Tough times for the service industry

Aug 21 2009 By Andrew Hebden, The Journal

IT is quite difficult to characterise briefly the fortunes of a sector as diverse as the businesses represented in this section of the North East Most
Influential 2009.

Whilst all of the individuals work in the service sector in some form, the businesses can be providing services as broad as recruitment consultancy and healthcare. In general, however, the tough economic climate is being felt far and wide.

The year has marked an end of an era for Lorna Moran’s successful NRG recruitment business, which delisted after 11 years on the stock exchange. The company listed on the market at £1.08 a share and reached a peak of £2.20 in 2005, but, in common with most of its peers, its share price dropped as the market has fallen in the last year.

Announcing the decision to delist, Ms Moran said: “It’s been a great 11 years, but at this moment there is no appetite for small market cap or recruitment companies, and the cost of being listed – at around £250,000 a year – means it is not good value for money.”

It has been an eventful year for the other plc featured in this section – Darlington’s Southern Cross. The UK’s largest provider of care homes saw its share price collapse after slipping into the red at the end of 2008. Its problems stemmed from July of that year, when it was forced to renegotiate its finances and alert over its profits after lower than expected occupancy rates.

In the wake of the problems, the firm announced the appointment of a new chief executive to replace outgoing boss Bill Colvin. Jamie Buchan, who started work at the company in January, is one of several new faces featured in this sector of the Most Influential for the first time this year.

Another new face is that of Matthew Lumsden. His firm, TNEI, is a fast-growing energy consultancy business which, since its launch in 1995, has emerged as one of the most dynamic in its sector and now boasts offices in Manchester and Woking as well as Newcastle.

TNEI recently launched a new company, headed up by Mr Lumsden, known as Future Transport Systems, which is pioneering the introduction of sustainable transport across the UK having won a number of major contracts to introduce electric vehicles and their charging infrastructure to Britain’s roads. The
company has an important part to play in wake of the region being named by the Government as the UK’s first Low Carbon Economic Area.

Another business well in tune with the environmental agenda is Newcastle-based green support services plc eaga, which has continued to see its star rise during 2009 with a succession of impressive contract wins.

The year has seen a change at the top of eaga with chief executive John Clough stepping down due to ill health. Mr Clough, a former North East Business Executive of the Year, has been one of the region’s most high-profile and successful business leaders, having built eaga into a £700m-plus business with 4,500 staff.

Mr Clough’s place in the Most Influential listing is taken by his successor and the group’s former commercial director Drew Johnson.