As an industry leader in modern methods of construction (MMC) in the UK and Ireland, ESS Modular has seen significant growth in the business over the last 18 months. Paul Tierney CEO and Ronan Smyth, Managing Director of ESS Modular share some thoughts on MMC and the future of the construction industry.
In the last year the group turnover has grown from €60 to €95million and staff numbers have increased from 150 to 280 in Ireland and the UK. Most recently, the company announced a significant development, when global construction specialist ISG acquired a majority stake in the business, providing ESS with a solid platform from which to deliver an ambitious growth plan.
Q: For those who may not be familiar, can you explain what MMC means?
MMC amalgamates a range of advanced approaches to construction, including offsite, near-site and on-site premanufactured elements and technology applications. In an MMC environment, we use the latest technology to design out any inefficiencies and then manufacture in a controlled factory environment. Here, we can control the programme and the quality, reduce waste and mitigate the risks inherent in the traditional environment. Our manufacturing process operates on a flow line basis where all sequences of works are carried out in controlled manner, resulting in faster project times and higher quality. Once ready, we move the finished product to site and assemble it to form the completed building. Our approach allows for significant time savings in that we can deliver completed buildings up to 50% quicker. It also allows for greater cost certainty, precision, and quality control.
Q: Do you think MMC has been fully embraced by the wider construction industry?
MMC has grown hugely in the last 10 years as clients begin to recognise its major advantages. We have seen a big shift to adopt, embrace and actively pursue MMC. In the UK, the Government have indicated a preference for MMC through the establishment of a number of dedicated MMC frameworks for education and healthcare projects, with the Department for Education (DfE) alone investing £3billion in school frameworks in the UK. For public sector projects there is a focus on maximising the pre-manufactured value (PMV) of the building which allows the Government to see tangible benefits around how quickly buildings become operational.
Q: Can MMC and traditional construction co-exist?
In a word, yes! In 2020, the annual turnover in construction from the EU-27 countries amounted to almost €1.7trillion and is set to continue to rise, mostly driven by Government spending on planned infrastructure projects. The fact is that the industry, as a whole, genuinely can't build fast enough. While the industry is looking for ways to build faster, more cost effectively and more sustainably, there is no one size fits all answer. Our projects are focused around driving high levels of pre-manufactured value, but we still use a network of traditional subcontractors in our controlled factory environment, as opposed to transient labour moving between sites. We strongly believe that we need to stop looking at MMC as a separate industry, rather we should see it as a natural evolution of the construction industry.
Q: Do you think that the recent investment from ISG will help facilitate that?
Without a doubt it will. ISG is a leading global construction specialist and their investment in ESS makes a statement to the industry around the serious need for Tier One contractors to develop their service lines to include MMC.
Over the last 30 years, we've always been focused on development and growth, developing our service lines and investing in MMC technologies to find a better way to meet our customer's needs. ISG have been on the same trajectory, so the investment plays into both of our strategic agendas. For us it has provided a solid platform for our continued growth. For ISG, it is the opportunity to fast-track their journey in developing and implementing leading-edge built solutions.
Since the announcement, our focus has been on creating a strategic plan for growth and mapping out the key touchpoints along the way. We've recently secured our third manufacturing facility in Warrington and once that's up and at capacity, we'll be looking to develop a further facility in the southern region of the UK. We're also investing heavily in automation technologies in our two existing production facilities in County Laois and Dublin.
We have also been concentrating on creating the right support infrastructure to facilitate growth, recruiting a record number of 130 staff members in the last 18 months. We've enhanced our manufacturing, IT, marketing, design, people, and procurement teams, recruiting talented individuals, all driven by the same purpose, to find the better way of doing things.
Q: Mark Farmer's report 'Modernise or Die' cited declining workforces as one of the main threats to construction – how is ESS navigating that?
MMC has very definite advantages when it comes to recruitment which opens opportunities to a different range of candidates. In terms of production facilities, we offer a fixed place of work, with flexible working patterns, and a reduced amount of travel to sites. This lends itself well to a more diverse workforce, for example women, who tend to be primary care givers for dependents.
Fixed production facilities also support economic growth in the areas immediately surrounding our factories. We concentrate our recruitment in the communities surrounding our production facilities and we promote our vacancies to local communities. MMC is more reliant upon digital technologies, which also attracts more diverse entrants to the industry and challenges the traditional perceptions of construction.
Our recruitment strategy is driven by an underlying ethos of 'recruit for attitude, not for skill' so our talent development programme is well established, as we bring people in at entry level, and mould them into our future leaders. Our industry never stands still, and it gives our people a challenging and stimulating work environment, so our attrition levels are really low.
Q: After a very positive start to 2022, what challenges are you facing in the short/medium/long term?
There are challenges which we experience in the same way as traditional contractors. Hyper-inflation of costs is a very real issue, with the ONS reporting (June 2021) a clear trend of rising costs. Add to these, soaring costs in labour, building materials and transport, with the highest inflation seen on imported materials.
This causes problems for anyone operating on public sector contracts, due to strict procurement terms and conditions – in April, the Irish Government announced the Office of Government Procurement was examining whether help could be provided to firms working on public projects to deal with soaring costs. The industry cannot simply just swallow the cost, nor can we move the costs onto our supply chain partners so it's good to see that conversations are taking place, so we can overcome this.
The restrictions around movements of materials and labour, initiated by Brexit, were further exacerbated by the pandemic, but we have been working to mitigate them, by building supply chain frameworks, and providing our trusted partners with visibility of order book, to help facilitate continuity of supply. We are also developing a standardised design product, which will give us more stability around supply chains and continuity of supply.
Despite the above we remain optimistic; increased public sector spending in MMC is really shining a light on the benefits of our industry and we're being approached by an increasing number of private sectors clients who are looking at alternative methods of delivery.
For more information visit: www.essmodular.com