A NEW focus on projects where Clough can earn a premium for its engineering expertise is the key plank of a five-year plan to turn around the engineering company’s fortunes.
Clough CEO David Singleton told WA Business News he wanted the company to focus on things that would earn it a premium for its engineering expertise.
He also flagged a possible return to the North Sea, thanks to a joint venture with Norwegian-based Aker Marine and a larger emphasis on alliance-based contracting, such as that it used to great effect with the WA21 water treatment plant at Woodman Point
A greater emphasis on maintenance contracts from projects the company has constructed is also on the cards.
Market players, and Mr Singleton himself, agree change is needed, given Clough posted a $9 million loss for the 2002-03 year, down from a $30 million profit from the previous fiscal.
Analysts put many of the company’s problems down to poor management, including a structure that duplicated several key positions.
They felt its accounting system all but concealed the cost of projects the company was bidding for.
There was also a fear that the company put its order book ahead of everything else, often bidding for projects that would bring it no benefit.
Writedowns in four projects have been blamed for this year’s loss.
Mr Singleton said many of these concerns had been addressed.
The company is sporting a new, flatter management structure.
There has been considerable management blood-letting and the last change is due to happen soon when new chief financial officer Andrew Walsh joins the business, replacing Mike Goddard, who will take up the role of CEO of the newly created development division.
That development division holds non-core Clough entities PT Petrosea Tbk, Clough Property, Shark Bay Resources and Wundowie Foundry that may be exited soon.
“These are businesses that either don’t fit our strategic direction at the moment or need some corporate reshaping,” Mr Singleton said.
To that end the old mid-tier commercial construction business, Entact Clough, has already gone.
Project management is another area under scrutiny.
“There are a number of opportunities. Firstly we build big infrastructure projects around the world,” Mr Singleton said.
“We have a really good opportunity to do engineering services and maintenance of these projects as we go through,
“We’re putting in a new cost accounting management system that will allow us to see what’s happening in our costs more effectively.”
Mr Singleton said the company had to concentrate on areas where it could differentiate itself on the quality of its engineering and earn a premium.
“We are well differentiated in some of our markets – offshore is one – but in some areas of our business we are less differentiated than we should be,” he said.
“We have to look at these areas and see if we can get differentiated or exit them.”
However, Mr Singleton would not specify what those areas were.
Building a performance culture is also high on the agenda.
“My mantra is three things – growth, performance and people,” Mr Singleton said.
“We will continue to invest heavily to make sure our people are properly trained.”
Mr Singleton said “Clough College”, an internal institution set up 18 months ago, would play a major part in that.
He said the Clough family remained a positive addition to the board.
While previous chairman Harold Clough’s health has not been the best, Mr Singleton said he was beginning to return to work and would be concentrating on the areas of the business that only he could handle – such as making use of his huge list of contacts.
Mr Singleton said the new chairman, Harold’s son Jock, had made a “big contribution to this business over the past 18 months”.
“That will only become obvious over time.”
In fact, the younger Mr Clough was directly responsible for recruiting Mr Singleton.
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