar, in January 2011, and slowly set about building a reputation and a network of contacts.
"It took 12 months before we landed key projects – such as a €1m contract to supply door hardware and access control systems for the Aspeter Hospital and the Qatar Airways Crew Accommodation Village in Doha," he tells me.
More recently, the company won €2m worth of contracts there including the Al-Sadd Sports Stadium, the Lusail Sports Stadium and the prestigious Kempinsky Hotel.
"It's going really well for us now. We have three full-time staff on the ground there and I visit the region every month or so," explains Chris.
In 2012, he opened an office in London, and shortly afterwards landed a number of impressive projects including the supply and installation of glazing to a number of large-scale office developments, and the provision of door sets and access control systems to the communications building that was used for the London Olympics.
Does he now see light at the end of the tunnel?
"Yes, we are beginning to see green shoots now and I think at last we are beginning to emerge from the recession," he tells me positively.
He adds: "We can tell by the increase in the number of tenders and specifications we are submitting for proposed new projects."
Chris's focus now is on continuing to grow overseas business until such time as the Irish market recovers.
"Our business model is one that takes time to develop in a new country because there's a lead-in time where our products have to, firstly, be specified by the architects in the plans – and that is usually a long time before work actually starts on the site," Chris explains.
He is also exploring the possibility of opening an office in Kuwait where large-scale construction works are under way and where there is an increased desire among locals for European-type products.
With many players in the architectural supplies business, what makes his bus- iness unique?
"Our unique approach is that we offer a one-stop-shop solution to architects and contractors, where we do everything from design and specification right through to supply, installation and maintenance," he explains.
"That way we eliminate the need for contractors and architects to have to manage a myriad suppliers and teams on site."
As a result of the challenges the company has faced, together with what he learned during his studies, Chris and his team have worked hard to create a different structure and culture within the business.
"We have broken each division into distinct business units with each having their own teams, their own business development manager and their own budgets. This approach promotes increased ownership among staff as well as enhancing their levels of autonomy and responsibility," Chris says.
"Our biggest lesson has been to realise that the world is a big place and companies like ourselves need to see that we can compete in that global market place," he says.
Chris Kilpatrick is certainly a visionary. He has succeeded in marrying the theory and practice of good leadership and strong management in his company.
He has been able to stand back, see the bigger picture and define a strategic roadmap to take his company in a new direction.
He has been smart enough and courageous enough to find new opportunities in new markets. And he has shown that he is not afraid to admit when things are not working and move to close them down and quickly move on.
His story, and his experience, act as a valuable role model for others who are facing challenges in their own businesses and are wondering whether to give up or to fight on. Chris has decided to fight on. And having met him, and witnessed his focus and steely determination, I have no doubt but that it's a fight he will win.
Chris and his team at KCC look to have weathered that storm and are now focused on a growth strategy.