Inside business: All right on the site

Roger Trapp reports on a housebuilder that is trying to reconcile rapid growth with green issues
Click to follow
The Independent Online
John White, chief executive of the housebuilder Persimmon, admits his industry has an image problem. On one hand, the construction business is notorious for what has been termed "over-promising and under-delivering". On the other, developers such as Persimmon are increasingly under attack from environmentalists for building on greenfield sites.

But on quality and care his response is robust: "I think housing development is better than it was only five years ago. But if you went back 20 years it would be like being in a different country." As for the environmental question, he says everybody is aware of the need to preserve the countryside, "but people want and need houses to live in - and their aspirations are higher. There's a conflict between the two."

Nevertheless, Persimmon has unveiled two initiatives aimed at dealing with the issues.

The Persimmon Pledge announced at the beginning of this year is designed to offer purchasers of the company's properties "the same high standard of customer service" wherever they are in the country. Mr White points out out that an industry operating as "an outdoor factory" cannot always be perfect. However, he acknowledges that his sector has caught up with the realisation in other industries that customer care is paramount.

More recently, Persimmon has set up a separate company, City Developments, to "concentrate on bringing life back into Britain's towns and cities through redeveloping urban land to meet today's housing needs".

Even without this venture, Persimmon is at pains to stress it has not been hell-bent on ripping up the countryside.

"A bit over 50 per cent of our houses are built on brownfield sites. I am sure that percentage will increase. We're quite willing to build on them," says Mr White, claiming it is a myth that these developments are less profitable.

But he emphasises that such projects are dependent on being allowed to build what will sell in particular locations. "I'm not prepared to risk the business by building the wrong product in the wrong location," he adds.

That is understandable, given the progress the company has made in recent years. Founded by current chairman Duncan Davidson in 1972, and floated on the stock market in 1985, the York-based company has grown to the point where it is Britain's fourth-largest housebuilder with operations from Scotland to the south-west of England.

The just-announced results for the six months to the end of June showed the company following up last year's record performance with a 27 per cent rise in interim pre-tax profits to pounds 35.7m. Turnover during the six- month period was up 18 per cent to pounds 317.6m.

Clearl, the current economic climate has helped, with house prices rising as rapidly as they did in the late 1980s. But Mr White believes other factors have helped distinguish Persimmon from some rivals.

In particular, he points to continued streamlining of the business following the acquisitions of Ideal Homes and the Scottish division of Laing Homes in February 1996 and April 1998 respectively. Moreover the company is following the current management thinking of seeking to expand sales as well as drive down costs. "We're growing all the time," says Mr White, explaining that the organisation is about to establish another company in the North-west.

Then there is the way in which the company is run. The housebuilding sector is undergoing substantial change, with some smaller businesses deciding they would be better off returning to private ownership rather than remaining public companies, and others bulking up through a consolidation policy that has yet to run its course.

Such a situation is bound to put pressure on costs. But while it handles financial matters at the head office, Persimmon is determined not to centralise too much decision making. Its 1,200 employees are spread around nearly 20 operating divisions that have a good deal of autonomy.

This means that the local companies employ local architects and other professional advisers when carrying out their developments, says Mr White. "Obviously we try to get some economies of scale within regions, but we don't want to tie our guys down," he adds, claiming that the company has about 200 different house styles on offer.

"It won't work for everybody, but it does for us."

While the average selling price of a Persimmon home is about pounds 86,400, the company is at pains to stress that it offers a wide range of properties - from bungalows and apartments to five-bedroomed detached houses.

It is all about justifying the Persimmon claim that "We don't just build houses - we help to create communities".

But while the company has enough land with planning consent to last it more than four years at the current rate of building (nearly 7,000 houses a year), Mr White realises that its ability to live up to the claim and continue to prosper will to an extent depend on public attitudes to development.

A life-long builder who joined Persimmon in 1979, after starting in the industry as an apprentice, he believes the rising cost of property will force planning authorities to relax curbs. If that happens, it will not take a racing man to bet that the company, named after the 1896 Derby winner, will be seeking a share of the action.