Davidson Projects & Operations consultant Merryn Thomlinson continues her series of conversations with leading construction managers on the future of work within the building and property industry, and how we can prepare.
Hutchinson Builders is one of Australia’s largest privately owned builders, employing more than 1,400 people. Well-known across the Australian construction industry, Hutchinson Builders Chairman Scott Hutchinson sat down to discuss the Australian construction market and the challenges that we face and trends in the industry.
Can you tell me about your career pathway to date and how you came to be the Chairman of Hutchinson Builders?
I’m the fourth generation in my family to hold this position. I studied engineering, then I completed an MBA.
I was Managing Director from 1992 to 2002 and the business was getting bigger and bigger. We bought shares into a larger company about seven or eight years before I became the Chairman. We didn’t like that operation so we sold the shares and went back to being ourselves.
My father met our present Managing Director Greg Quinn at Master Builders and was really impressed by him. I remember he said to me ‘there’s a guy at Master Builders that could run BHP.’
I said that he sounded good and wanted to bring him in. After 10 years, I was starting to want to do other things. Dad resigned as Chairman, but remained a Director. I became Chairman and Greg became Managing Director and it has been very successful. I had no qualms about handing over, he has 10 times the capacity that I have.
What effect do you think technology will have on construction in the next 10 to 20 years?
We are largely into modular and off-site manufacturing. I’m sure 3D printing will have an effect.
People are trying to do steel buildings now, whereas traditionally we have worked predominately in concrete. There is a lot of teething problems changing from one major system to another and there is a lot of expertise built up in the previous technology, which means the next technology has to be a lot better before it takes over.
That is probably the same with any industry, but especially within construction. They are going to have to be a lot better at steel construction, before it takes over from concrete. That is just one example. It’s all steel in America and its all concrete here. This surprises me given that our processes and methodologies are usually the same.
Everyone is talking about modular, but at this stage it is only economically a good decision when you do it in the bush. In the city it doesn’t work. You have to do things quickly in the bush, and modular is a lot quicker.
We had three modular factories and we now have two. We are working to try and get them to work in the city. You will find a lot of people pushing modular will say it works in the city, but it doesn’t. However, it may end up doing so.
What trends do you see happening in the market at the moment?
It’s all residential at the moment. There is a bit of retail, but mainly residential. That’s across Sydney, Melbourne and Brisbane, but it’s got to end soon.
We don’t know what’s going to come past that, if anything.
What do you think we need to be doing today, to prepare for tomorrow?
It comes down to training and development. We have a massive training operation that Greg runs. It is a big cost to the business, but I think its good value for us because it helps us recruit people who are the best people to come into the construction industry. Especially women, as there is a very low uptake of women in construction.
It might be something to do with the culture or the image, but we are doing what we can in this area. We support the National Association of Women in Construction, we are their major sponsor for their awards. I manned a stand at Brisbane Boys College and St Aidan’s Anglican School, which was a girls and boys combined career night.
In the four years I was there, not one parent of a girl or girl approached my stand. This needs to change drastically.
Are there any innovations or new movements that our counterparts overseas are doing that we should be aware of?
We found Canada to be very close to Australia. New Zealand was a bit like Australia and Japan was different, but not that different. I have heard Singapore are making modular mandatory so that they don’t have as many concrete trucks clogging the cities.
Any innovation has to have real benefits before it sets in.
What do you wish you knew at the start of your career that you know now?
I think I should have gone into Quantity Surveying, rather than engineering. In the MBA, I did every human resource subject I could do and I came away with a lot of theoretical ideas, which was good.
Most importantly, I wished I found our Managing Director earlier on.
What do you look for in new recruits?
Attention to detail, ability, attitude and being able to get along with people.
The people who haven’t had on-site experience may struggle. Clever chippies are still the real ace in your pack. It’s all a matter of being able to do the micro and the macro. If you have on- site experience you can often do the micro, and then you have to learn the macro.
What are some of the big challenges facing your industry now?
Industrial relations is a bit of a challenge, but I think we handle that well. Greg has come from an industrial relations background from Master Builders and knows the priorities of the unions.
Holding and motivating staff is a big challenge for our industry.
We look after our people and try and recruit for life. Many of our staff members have been with the company for 10 or 20 years.
And in the next five years?
Retraining or trying to keep the best staff will be a challenge. But at this stage we are still motivating and attracting the right staff.
Margins seem to continuously becoming tighter, how has this changed from when you first joined the construction industry?
It hasn’t changed. It’s always been tight.
We are turning over $1.5 billion and making $20 million. Some of our competitors might be doing a little better as they are dabbling in engineering or doing their own developments, but that is further up the risk curve and you are competing with your clients.
We keep all of the profits in the company and that keeps us well capitalised to do the bigger jobs.
And how do you think they will change in the next 5-10 years?
I don’t think margins will change in the next 30 years, it’s just the way it is. There are very few barriers to entry. Nearly every client or organisation will give an undercapitalised builder a go, it does stop when a few go broke.
Then after a year or two, everyone forgets about the people who went broke and they are back to using undercapitalised builders who are risky. That’s just the way it goes. The sad thing is, the undercapitalised builders take out some really beautiful jobs when they go down.
What do you think the next generation of construction workers needs to be aware of and focus on to be successful?
I’ve got a lot of confidence in the next generation. They are certainly willing to get in and give it a go. You’ve got to give them authority and include them on decisions and empower them. If you do that, they react well.
Everybody says they have less desire to do repetitive work, but construction is not a repetitive job so that’s not really an issue here.
Its long hours, but it’s well paid. The difference between someone who is 95 per cent enthused and committed, as to someone who is 75 per cent enthused and committed is millions of dollars on a job. That’s the challenge as well.
The most important thing to be successful is to take responsibility, and if the responsibility is getting too much then you need to communicate. We are constantly trying to check in with our staff and make sure they are ok as sometimes people are going through things in their personal lives, which can really affect their work.
It’s our job to keep on top of that and ensure we have the right support available.
Merryn Thomlinson is a Consultant with Davidson Project & Operations and this is part of a series of interviews she is conducting on the future of the construction industry. Her last chat was with Pellicano’s Construction Manager Chris Nock.