SNC-Lavalin’s (TSX:SNC) Mark Hughes: using cooperation and collaboration to achieve growth
Mark Hughes firmly believes that the foundation of any successful company is focusing on developing excellent relationships that embrace clients, competitor-collaborators and employees.
“Only an organization that is truly aware and focused on the importance of those personal relationships and has a plan to continuously improve them can really hope to succeed,” Mr Hughes says.
Over the last few years Mark has tried to ensure that the company’s recruitment and development of staff positively promotes the importance of the soft skills, as well as ensuring it continues to deliver high quality service and advice on a technical nature. Even in the midst of the highly technical and pressurized project environments, the human element cannot be ignored.
“At SNC-Lavalin,” Mr Hughes adds, “whilst we are a world leading engineering and construction company, we are ever-more so a relationship-oriented business, not a transactional one, and we want clients to want to do business with us, and people to choose to work for us rather than competitors. As such we’ve been spending time investing in both.”
In Australia, the company is building on its ethos of a One-Company approach. For an organization globally of 40,000 people, and several thousand people in Australia working across all four of its key sectors, Oil and Gas, Infrastructure, Mining and Metals and Power, Mark is very clear that SNC-Lavalin’s business model across all sectors is firmly to deliver excellence in engineering and construction, safely and through the power of relationships.
“We are in a highly competitive market place,” he says. “It requires us to focus on our clients, collaborators, staff, and our future staff – we want to be the obvious choice for people at all stages of their careers and across all our market sectors.”
Originally from the UK and a graduate of British Railways, where he held a variety of posts within both the passenger and freight sectors, Hughes found himself in the consultancy environment for over a decade with Interfleet Technology. It was during this time in 2011 that SNC-Lavalin acquired Interfleet.
As well as leading the London business for 6 years, Mr Hughes’ consulting experience involved significant periods working for the major transport groups during intense periods of franchise bidding, latterly and most interestingly as MTR Corporation’s Bid Director for the Crossrail Franchise.
The combination of a strong rail operations, commercial understanding and leadership capability proved to be the right blend of skills for SNC-Lavalin to move Hughes to the Australian arm of SNC-Lavalin, where he is currently the Regional Director of their Infrastructure sector, heading up their Rail & Transit and Environment and Geoscience teams.
A real testament to SNC-Lavalin’s approach to relationships and collaboration is its recently awarded contract on behalf of the Commonwealth Government as the consortium lead for the rail design element of the Western Sydney Airport.
Mr Hughes says: “Whilst we were shortlisted for tender by the Department of Infrastructure & Regional Development (DIRD), we realized that we could offer a much stronger offering through collaboration with our industry peers, so we set about bringing a consortium together very quickly, developing our bid as a team, presenting as a team and ultimately succeeding as a team.
“Having the relationships already developed to be able to bring such a consortium together was in itself a fantastic achievement. Having won, SNC-Lavalin’s strength in programme and stakeholder management, systems engineering and future operations understanding made our role at the core of the project team an excellent fit as the overall integrator.”
Elsewhere under Mr Hughes, another Joint Venture is nearing its completion in Malaysia, where SNC-Lavalin have a team of 15 personnel performing the role of rail systems Independent Checking Engineers on the recently opened (Phase 1) Klang Valley line, with Phase 2 due for completion in July this year.
The Klang Valley project started in 2011, and in pursuing the company strategy for this role it had to understand the market and the need to identify and be able to work with a local partner that brought the civil capability as a complement to its systems capability. Mr Hughes emphasizes the need to understand the culture of the environment where the company is working.
“You need to be local, [but should also recognize] the strengths that you bring; in our case, [we bring] systems and integration strengths, and our partner [brings] civil design and construction strengths.”
On many occasions the partnerships are not so much about technical problems themselves, but about having a local resource and good relationships that can help to really interpret the client’s concerns. However, Hughes also recognizes the volatility of these markets, and stresses that responding to changes in the industry and moving the focus to the expanding sectors is of paramount importance.
“Right now, Infrastructure in the transport domain is described by many as in a boom time. Certainly in certain states in Australia they have a number of significant and exciting projects to point to, whether new metros, tunnels, level crossing removal, light rail schemes or freight enhancement schemes.
“SNC-Lavalin is delighted to have been involved or still involved across all these important schemes. However, it will at some point not be quite so buoyant in terms of growth and investment, and it’s my job and the job of others in my team to identify other aspects of the infrastructure marketplace that we could respond to, or indeed other sectors that SNC-Lavalin operates in where our skills can be deployed.”
Being responsible for around 100 staff in the Infrastructure business, and a further thousand or so indirectly across the other business sectors, Mr Hughes takes the responsibility of keeping SNC-Lavalin running a sustainable business model very seriously, even personally.
“You have to be looking to the future and how you can sustain the employment of those people as well as grow the business,” he says. “You have to look to the future, and I mean years not just 12 months, and navigate a path that you can describe to your staff and your business about where you will be in that future. If you can’t do that with a level of confidence, then you can’t expect your team to believe in you or your company.”
Of course that is easier said than done. Complications arise through the booms and busts of both state and the national economy that impact the industry, and especially the government politics involved. Part of Mr Hughes’ job is to try and predict these cycles and brace the business for them, but in the long run, change is the only answer.
“You have to be able to accept that eventually, either what you provide to the market will need to change, or the spending in that sector of the market will change and you have to adapt.”
In practical terms, this means that SNC-Lavalin will always have to be looking throughout their businesses for re-deployable skills that they can apply across the sectors as the landscape of the market changes. It is SNC-Lavalin’s diverse business model that allows this “recycling” of talent and expertise.
“In power, for example, we have the diversity and capability to move from nuclear on one end of the spectrum, to renewable on the other,” Mr Hughes says.
Recycling competences such as electrical or systems engineering, telecommunications, asset management and programme management between different sectors are also part and parcel of the business strategy.
This resourcefulness allows the company to run a robust and stable business even as the winds change in multiple industries. “Here in Australia, we are lucky to have all four sectors in operation, with each at varying stages of maturity and economic optimism.”
Roughly 10% of SNC’s operations are in Australia, including major oil and gas operations such as the Ichthys LNG project and Gorgon project in Western Australia, one of the world’s largest natural gas operations. Whilst the company’s Oil and Gas team is still very significant in terms of financial and operational scale, there is no denying that future work will be less about construction and more about operations and maintenance as the industry moves from a CAPEX phase into an OPEX phase.
However, the skills held within the Oil and Gas team are immense, the extensive construction expertise within this team can be deployed across any of our other three sectors. Likewise, the company’s telecommunications and security team can service across all four sectors ensuring clients receive the best solutions.
This ability for one or more sectors of the company to work synergistically to better serve the customer and make operations more efficient, especially in the fast-changing power and infrastructure industries, adds to SNC’s strength and service offering.
Currently, a large focus of the company’s efforts is on winning renewable energy projects and bringing both its expertise and capital investment into that sector. “Power and Infrastructure are growing markets for us,” Mr Hughes says.
Collaboration and the recognition that SNC-Lavalin can use the talents of a diverse range of companies comes in the form of new acquisitions as well. Four years ago the company acquired Kentz, a construction and engineering company that operates mostly in the oil and gas sector.
“[Kentz] is extraordinarily dynamic in the way that it’s done business and innovated, and [it] has very strong leadership.” This acquisition served to reaffirm SNC-Lavalin’s commitment to oil and gas, in spite of a currently difficult market and low oil prices.
Besides this spirit of cooperation, one of the things that SNC-Lavalin strives for is to be, in Mr Hughes’ words, “client-centric.” According to Mr Hughes: “We absolutely understand that you only get repeat business by doing a fantastic job and not just a good job.”
This means that SNC-Lavalin spends a lot of time and effort drawing feedback from its customers and constantly improving based on their suggestions. “We ask for regular feedback from our clients on how we did, and we don’t just take it and say, ‘thank you very much.’ The company looks at the data and analyzes it deeply in order to incorporate what they learned into future projects.”
Hughes maintains that this is integral to acquiring repeat business, and that repeat business is integral to a company’s livelihood in its industry. “Repeat business is a lot easier to win than competing through a bidding competition all the time.”
He accepts, however, that constantly bidding for projects is a normal feature of acquiring clients in the public sector, which is why the business has invested significantly in professionalizing its bid team capability in the region.
Another one of SNC-Lavalin’s primary concerns, especially in Australia, within Infrastructure due to the nature of the business, is having a highly engaged workforce in order to ensure it retains its large and talented team. Recruiting and keeping staff is a major part of the business’ focus, because attrition can not only have direct costs but can also negatively affect the staff that are left, as well as lead to inefficiency.
“Losing staff to clients is often more of a challenge than to competitors”, Mr Hughes says. “In the consulting world, as any other, this is a well-known, well-trodden problem. You put staff amongst your clients, and you want to put your best staff prominently, and every now and again either the client sees something which they want to keep for themselves, or the individual sees that that’s an organization they want to work with.”
Often, these consultants will leave for a time, only to return to SNC-Lavalin eventually. “We’re a good place to work—we want to be an excellent place to work—and we invest in our staff feedback to understand that. It is a constant battle of being able to offer the right level of reward and the right environment and interesting work.”
One of SNC-Lavalin’s greatest development benefits to its employees is allowing them the ability to work internationally, since the company has a presence in many countries. This benefits both parties, as it allows the company to send talent to where it is needed most, anywhere in the world, where it cannot find the required skills and experience available in the local market.
Though SNC-Lavalin’s Infrastructure Australian market is still relatively small in comparison to the size of its North American business, it is a growing presence, and also an important one. In spite of its size, Mr Hughes describes the market here as “mature.”
He remarks that in terms of landscape, population density, and other concerns, Australia and Canada have a lot in common, but that SNC-Lavalin has simply not had a very long presence in Australia compared to its century-old business in Canada. “We don’t want to wait a hundred years to reach the same size and scale of course” he says.
One of the factors that affects growth in the rail Infrastructure sector in Australia is the different engineering and safety standards in railways across the different states. Rail gauges differ as well as local safety and regulation requirements, not to mention the political environment and available funding.
“All states will vary, and as a result of that, it makes [planning and business forecasting] complex. It makes it complex not just for running trains, but it makes it complex for procurement of trains.” Mr Hughes suspects that these differences will continue to produce challenges well after his lifetime.
“It makes Australia a smaller market than it could be,” he says, “because many of these individual issues effectively fragment the market. That’s just not great when you are trying to attract international commitment and investment.”
SNC-Lavalin does not shy away from these challenges, however, as Mr Hughes maintains that engineering and strategic infrastructure solutions is what his company does best. “Increasingly, the recognition in our company is that complex environments as well as complex engineering and systems engineering is where we bring a lot of expertise. That’s the difficult stuff.”
One of SNC-Lavalin’s recent concerns has been integrating this infrastructure sector of their business into the other units, to help serve as part of the backbone.
“The Presidents of each of the four sectors are targeting working together in a more holistic and joined up way. Cross-selling is one thing, but Cross-delivery is the real focus – back again to sharing skills and competencies in a planned and strategic way.”
This integration may be important as the company turns towards new market demands for “big data.” As technology improves, the raw amounts of information that must be understood are overwhelming clients, and this has become an important service that consulting companies could provide.
“Our ability to work with clients to enhance their businesses is very much driven by a race to[wards] who can understand and provide more insight into the information that our clients perhaps don’t necessarily have time to sift and understand themselves.”
While there’s a “backdrop” of engineering, being able to improve system performance through data collection and understanding is a major factor. Many organizations, especially those in transport, are only starting to grapple with these challenges—and SNC-Lavalin, Mr Hughes says, is making progress, but needs to do better.
With this work on Infrastructure being aligned with the company’s client-centric approach, its service continues to grow and develop in line with the industry. “[It’s] a partnership of mindset, rather than a partnership of contract,” Mr Hughes emphasizes. The relationship-building aspect of their business will always be primary at SNC-Lavalin.
Written by Raul Betancourt.