High hopes for Beatty director
Balfour Beatty’s Peter Zinkin says construction will never disappear.
Balfour Beatty’s Blackfriars Station and Bridge project
Balfour Beatty's Peter Zinkin is not a fan of the word "construction" - at least not when referring to the company he has worked in for more than three decades.
The planning and development director prefers to use the term "global infrastructure business." He explains: "We are not just a construction company. We are so much broader than that."
Founded in 1909 Balfour Beatty's services extend to engineering, consulting, managing and investment-services. In fact, whether a school, airport, road or railway, the company has probably been involved in its making.
Well-known UK projects include Heathrow's Terminal 5, the Channel Tunnel, Docklands Light Railway, Kielder dam in Northumberland and the Birmingham Super Tunnel. Its order book for 2011 was £15.2 billion.
Balfour Beatty’s Peter Zinkin
But Britain's infrastructure industry has taken a big hit of late and projects have grind to a halt amid the crisis. According to the Construction Products Association (CPA), Britain's construction industry is unlikely to grow until 2014, marking the worst decline in 30 years. The CPA said more than £32 billion of construction activity had been lost since 2007 and predicted a fall in construction output of 3.6 per this year and zero growth in 2013.
So, what does Mr Zinkin, who has been instrumental in many of the company's contracts over the past 30 years, have to say about the beleaguered industry? "Maybe the past few years have not been as hard for us as they have been for many. Much of what we do is around managing construction projects rather than actually laying bricks. We have the people who win the contracts and then manage the supply chain necessary to build the project.
"We are much broader than we used to be so although the construction market hasn't been the easiest market, the business has survived the period."
Besides, "construction is not going to disappear. The economy can't grow without investment in infrastructure."
Balfour Beatty generates £10 billion of revenue across 80 countries. It has fared relatively well in the difficult conditions and earlier this month reported pre-tax profits of £246 million for 2011, up from £201 million in 2010. Group revenues rose by three per cent to £9.49 billion. Profits were up by nine per cent to £334 million.
Since joining the firm Mr Zinkin has spent much of his time building businesses in the US, the company's biggest market behind the UK. It accounts for nearly half the Group's turnover. Balfour Beatty is the third biggest general builder in America, with 10,000 staff - one fifth of company's total.
"I spent much of the 1980s growing the business across the US but the global industry had a really rough time so I had to dismantle them, and in the late 1990s, sold a lot of the businesses. We were left in 2000 as primarily a UK construction company but we had been able to pay off all our borrowings and sold some remaining businesses. This gave us quite a lot of money which we have been able to reinvest, turning ourselves back into being a global company."
Over the past decade the group has spent more than $10 billion buying businesses in America but Mr Zinkin is now turning his attention to emerging markets: Brazil, India, and the major resource economies, Australia and Canada.
Recent international projects include a desalination project in Victoria, Australia, the West Island Metro Line in Hong Kong and the Institute of Technical Education in Hong Kong.
Today more than half of the company's value comes from overseas and Balfour Beatty estimates 10-12 per cent-a-year growth expected in emerging markets such as India, Brazil and Indonesia over the next ten years.
Mr Zinkin is one of five executive directors at Balfour Beatty. A Cambridge graduate with an MBA from the London Business School, he joined the firm in 1981.
Mr Zinkin held several senior positions in the finance departments before becoming the Group's director of planning and development in 1991.
Pressed for his views on Mayor Boris Johnson's cross-rail development levy, taxing new developments to fund the cross-rail project, he says: "Infrastructure is what the group is about so broadly we are very supportive of all major projects because that's our life-blood. Clearly it's nice when these projects have broad support and I think that we are very conscious of the fact the for the younger people in the organisation and many of our customers, sustainability is a key issue."
So, what are the biggest challenges facing the industry? "Broadly, with most of the markets we are in, money has to be spent on them. GDP growth simply doesn't happen without expenditure on infrastructure.
"We strongly believe that economic growth and infrastructure are tied together. The government is cutting its spending on many areas and we have had to adjust our businesses in those areas. On the other hand, more money is going to be spent on power stations and off-shore wind so we are doing work in those sorts of areas to compensate. Our biggest challenge, because we are so broad, is making sure that we focus on work on the areas that are growing and not declining."
He would "absolutely" encourage a career in the sector. "Working for a global organisation is very interesting. "Construction has been quite traditional but it is changing. It is a good career for people interested in travel - you get broad experience across a range of disciplines in different countries."
Outside of work, the father-of-two is actively involved in the community. He is the former vice-president of the United Synagogue and was one of presidential candidates last year.
He is a long-standing member of Golders Green Synagogue where he was former chairman - his wife Jacqui is vice chair. He is a governor at the University of North London and Birkbeck College.