Firm builds its defences against credit crunch

Apr 11 2008 by Chris Knox, The Journal

A NEWCASTLE construction firm is to carry out a further extension to the new £17.3m Bishop Auckland College as it takes steps to widen its portfolio of contracts in an effort to avoid the worst effects of the credit crunch.

Surgo Construction will add 48,000sq ft to the 91,000sq ft building to house a technology centre for construction students and an art, design, music and performing arts centre.

As well as additional car parking, the company will also build extra exhibition space and a multimedia centre.

The first phase of the build, completed last year, saw Surgo construct the main structure for the three-storey college, which now caters for some 10,000 students.

Surgo director Jeff Alexander said: “During phase one we faced a number of challenges attributable, in the main, to working around the original college which remained fully operational.

“Whilst these challenges remain, I am confident that this phase will be equally successful because of the management tools we have developed at the site.”

Surgo, which employs 200 staff and changed its name from Bowey Construction in 2002 after a management buyout, believes it can increase turnover from £50m to £65m this year.

It says it now has a more balanced portfolio and a relatively small number of contracts in private housing, a sector badly affected by the credit crunch.

In the past decade Surgo has been responsible for completing more than 50 education projects in the North East. These have included small refurbishments, extensions, new build schools, colleges and academies.

Continuing projects include construction of the £31m Bede Academy in Blyth, Northumberland, and the £20m Excelsior Academy in Scotswood, Newcastle.

The firm admits it could find it harder to secure educational projects in the future if the Government tightens its national frameworks in favour of national contractors, but remains confident it can maintain a turnover of about £65m.

It is also in the middle of the £8m facelift of Whitley Bay Playhouse as well as the extensive refurbishment of the Sanofi-Aventis pharmaceutical plant at Fawdon, Newcastle, as part of its commercial contracts.

Mr Alexander said: “Things could get tougher if the Government places more resources in national contractors. However, we believe that our experience and reputation in the education sector will enable us to remain active in this area.

“In addition, we are keen to expand our activates in other areas, such as commercial development, as any construction firm putting their eggs into one basket at the moment could run into difficulties.”