REPORT BACK ON MEETING: May 13 2016
WITH DAVID THOMAS, GROUP CEO OF BARRATT DEVELOPMENTS plc
“I loved the event and have gained a potential graduate employee, a potential land deal, a very interesting discussion with the Federal Mogul representatives, a discussion with a number of very interesting people….all in two hours!” – David Thomas
“Really enjoyed last Friday’s Business Club. Great speaker and made some very useful contacts.” – Mike Madden of Legacy IT
“The talk was really excellent and I wished that I had brought our MD with me .. a friendly bunch. I liked the bacon sandwich!” – Oliver Stephenson of Carlton Brick
A large and lively group of business people gathered at Chapel-en-le-Frith Golf Club on Friday May 15th to hear our first CEO, head of FTSE 100 company Barratt. David Thomas, a softly-spoken Scot, once washed dishes in a Glasgow restaurant on Saturdays to earn pocket money. He took a degree in hotel management and an accountancy qualification, and came to us via House of Fraser, Millennium & Copthorne Hotels and retailers Game Group. He joined Barratt in 2009 when the firm was reeling from the Recession, with sales down 40%. Now it’s the top housebuilder in the country.
Laurie Barratt, the firm’s founder, was an accountant who couldn’t afford to buy his own home in 1958, so he built one. Within 10 years he was running a listed company; he created show homes and the original affordable housing with a £9 per week mortgage. Those were the days! The leading edge tradition continues, with zero carbon emission properties in Bristol “Some day,” David said, “all houses in Britain will be carbon neutral.”
The lessons applied on that long journey are clearly applicable to other businesses. A long term view, the upholding of the highest standards, rigid attention to detail (“Rectification is very expensive”), all make for financial success and repeated annual awards from customers and the building industry.
Demand continues to outstrip supply, despite strong government support. The average age of the first time buyer is now 37, or 32 with parental help. “It is indisputable that at no time since the 1960s has Britain built enough houses: 250,000 – 300,000 would meet demand, but this year it’ll be around 150,000.” Barratt contribute 17,000 units, around 12% of the UK total. The good news is increased lender competition has seen interest rates dropping in the last 2 years from over 3.5% to just over 2%. The government wants another 1 million houses by 2020. A tall order.
The problems are complex, particularly in the land market and acquiring all permissions. “It used to take 72 weeks on average to get on site, now it’s 60, but that’s still far too long.” Barratt has almost £1 billion of land approved for investment and directly or indirectly provides 53,000 jobs. All this, and high operational standards including zero tolerance on health and safety, mean that the small builder is disappearing, David said. The gravest shortage is manpower, bricklayers, plumbers, electricians and the like: “With 40% of our workforce in the south east and London coming from the Continent, Barratt wants to stay in the EU,” he said firmly, and one can see why.
Chapel-en-le-Frith is unusual in having two Barratt sites, both selling well; the 9 acres of surplus land acquired from Federal Mogul probably made the difference to the survival of that company (two of their employees were present). After answering many questions over the bacon baps, David was heading there unannounced, the act of a top manager.
David Thomas, CEO of FTSE 100 company Barratt Developments:
“It was a pleasure to meet you and I really enjoyed the experience – it was a very good question session and it was the most scenic drive to work that I have ever had! The club members were very interesting and incredibly enthusiastic.”