Kershaw Mechanical Services has been in business since 1954 and, despite the recession, it is optimistic about growth. Paul Braithwaite talks to Ian Greenstock, the company's sales and estimating director.
Kershaw Mechanical Services has been sponsoring the Cambridgeshire Football Association for 18 years and it has just signed up for another three with the local amateur football league, known locally as the Kershaw League. The mechanical engineer has also sponsored the Cambridge United away shirts for eight years and has just signed for another two.

Ian Greenstock, sales and estimating director, says it is the company's way of putting something back into the community. 'The team was in the play-offs at Wembley (they lost) but it feels good to see 22,000 people with Kershaw on their shirts, whether or not it brings in much business.'

And every year Kershaw Mechanical Services takes its staff out to a hotel for a christmas lunch. The company pays for the event but the staff have to pay £5 for the meal and some
more money for a raffle. The money collected is donated to the East Anglian Children's Hospice.

In this way, Kershaw staff have contributed more than £20,000 in the last five years. Kershaw Mechanical Services turns over £25M and operates from two bases, one in Cambridge and another in Stourbridge in the West Midlands. Managing director is Gary Smith, who has been with the company for 30 years. The group as a whole turns over £40M, which makes Kershaw Mechanical Services the largest part.

Although Kershaw bills itself as an m&e contractor, it is in fact only the mechanical half.
It works in partnership with electrical contractors when it takes on an m&e contract.
'Very few firms are true m&e contractors. They specialise in one or the other disciplines and work with a partner.'

Working like this gives clients a strong package with specialists in both disciplines rather than one strong one and one weaker, he adds. For instance, he cites T Clark of Peterborough as an electrical partner and 'it works well' for the company and the client. Would it not be better to offer both and keep the money in-house?

Greenstock reckons Kershaw would have to pay around £20M to buy an electrical contractor and then it would lose the relationship with its electrical partners which, he insists, work well.
What Kershaw sees as its unique selling point is that it manufactures its ductwork in-house.
'By doing this, we consider we offer a much better quality result.

We produce a fabrication drawing, an installation drawing and a fully co-ordinated drawing complete with 3-D and video animations as well.' It gives the company much better control.
Greenstock says as well as working for many clients, Kershaw does lots of work for a cinema chain.

'Cinemas are full of galvanised ductwork. Our repeat business here comes from the fact that we have total control of manufacturer, delivery and co-ordination.' He adds that ductwork does not go to the back of the queue as it might with other firms. When changes are needed, Kershaw just makes them.

'We also do a lot of store conversions, which tend to be night and day working. We can measure during the night, make during the day and install on the second night. 'Many stores will refurbish in about two weeks. If you are making your own ductwork, you have absolute control. Kershaw has never delayed a job because of ductwork,' he insists. 'Any problems and we can change it overnight.'

Greenstock adds there is also a pre-fabrication unit which makes anything from plant rooms, risers, or fan coil installations. Retail makes up about £4M of the £25M turnover with the majority of the rest from health, leisure and education. For instance, Kershaw does lots of work for Cambridge University, and is also currently at for St Andrews Hospital in Northampton following work on earlier phases there.

Indeed, Greenstock reckons at least 40-50% is repeat business. The m&e contractor has carried out all the mechanical services work at every Cineworld cinema except one. 'The builder wanted to use another m&e contractor and, guess what, the opening was delayed as the ductwork was
not ready.'

Needless to say, Kershaw was back on board for the rest. Greenstock says that most
cinemas are built in a shell. 'We produce the main building work drawings for the fit-out as part of the shell. Because we produce the drawings for the shell for the builder, when it comes to the fit-out we are cruising. If we were not on board that early, it would be that much more difficult.'
And much of the work is done on trust for the cinemas.

'We did the shell drawings for the builder on the Aberdeen cinema months ago,' but Kershaw received the order for this only on the week of my visit. The relationship with Cineworld has been going on for years. Kershaw also works like this with one or two of its retail customers. It is on board early in the project and will undertake surveys before it receives the orders.

A project at Cambridge Regional College worked well for Kershaw and the group. It did the m&e fit-out for the hair and beauty and motor vehicle workshops while sister company TR Freeman worked on the roofing and cladding.

Was Kershaw ahead of the game because it was a local company? Not particularly, says Greenstock, but it does have a good reputation locally and it did help that all six site apprentices attend college there. It was able to integrate some of the apprentices' work on the site.

In all there are ten apprentices, which, for a company that employs 49 site staff, is a good average. The other four apprentices are office-bound with one each in estimating, the drawing office, the surveyor's office and one in contracts.

Greenstock says the company takes on two or three site apprentices a year and three will start this year. And he adds that Kershaw rarely loses any apprentices during training.
Training manager Alan Lucas, who was one of Kershaw's most experienced site managers, tends to take on 18-year-olds.

'We have up to 25 youngsters applying at 16 when they leave school and Alan steers the better ones - they have to have passed GCSEs in maths, science and English - towards the Cambridge Regional College to undertake a further education course. Alan and the college monitor the progress of these youngsters, their attendance, behaviour and capabilities, so that when the two-year course is coming to an end, they have almost been told there is a job for them. But it does not end there.

Before they are offered an apprenticeship, they are interviewed alone and with the
parents, plus there is an appraisal system during their apprenticeships. 'Any adverse reports from the site or college and the parents are brought in again.'

A couple of years ago, Greenstock was having trouble finding an estimator and Kershaw took a conscious decision to advertise for an 18-year-old student who had passed his A-levels but did not want to (or could not afford to) go on to university.

From the many students who applied, the company took on four office apprentices.
Greenstock says that Simon, the estimating apprentice, is already working towards his ONC and HNC degrees and with a minimum of supervision.
So pleased is Kershaw with the standard of these four apprentices, the company is to repeat the exercise next year and every couple of years to replace the ones who are completing their apprenticeships.
'People leave, people retire, and the company is growing and this is a good way of replacing them with fresh talent.'

And further training is available to any of the site apprentices who want it. Or, indeed, any employee will be sponsored to further his (or her) career with Kershaw. Greenstock says that, if Kershaw looks after its staff, they will be loyal in return.

'There are good career prospects with this company. I joined when I was 18 years old as a junior estimator and now I am a director. Gary Smith joined at the same time and he is now the managing director. Mahul Patel joined when he was 17 years old as a contract engineer apprentice and he is now divisional manager at Stourbridge, after the former divisional manager retired, so there are good opportunities with Kershaw.'

Kershaw has a target of steady growth for the next three to five years. 'This year we have an order book which will meet those targets. Everyone is unsure of what will happen in 2010.'
And he admits it is a little early to tell but indications of enquiry levels indicate that Kershaw should also reach its target for 2010.

And although the company is obviously going for organic growth, Greenstock says it is always looking at suitable firms to acquire but probably not in this climate. 'But if the right company were to come along...' he smiles.

Steady organic growth would mean about £35M turnover in five years' time, he adds. 'But, as a private company, it's profitability that counts.'
Still, these are not bad growth figures in the current economic climate!

Retentions and sustainability

About 25% of Kershaw’s business is retention free, says Greenstock. “On a £25M business, there could be as much as £100,000-plus tied up.” However, the company has negotiated very good payment terms on a number of the repeat-business projects. He reckons that between a third and a half of the business is on 30-day payment.

“When supply-chain partnering was first mooted, it did not work. Now, with the right partners and a lot of trust, it does. We are treated as a proper partner and there is no subbie-bashing.”

The 30-day payment regime works for Kershaw’s financial bosses and for the smaller subbies who cannot afford to wait too long for their payments.

Sustainability has been creeping into every tender in some form or another. Kershaw has been involved with heat pumps, biomass boilers, grey water etc, especially on schools’ and health projects. Kershaw has two projects with schools at the moment. Both have installed ground source heat pumps and the Cambridge Regional College had biomass boilers.

But are developers toning down the sustainable element? No, insists Greenstock. That day he had been pricing a care home project. This had involved ground source heat pumps, solar thermal etc.“Often this 10% is needed for planning permission but firms are going for 20% or 30% because it is more energy efficient and, therefore, cost effective in the long run.”