Wednesday 23 January 2019

Designing a solid blueprint for success

Former Dublin hurler Michael Stone didn't let a recession block his way to his ambitious goals

Michael Stone, group chief executive, the Designer Group Picture by David Conachy
Michael Stone, group chief executive, the Designer Group Picture by David Conachy

Fearghal O'Connor

It is a strange experience to walk around the proposed new Quad building on DIT's Grangegorman campus, knowing that it does not really exist.

Michael Stone's powerful north Dublin voice comes booming from the real world beyond the 3D virtual reality headset. "This is the future of the construction sector," says the chief executive of the Designer Group with obvious pride.

All around is the proposed building, only missing the students that will throng it when it is finally built in Dublin 7, a few miles from where we stand in the company's Blanchardstown office.

"Point the controller to wherever you want to go," he says, from beyond the all-enveloping blueprints.

Stone's rapidly-expanding mechanical and electrical contracting company is involved in many of the highest profile construction jobs ongoing in Ireland: Capital Dock, the ESB's headquarters, the Leinster House upgrade and a huge just-completed project for Bristol-Myers Squibb.

For Stone, innovation and international expansion were the only sensible ways for both Designer Group and the deeply-damaged construction sector to react after the recession.

"The industry needs to stop worrying about what other people are going to do," says Stone, a former Construction Industry Federation president. "I'm sick of hearing people in the industry saying 'The budget wasn't good enough' and 'We need more help'. What about helping yourself?"

As part of its innovation drive, Designer Group has installed the six-metre by seven-metre curved virtual reality screen in its impressive new Blanchardstown headquarters.

"Our 3D designers design the job in-house and we can bring a client in and walk them through it," says Stone. "They can see and stand in their office or laboratory or hospital surgery and see how it is going to look and change it if needs be."

The approach appears to be working and business has boomed. Turnover will hit €160m this year, with a strategy of international expansion that will see it grow to €350m within three years. Over the past two years staff numbers have grown from 400 to 750, necessitating a move to the new headquarters in Blanchardstown earlier this year.

As if to remind visitors that the company is in fact an electrical and mechanical contractor, a swathe of the floor in the gleaming reception area is glass, revealing the neat lines of power, plumbing and broadband circuits beneath.

"I wanted our clients to be able to see exactly what we do when they walk in," says Stone.

But in many other ways the Blanchardstown office feels like the home of a multinational tech firm rather than an Irish construction company: open plan, full of natural light, with a pool table, an Xbox and a live map showing a large fleet of vans moving around the city, live status updates from building sites across the city and further afield.

"It is all about balancing our risk," says Stone, of his embrace of innovation. "We can never allow what happened to us in the recession happen again. In 2006, 98pc of our business was Irish. We lost 85pc of our business in the two years between 2008 and 2010. If we hadn't got business in the UK, we wouldn't have survived."

It would have been a sad end to a dream that began when Stone left ESB in 1992 aged just 24. At the time he was part of a Dublin hurling team that threatened but never made a breakthrough. But the lure of his own business was too hard to resist.

"If I'd stayed another couple of years it probably would have become a job for life. But the opportunity was there and I'm very ambitious. I love work. A semi-state body was probably a bit restrictive for me. I wanted that feeling of being my own boss. I had just got married and not long afterwards my first child was born. If I had left it until after that I would have been too afraid."

But leave he did. He began to teach himself the basics of doing business to add to the electrical skills he had acquired at ESB. Before he knew it he had 10 people working for him. For 16 years he enjoyed continuous growth.

"And then bang! In the space of six months we had two or three builders go wallop, who took us for millions of euros. We had €40m or €50m worth of work stopped. Just stopped. That was frightening. It scared the living daylights out of me."

With business almost non-existent in Ireland, he began a year-long course with Enterprise Ireland to learn how to internationalise his business.

"I had always kept my problems to myself. But the biggest thing I learned on that course was that everyone was facing the exact same problems as I was. Sometimes there was no solution, but just to hear that you were not the only one was a great comfort," he says.

"Coming back on the plane from the UK in the early days when we were finding it very tough there and things were bad here was demoralising. What kept me going were the people who had worked with me for 20 years and the fact that their children were now looking for work too. I felt a responsibility to keep driving on."

As part of the company's growth plan, Stone hired former Dalkia boss and Dublin football manager Pat Gilroy as Designer Group's Irish managing director. Gilroy had taken over the Dubs at a low moment, reinvented the team's approach and famously won the All-Ireland in 2011 - year zero for a remarkable ongoing run of success.

"Pat has unbelievable energy," says Stone. "He has one of the brightest minds I've ever come across. He is also a fantastic motivator and I can see why he was such a winner with the football. His big thing is meritocracy and promoting people on the basis of their talents and what they have done."

In recent weeks, Gilroy came to him to say he was considering taking on the management of the Dublin hurling team, on top of the 14-hour days he puts in at Designer Group.

"My selfish thought was 'how is this going to impact the business?'. But this man works a 14- or 15-hour day and his mind never stops. So for him to channel some of that energy into something else is probably a good thing. It would be some achievement if he brought the Liam MacCarthy Cup back to Dublin and I think he can do it. Nothing is beyond Pat. I haven't seen him do anything he has failed at since I've known him. He never has a negative thought and he really believes he can do this. Second place is not good enough for Pat."

Now, every Monday morning, Gilroy expects his managers to outline three key goals for the week and for them to ask the same of their subordinates. Everything is recorded, tracked and analysed to see what is working. It's the type of embrace of individual and collective responsibility that wins All-Ireland titles and is now helping to drive Designer Group's rapid expansion, says Stone.

"Pat has always been incredibly good at analysing what is happening on a pitch. It is the same here. He picks up very quickly on what people are doing and not doing and where a tweak is needed. Like a cornerback who misses a few tackles, people themselves know if they are not performing. But the key is to identify it, sit down with them and see how you can help and support them."

Back in the virtual reality room, the image on the screen suddenly changes. Grangegorman is replaced by what looks like a far less impressive series of shipping containers. It is, in fact, the plans for a new €19m high-tech brewery that Designer Group is building for Diageo in Kenya.

The company worked on Diageo's new Dublin brewery and was asked for advice on the unique challenges faced in Kenya. Stone's designers came up with a plan: don't build the brewery in Africa.

Instead, they will build up to 80pc of the brewery inside specially designed shipping containers here in Dublin. The containers will be assembled into a brewery on arrival in Kenya, perhaps the world's first plug-and-play brewery and an example of how the company is growing its global footprint.

"In 2017, we've passed the 50pc threshold for business outside Ireland," says Stone. "By 2020, the plan is for 30pc business in Ireland, 30pc in the UK, 20pc in the US and 20pc in Europe and Africa."

The company has just purchased an energy-consultancy business in the US, with plans to focus on building biomass power stations. But for now, the key international market remains the UK and Stone expects to do €65m worth of business there this year alone. He believes that Brexit - as well as the uncertainty created by Trump - is creating more of a drag on business in Ireland than it is in Britain.

"FDI business is coming under pressure," he says. "There are not as many enquiries in the second half of the year. There is a nervousness out there that I am picking up talking to clients and friends in the industry. It's different in the UK. The economy is so big that they can drive on. For example, last month they announced the Heathrow framework, an investment of £2.5bn (€2.8bn) in Heathrow alone. I would love to see the Irish Government making this type of investment in infrastructure. It would help bring some certainty."

Later, as we drive back into town and pass through Dublin's north inner city, Stone talks about how much he loved growing up here and how it shaped his no-nonsense personality. He is passionate about the area and shakes his head as he points out a notorious street where young men stand openly dealing drugs. But, he says, there are many good things happening too. He is now chairman of the north-eastern city regeneration project and had spent the previous evening helping out at a family friendly pre-Halloween bonfire.

He has also established a link with his old school, close to Grangegorman, to take a batch of students each year for Designer Group's training academy. It currently has 163 electrical and mechanical apprentices. "I want every one of them to get the same experience as I had going through ESB," he says.

"The good companies in this industry, the ones with the best health and safety records for example, are the ones that are investing in training," he says.

After being stung during the recession, Stone is now very careful who he works for and generally only takes work with big companies with big balance sheets, he says. Key commercial clients in Ireland include Kennedy Wilson, Hibernia REIT, Irish Life, Michael O'Flynn and Blackstone.

"Thankfully, we haven't had a bad debt in five years. These companies understand the importance of paying people on time. It's a partnership approach. They push you hard but you do it because these guys are good, they're fair and they pay you. If you deliver for them, they give you the work."

Under no circumstances would he now do business with a company that was conducting its business in the sort of haphazard manner that was so prevalent during the Celtic Tiger.

"I'm not prepared to take that risk," he says. "I turn down work because of that. You have to learn lessons in life and I will never let that happen to us again."

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