Northumberland construction company Merit says it is starting to reap the rewards of investment in a new business strategy which initially impacted its turnover and profit.
The Cramlington based engineering and construction specialist – named company of the year at the North East Business Awards in 2018 – brought in a design and manufacture strategy at the start of this year, as part of plans to secure larger contracts against global competition and deliver long term growth for the business.
The strategy involves switching to Pre-Assembled Modules (Pams) for virtually all its projects, which, it says, reduces the construction programme and costs.
The modules are precision-engineered and tested before being installed on site as part of the new system.
Accounts have now been published for the year ending March 31 2019, showing a 28% fall in turnover from £47.35m to £37.03m, and a drop in operating profit, from £3.12m to £1.74m.
But while Merit directors say the cost of the strategic investment contributed to the reduction against the previous, record year it said the strategy is already delivering new business.
Plans are also in place for the company to move to new offices in Cramlington next year, which will double the size of the firm’s space to accommodate its plans for continued growth.
Tony Wells, managing director at Merit said: “We have made a significant investment in the year as part of a strategy that positions us at the forefront of innovation in a market that is looking for sustainable, cost-efficient solutions that meet the most stringent quality standards.
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“While this has had a short term impact on turnover, our leadership in new skills and technology now enables us to compete successfully for larger contracts against global competition and we have a strong sales pipeline.
“We expect to continue this success in new and emerging markets such as cell gene therapy and innovative battery technologies, where we have now developed extremely strong reference credentials on a number of successful projects.”
The new strategy has also led to it bypassing the traditional 海角视频 construction industry contractor model, to remove all tier 2 contractors from all of its projects.
The accounts say: “This allows us as a tier one contractor to better control the delivery of projects in a more cost effective and efficient manner and provides benefits to our clients, through greater certainty and transparency of delivery as well as lower costs.
“These changes have not been at the expense of our own profitability as this process allows a fair sharing of benefits for us,as well as our clients.”
The accounts also highlight how Merit is working hard to be at the forefront of zero carbon design, which is leading to big contract wins.
The accounts detail a £50m contract win against global competition, but says the start date has frecently been deferred, and that it has also won a number of other ‘“very large” projects, but that it is waiting for internal funding approval before it can start work.
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The accounts add: “In the future we believe this will see us winning larger projects, particularly in new and emerging markets such as cell gene therapy and new innovative battery techniques.
“So whilst 2019 shows a fall in our turnover this has been necessary to establish the new strategy whilst setting the business on a path for growth over the next decade.
“We believe in the long term our future work will increase dramatically, particularly once our new approach is readily accepted in more traditional projects.”