Rebuilding the Business 1986 - 1994 - Abigroup

More documents

Recommendations

Info

REMEMBER... • On 23 February, the first mobile phone call in Australia is made. • The Simpsons cartoon first appears on The Tracy Ullman Show. • Aretha Franklin becomes the first woman inducted into the Rock and Roll Hall of Fame. Meanwhile, the Irish rock band U2 releases their studio album The Joshua Tree. Opposite Page: John Cassidy, 2010. Top: Sydney SuperDome under construction, 1998. Middle: F3 Freeway under construction. Above: John Cassidy, 1987. Most people would baulk at that level of financial difficulty and strategic uncertainty, but John saw opportunities. ‘I had a good look at it and decided to form a buy-out group, mainly from within the management, to see if we could take over control from Lee Ming Tee and really focus our attentions on the core business of civil engineering and building. I formed a company called Vercot in which my wife and I were the major shareholder and also involved were Clive Austin, Darrell Hendry, Brian Allen and Norm Reich. We offered Enacon [Lee Ming] one cent a share and by mid-1988 the deal was done.’ Abignano Ltd’s name was changed to Abigroup Ltd and the real work of turning the company around began. ‘The company had 126 employees and a turnover of $126 million. Vercot acquired all the assets (though the plant and equipment was ageing) but we also inherited some $76 million in debt. Vercot was supported by the (then) State Bank of NSW. Darrell and I spent a lot of time convincing the banks that we were a viable operation. Enacon also took Abignano’s Thos Clark business in the buyout deal, which gave us some money, and we pursued our contractual claims through the courts. There were some clients who delayed or stopped paying us because they thought we would go out of business, but we fought for our entitlements. I took some hard decisions in developing and refocusing the management team and Darrell focussed on the administrative and financial side of things. There was no time for niceties, but communicating to staff was easy because they wanted success and they were invigorated by the new purpose and direction. I also made a point of remembering everyone’s name and their kids’ names – it’s a small thing but we were a tight-knit group and this family approach really helped. We eventually offered shares to the staff, too, and most of them bought. We were all in it together. Meanwhile, we concentrated on winning blue chip and government work because we knew they’d pay us. We settled most of the outstanding claims and slowly, we started clawing our way out of the hole.’ As a symbol of the new beginning, John and his team also decided it was time to change the name of the business. ‘Jim [Abignano] had moved on, Enacon was gone and the industry needed to know that this was a new start – a new dawn. Out of respect for Jim, we didn’t want to move too far from the Abignano name, and we’d generally been known as Abi’s anyway. So we kept the stylised A and Abi in blue, then just added the group part. We didn’t have money for consultants, so we just did it ourselves in my office. We put the new Abigroup signage all over our equipment and sites and the word started getting around. We weren’t an entirely new business, but it was a new beginning.’ But not everyone in the industry was happy with the changes afoot. ‘There was a lot of opposition from competitors when we started to get back on track and bidding for bigger jobs, and they definitely would have preferred for us to remain on our knees – it’s a competitive industry.’ Innovation has always been a hallmark of Abigroup’s success, and John has an interesting take on how this culture has evolved. ‘Innovation is a requirement of good business because it can save time and improve efficiency. But innovation comes from people within the company – people on the jobs. If you sit with say a bulldozer driver over a beer in a pub, they’ll tell you what they think can be done better. I do wonder how much business growth and new ideas have come about over a cold one after work!’ Many people consider winning the M2 project the turning point that finally got Abigroup out of financial trouble, but John believes two earlier projects laid the foundation. ‘The first one was the F3 in 1989. We were doing $5 million to $6 million jobs before then, but that one jumped us up to $43 million. Then we won the Terrey Hills Golf Club job in 1991 where we built the clubhouse and did the earthworks for the course. It was a good job financially, but the big thing was the relationship it helped us forge with Obayashi in Japan and they were vital to us winning and succeeding with the M2 later on. We did a great, profitable job for them without even signing a contract. After that Darrell 51 REBUILDING THE BUSINESS JOHN CASSIDY
and I travelled to Japan to meet Obayashi’s Chairman and senior staff and they asked if there was anything else they could do for us in Australia - I said that we needed a $500 million bank guarantee for the M2 job. Over another handshake, the deal was done and we successfully tendered in Joint Venture for the M2, which ended up earning them $60 million and putting us on the map.’ After the M2 the next big thing for Abigroup was the 2000 Sydney Olympics in which the company secured six contracts including the building of the prestigious Sydney SuperDome for the basketball and gymnastics. John said the pressures on getting the venues ready on time were immense. ‘We did a lot of construction for the Olympics – hockey, tennis, roads, water features – but the main project was the SuperDome because it was a complex design, construct and operate job and there were so many obstacles to us reaching the Olympic opening deadline. For example, the roof was the largest unsupported roof in the southern hemisphere and part way through, a major structural contractor walked off the job. So with the help of Bob Gusheh’s expertise (who at the time was Senior Project Manager) we ended up putting the roof on ourselves. At first Peter Deane’s (then Project Director) team said, “We can’t do it,” so I told them to go away and think about it more. They came back again and said, “Maybe we can do it,” so I told them to go away again. They came back again and this time said, “I think we can do it.” I told them to try some more. Eventually they came back and said, “We’ve found a way to do it.” I told them that’s what I wanted to hear - the Olympics were knocking on our door and failure wasn’t an option! I was down at the site every day overseeing the preparation of the venue. Two months before the opening, we still didn’t have any of the external paving completed around the SuperDome and Sam “The Paving Man” said he couldn’t do it by the deadline. So I asked him what was needed to make it happen and he said four tickets to Pavarotti would be great. I told him he could have a corporate box and you should’ve seen it – he got family and friends and everyone down there working and we got it completed on time.’ With the success of the M2 and then the Olympic projects Abigroup was in good shape and then in 2003 with the winning of the $1.5 billion M7 contract in a joint venture with Leighton Contractors the company truly had entered the big league. It was all a far cry from those desperate days in the late eighties and early nineties. ‘There were huge financial risks for all of us and it was not until ’92 and ’93 that we were able to begin stabilising our debts. From ’94 onwards the pressure began to ease as the M2 got underway. This major project, the first with electronic ticketing in Australia, was completed months ahead of schedule and earned us significant bonuses.’ The financial risks John and the Vercot owners endured paid for themselves after Vercot sold Abigroup to Bilfinger Berger with the aim of giving the business increased financial muscle that would allow for growth. It also meant that John could finally start thinking about spreading fertiliser on his long-neglected farm. His is initial 1982 land purchase of 8700 run-down acres in New England was subsequently added to, so that “Merilba” is now some 35,000 acres of prime farmland near Armidale where John now farms sheep, cattle, lambs and Boer goats. Merilba Estate now also makes wine and runs a cellar door and function centre. Life is different to what it was, but when he reflects on his emotional and financial rollercoaster with Abigroup, one thing supersedes all others. ‘I’m still fantastically proud of the company and what it’s achieved. Our people are industry leaders – first class, world-class people. I’ll always be proud of Abigroup and what it continues to achieve. It was all worth it.’ The management buy-out that John led, and the people that were trained and developed during that time, is perhaps Australia’s most successful corporate success story ever. REBUILDING THE BUSINESS JOHN CASSIDY 52
Page 1: REBUILDING THE BUSINESS 1986 - 1994
Page 6 and 7: This Photo: Sydney SuperDome, as it
Page 8 and 9: John and Darrell got to work, shedd
Page 10 and 11: support for major projects. John an
Page 12 and 13: esurrect the company. There were ti
Page 14 and 15: Opposite Page: Richard, 2010. Above
Page 16 and 17: Opposite Page: Ron Lovett, 2010. Le
Page 18 and 19: ABOUT ROBERT SALZER Robert Salzer w
Page 20 and 21: Opposite Page: Paul, 2010. Left: Hu
Page 22: We’d also heard that Alan had onc

Rebuilding the Business 1986 - 1994 - Abigroup

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?