Strong growth in BGC’s contracting and development arms mean the diversified group is set to become even larger following the passing of founder Len Buckeridge, if it stays intact.
Strong growth in BGC’s contracting and development arms mean the diversified group is set to become even larger following the passing of founder Len Buckeridge, if it stays intact.
Just before Christmas last year, BGC announced a major new project that signalled an important shift in the already diversified group’s business focus.
It was the launch of a hotel and commercial development at the eastern end of the CBD valued at more than $500 million.
The Heritage Precinct comprises a 350-room hotel, The Westin Perth – the city’s first new five-star hotel in 30 years – and a 22-storey office tower, one of the dozen tallest office buildings in the city.
A property development project of this scale would be large by any standards, but it was particularly important for BGC.
“The project is the largest and one of the most significant ever undertaken by BGC,” managing director Julian Ambrose said at the time.
It confirmed that BGC Development had become an important part of the group, bringing together an array of commercial, residential, hotel and land development projects.
BGC Development has a $1.76 billion portfolio of established properties and new developments, with The Heritage Precinct being the largest.
The development arm plans a similar project on Great Eastern Highway, comprising a 226-room, four-star Starwood Hotel and a 10,100 square metre office building.
It also has four apartment projects on the books and a 650-lot residential land sub-division at Baldivis.
Legacy
The low-key emergence of BGC Development, led by general manager Ross Catalano, adds to the legacy left by Mr Buckeridge, who passed away in Perth last week at the age of 77after reportedly suffering a heart attack while sitting at his desk in his home office.
It adds to the residential building, construction, manufacturing and contracting operations that Mr Buckeridge built up over more than 50 years.
A long-time supporter of the Liberal Party and a staunch opponent of union militancy, Mr Buckeridge attracted accolades from many people in the business community and across the political spectrum.
He was universally praised as a no-nonsense entrepreneur who built a ‘real’ business that created thousands of jobs and held lasting value.
Mr Buckeridge was also known to be cantankerous, grumpy and aggressive in his business dealings, often choosing to go to court if it was going to help him achieve his goals.
That has included taking on militant unions, local councils, state governments - on both the Labor and Liberal sides - and business competitors.
Boral subsidiary Midland Brick was famously forced to publish full-page apologies in 2009 after Mr Buckeridge uncovered its secret role in backing a community group that distributed defamatory material criticising BGC's plans for a brick works.
He was ranked one of Australia’s wealthiest individuals, but never flaunted it. He lived in a nice house overlooking the river at Mosman Bay but it was modest next to the ostentatious homes of many of his neighbours in Peppermint Grove.
That was fitting, since Mr Buckeridge – an architect by training – got his start in business designing and building affordable housing and flats in the 1960s.
He subsequently lifted BGC to be the largest residential construction company, not just in Western Australia but nationally.
With 3,443 building starts in 2012-13, BGC was ranked number one on the Housing Industry Association’s annual review.
Most of the building materials used on BGC projects are manufactured in the company’s own factories and process plants.
At Canning Vale, Hazelmere, Armadale and other locations across Perth, BGC has manufacturing plants turning out bricks, plasterboard, concrete and other materials.
The group has also become a major player in the construction sector, with its biggest contract being the recent construction of Perth Arena.
Directors
As executive chairman, Mr Buckeridge called the shots.
Despite periods of poor health over the past decade, he was still in charge and left no clear succession plan.
From an operational perspective, it will be business as usual, but strategically some very big questions remain unanswered.
The people who will have to determine the group’s future structure and direction include its four directors.
Sam Buckeridge – one of six children – is managing director and runs the manufacturing side of the business.
Mr Ambrose – a stepson, who also holds the title of managing director – runs the construction and residential building operations.
A third director is Andrew Buckeridge, who is believed to have a non-executive role.
The final director is company veteran Andrew Teo, who has been with BGC for about 30 years.
He is finance director and company secretary, giving him a key role in a business that is famed for its lean management structure.
Mr Teo is also chairman of ASX-listed Medusa Mining, a role he took last October.
Scale
While the broad scope of BGC’s business is widely known, getting precise details is another matter.
BGC (Australia) Pty Ltd is a ‘grandfathered’ proprietary company, which means it does not have to lodge annual accounts with the Australian Securities and Investments Commission.
Mr Teo wrote to the federal Treasury in 2006, arguing successfully that the grandfathering provisions should continue to apply to BGC.
“It is unreasonable to simply lift rules that have been in place since 1995 that will have little benefit to the wider community,” he wrote.
“The changes will cause proprietary companies to have to unnecessarily release commercially sensitive information to parties who are not economically dependent on that information, but may be in a position to take commercial advantage of it.”
Gina Rinehart’s privately held company Hancock Prospecting made similar arguments when it tried to avoid lodging annual accounts with ASIC, but was not successful, because it is not covered by the ‘grandfathering’ rules.
BGC has confirmed that its annual turnover is a little over $2.5 billion, though its profitability has never been disclosed.
On the staffing front, BGC released a statement last week that said it had created employment for “more than 5,000 employees and thousands of sub-contractors”.
BGC Contracting, led by chief executive Greg Heylen, makes a big contribution to these totals.
It released information last week stating that it has annual turnover of $1.1 billion and 3,100 staff and contractors.
BGC Contracting has grown strongly in the past couple of years, with big wins in both its civil and mining divisions.
The civil division has won three contracts on the Roy Hill iron ore project collectively worth $600 million, while the mining division is a big player in the iron ore sector, with clients including Cliffs (in WA’s Yilgarn region), Atlas Iron in the Pilbara and Arrium in South Australia.
There has been persistent speculation that the contracting arm could be hived off from the rest of the BGC business.
This would be a relatively simple move, if BGC’s directors wanted to reduce the size of the group and simplify its structure.
It remains to be seen whether that will occur.
