Top 50: How to construct your own market

Rotrax is the `one-stop shop' for specialist work in the construction industry, and this distinctive approach has successfully set it apart from the competition, as Roger Trapp discovers
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The Independent Online
There can be few better examples of a company breathing new life into an old industry by challenging the way things are done than Rotrax Engineering Services. The Middlesbrough-based specialist engineering business has taken third place in the 1999 Independent on Sunday ranking of Britain's fastest growing private companies through achieving an annual growth rate of 116 per cent over each of the past five years - and it achieved that through coming up with a new way of serving its customers in the construction industry.

Essentially a building services company that carries out electrical, mechanical installation work and other specialist jobs for construction companies, Rotrax has differentiated itself by offering a "one-stop shop," whereby contractors go to it for a range of specialist work rather than have to split it up into three to four packages, and by providing a "design- and-build" capability. Unusually for a company of its type, Rotrax does a lot of the design work associated with projects in-house.

Doing this took more than just announcing an intention to the world. The company has in recent years invested heavily in computer-aided design and other information technology systems, so that, according to joint managing director Alan Robson, "it looks like a company that's been around for 30 years," rather than just a decade.

In fact, in its present form, it has existed for a somewhat shorter period. The company began the transformation into the assured, ambitious organisation of today six years ago, when Mr Robson bought into it after a career managing other people's companies.

As a result, he became an equal partner of Ian Rennison, his co-joint managing director. Mr Rennison had founded the company in 1989 after working his way through the ranks and into management in other companies within the industry.

Though Mr Rennison, who was 29 when he started, had done reasonably well working on a small scale, the company really took off with the arrival of Mr Robson. By his own admission, "a late starter" when it came to starring his own business, the 52-year-old has played a significant role in shaping the direction of a company that has gone from a turnover of less than pounds 700,000 in 1993 to more than pounds 13m last year. In the financial year just completed, the annual sales figures have moved on to pounds 24m and, according to Mr Robson, the business is "still growing strongly".

With offices in Newcastle, Derby and Leeds as well as the main operation in Middlesbrough's Riverside Park, Rotrax is well placed to pick up a good slice of business in the north of England. Among the prestigious projects Rotrax has been involved in is the Orange Call Centre in Darlington, for which it supplied innovative lighting. It will also travel further afield for favoured clients - that is, those that "treat us fairly and reasonably and pay us on time".

But both Mr Robson and Mr Rennison acknowledge that their aim of becoming a major player in their industry with a turnover of more than pounds 100m relies on more than just getting the business model right.

"I know everybody says this, but we're a people business. We're a service industry," says Mr Robson. And that requires having "a dedicated team of professional people".

In the early days, that was easier to achieve, since he and Mr Rennison brought together workers they had come across in their previous careers. "We'd met a lot of people, and we brought the best of the talent to create Rotrax," says Mr Robson. Latterly, though, the company - which now employs about 85 staff and about 200 pipe fitters and other operatives - has been forced on to the open market.

With a skill shortage making suitable people hard to come by, the company has also invested for the future by establishing an apprentice scheme at a time when such arrangements are largely dying out. Apprentices currently account for 10 per cent of the labour force and there are plans to increase that proportion to 20 per cent.

The company also makes itself attractive to would-be employees by operating a profit-sharing scheme. "The whole idea is to reward people for the success," says Mr Robson.

The challenge now facing him and Mr Rennison - who together retain the lion's shares of the equity - is to keep up the growth without losing sight of the principles that got the company to where it is today. "It's important to us that we don't outgrow what has made us successful so far," he says.

Though they want to reach a significant size, they as yet have no intention of floating on the stock market and would have to be convinced of the benefits for their customers and employees if a trade buyer tried to take over the business.

"It doesn't figure in our plans," says Mr Robson of seeking a listing. And he points out that he and his colleagues have seen examples of companies like theirs that have gone for listings and not got on well. "I don't think construction is very attractive to the City. There are no immediate advantages," he adds.