Last year saw building contractors Esh Holdings move up to 44 in The Journal's Top 200 league of the biggest companies in the North East and it is now putting in place measures to ensure that this growth can continue. Christopher Knox talks to chief executive Brian Manning about his strategy and Mark Webster, assurance partner at Top 200 sponsor PwC, gives his view of the company's success.

WITH its headquarters just metres away from one of its major housing developments and even closer to its plant yard, you get the feeling that Esh is a company that likes to keep a watchful eye on its business.

While other contractors have fallen victim to the downturn, most notably Rok and Connaught, Esh has managed to flourish, thanks to the tight control of its finances and a progressive move into new markets.

County Durham firm Esh, which employs around 1,000 workers, recorded a turnover of £134m in 2009, with a pre-tax profit of £300,000, which represented a quick recovery for the firm after the collapse of the property market saw it announce a pre-tax loss of £6.4m for the previous year.

Rather than sit tight and try to ride out the storm, the firm has been pro-active in its survival strategy, with the company opening offices in Leeds and Kendal to help Esh become a national brand.

With only three years under its belt, the Leeds office of construction arm Lumsden and Carroll is already contributing £8m to the group’s overall turnover.

The company is also placing much more focus on the profitable care home sector and is now heading up four major developments in London, Northampton, Wolverhampton and Kettering, in addition to a number of smaller projects.

Chief executive Brian Manning said: “We have always had a diverse business and are widespread across the construction sector.

“During mid-2009 we launched our care home business, which started as Dunelm National Projects, but which we are set to rename as Esh National Projects.

“The care home side made between £13m and £14m last year has helped to make up for the ground we have lost in other areas of the business.

“We now hope to bring in £20m this year as a result of care home work.”

Creating a stronger national identity is a key part of Mr Manning’s strategy for the business.

Thus far the company has traded many of its 15 brands as separate limited companies. These include private housing arm Dunelm Homes, maintenance operations Wilkinson and commercial build and refurbishment arm Stephen Easten.

As a way if growing the Esh brand beyond the North East, the firm is set to bring the majority of its operations under the umbrella of Esh Construction, with each business acting as a brand rather than heading up their own set of accounts.

The firm had forecasted a £165m turnover for 2010 and is now budgeting for a £170m turnover this year. More importantly, the firm is expecting its pre-tax profits to return to seven-digit figures next year, with a forecasted £1m.

However, Manning is well aware that the group is a long way from its heyday in 2007, when it recorded a £10.2m pre-tax profit. He said: “The housebuilding side of things is picking up. Although you have to consider that we built 110 units last year compared with 250 in our heyday.

“We certainly need to do better in this area, as we would need to shed some of our landbank if we were to continue at this level.

“However, our expansion into new areas should help to mitigate these factors and help us keep on track.”

A difficult market has certainly led to some difficult decisions.

As well as cutting back its workforce from 1,300 in 2007, the firm’s board of directors also took the unusual decision to take a 30% pay cut over two years as a way of setting an example to their staff, as well as helping to support a dented balance sheet.

Manning said: “While most directors would link their bonuses to profitability, we thought it was just as important to link our pay to the health of the business.

“It was important that we set an example to our staff as well as let them know how serious we were about the difficult conditions.

“The way I see it, we were sailing in Mediterranean waters for a number for years and now we have found ourselves in Icelandic waters.

“To deal with the considerable chill, we have had to look at every possible way in which we can cut back on spending.

“I think our staff responded to the fact that we could take a hit like that.”

Although the company is in a period of consolidation, it still has an eye on the future of the industry, so much so that it is due to have £40,000 of solar panels installed on the roof of its headquarters in support of its renewable energy services.

Manning said: “The renewables side of the business has been very slow as people come to terms with the technology that’s out there.

“However, we are very much in support of the sector and are fitting solar PV to our offices so we can benefit from the feed-in tariff model ourselves.”