A strategy of export-led growth would make many British companies stronger.
The recession was a painful reminder that we live on an island with a relatively small economy and limited market; businesses need to be diverse and able to adapt to new markets.
UK construction companies risk not being entrepreneurial enough.
They must be more willing to operate in those countries whose economies are growing fast but are politically and economically unstable, particularly in Africa and the Middle East. Too often they target more developed markets that are already saturated with competition.
Iraqi construction example
Many of the unstable markets in the EMEA region have the greatest need for assistance with building infrastructure and associated services.
For example, RSK Group works in Iraq, where there’s so much rebuilding to be done.
Since 2013, we’ve had an office in Basra’s Iraq Energy City, working for energy clients on soil remediation work.
“Of course there are security concerns. But it is possible to go into areas such as southern Iraq prudently and productively”
The oil fields in the country have suffered from a lack of investment in recent decades, and as a result the use of outdated technology has brought about extensive pollution.
There are opportunities for companies prepared to assist in cleaning up the desert, especially for those with innovative solutions willing to make some investment.
That frontier markets are so challenging is the very thing that makes them so useful for companies.
They allow employees to gain valuable experience they wouldn’t get at home, sharpening skills and making the company more successful.
Safety first with global ventures
Companies need to become better at calibrating risks. Of course, security of staff must be paramount.
But this needs to go with a realistic appraisal of the risks, rather than a blanket refusal to go to entire regions because of perceived dangers.
I have had people ask whether RSK is reckless to be working in Iraq. Of course there are security concerns. But it is possible to go into areas such as southern Iraq prudently and productively.
We examine the local conditions on the ground beforehand to ensure our people are safe.
In higher-risk locations, security specialists accompany us all. We only work in locations where we feel we understand the risks and can therefore work safely.
I believe that if the chief executive is not prepared to go there, nobody else in the company should have to.
“The global construction industry is a $7.5tn market, set to increase to $12.7tn by 2020”
When sizing up opportunities abroad, UK firms should start by talking to their customers about their needs.
Our directors spend time in the countries where we want to work, and we make our decisions based on first-hand experience. This isn’t something that can be outsourced to consultants.
They should then ask themselves searching questions about whether opportunities abroad will leave them over-stretched, or jeopardise their ability to satisfy clients.
Most importantly, new markets require energy and persistence; navigating unique legal and cultural rules can present challenges.
Negotiating a path through the red tape can be exhausting. To succeed, you need to view hurdles as there to be overcome, rather than an impediment to success.
Of course, not all risks are worth taking. Political instability can jeopardise the ability to work long term in an area, making it impossible to achieve a return on investment.
But you cannot grow without taking risks, and risks have to be weighed up against the potential return.
The global construction industry is a $7.5tn market, set to increase to $12.7tn by 2020.
The UK currently has the 10th biggest share.
But the sector can’t be complacent. British firms are held in high regard around the world, but competition is rising across the board and the global market is getting tougher.
There is a whole world of opportunity out there – but British companies need to fight for it.
Alan Ryder is the founder and CEO of RSK Group
Original article published on the Construction News website (10 November, 2015).