Balfour Beatty

History

Balfour Beatty was formed in 1909 with a capital of £50,000 (2012:£4,410,000) – an exceptionally large sum for the time. The two principals were George Balfour, a qualified mechanical and electrical engineer, and Andrew Beatty, an accountant, who had met while working for the London branch of the New York engineers JG White & Company. Initially the Company concentrated on tramways, the first contract being for the Fife Tramway Light and Power Company at Dunfermline; its general construction expertise was extended during World War I with, for example, army camps.

George Balfour was elected to the House of Commons in 1918 and played a large part in the debates which established the National Grid. To service this new market, George Balfour, Andrew Beatty and others formed Power Securities to finance projects and the two companies, with their common directors, worked closely together. Balfour Beatty was heavily involved in the development of Scotland’s hydro-electric power, building dams, transmission lines and power stations. Other work between the wars included the standardisation of the electricity supply in Derbyshire and Nottinghamshire, and the construction of tunnels and escalators for the London Underground. Extensive overseas work started in 1924 when Balfour Beatty took over the management of the East African Power & Lighting company; construction work included hydro-electric schemes in the Dolomites, Malaya and India; power stations in Argentina and Uruguay and the Kut Barrage on the Tigris in Iraq.

By World War II, control of the firm had passed on: Andrew Beatty had died in 1934 and George Balfour died in 1941. Construction work was now dominated by the war effort and notable projects included blocking the approaches to Scapa Flow and the building of six Mulberry harbour units. Peace saw a resumption of Balfour Beatty’s traditional work, power stations and railway work dominating at home. Overseas, a construction company was bought in Canada in 1953 and other work included the Mto Mtwara harbour in Tanganyika and the Wadi Tharthar irrigation scheme in Iraq.

In 1969 Power Securities, which by then owned Balfour Beatty, was taken over by cable manufacturer BICC. Then in 2000 BICC, having sold its cable operations, renamed itself Balfour Beatty.

Balfour Beatty moved away from its traditional area of expertise in 1986 when it formed Balfour Beatty Homes, building on a modest scale from its office in Nottingham. It also opened offices in Paisley and Leatherhead and in 1987 bought the Derbyshire firm of David M Adams to give it an annualised production rate of 700 houses. Little more than a year before the housing market collapsed, through its parent BICC, Clarke Homes was bought for £51m, giving housing sales of over 1600 in 1988. By the mid-1990s, sales were down to only 500 a year and although no financial figures were ever published, the housing operation was believed to have suffered heavy losses. Balfour Beatty Homes was renamed Clarke Homes and then sold to Westbury in 1995.

Balfour Beatty has embarked on a series of acquisitions including Mansell plc, another construction services business, for £42m in 2003, Birse plc, a UK construction & Civils contractor, for £32 m in 2006, Centex Construction, the commercial construction division of the US builder Centex, for £180m in 2007 and Cowlin Construction, a UK construction company based in Bristol also in 2007.

In 2008 the Company bought GMH Military Housing, a US-based military accommodation business, for £180m and Dean & Dyball, a leading UK regional contractor, for £45 million.

In March 2009 the company was found to be a subscriber to the Consulting Association, a firm which then prosecuted by the UK Information Commissioner's Office for breaching the Data Protection Act by holding a secret database of construction workers details, including union membership and political affiliations, and six enforcement notices were issued against Balfour Beatty companies. As of January 2010, individual workers had started suing the company for being on the blacklist; the first of these cases, however, was ruled in favour of the company. Balfour Beatty was subsequently one of eight businesses involved in establishing the Construction Workers Compensation Scheme in July 2014, though the scheme was condemned as a "PR stunt" by the GMB union, and as "an act of bad faith" by Parliament's Scottish Affairs Select Committee.

In September 2009 the Company agreed to buy Parsons Brinckerhoff, a US-based project management firm, for $626 million. In October 2010 the company bought Halsall Group, a Canadian professional services firm, for £33 million and then in November 2010 the company bought the remnant of collapsed UK construction company Rok plc for £7 million. In June 2011 it went on to buy Howard S. Wright, one of the oldest contractors on the West Coast of the United States, for £58 million as well as Fru-Con Construction, a US water and wastewater contractor, for £12 million and in January 2013 it bought Subsurface Group, a US consulting and engineering firm.

In mid-2014, the company rebuffed three offers by rival Carillion for the two companies to merge. The last bid, which valued Balfour Beatty at £2.1 billion, was unanimously rejected by the Balfour Beatty board on 20 August 2014, one day before a deadline for negotiations to conclude. Balfour refused to allow an extension of time for negotiations which could have prompted a fourth bid. Carillion subsequently announced it would no longer pursue a merger with its rival.

The company sold Parsons Brinckerhoff to WSP Global for $1.24bn in October 2014.

Operations

Balfour Beatty has three businesses:

Building, design, construction management, refurbishment and fit-out, mechanical and electrical services, civil engineering, ground engineering and rail engineering.

Installation, upgrade and maintenance of water, gas and electricity networks; rail renewals; street and public space management, operation and maintenance.

Operating a portfolio of long-term PPP concessions in the UK, primarily in the education, health and roads/street lighting sectors. Operating a portfolio of long-term military accommodation PPP concessions in the United States. Balfour Beatty also has interests in non-PPP assets in the UK.

The company is a 50% shareholder in Gammon Construction, based in Hong Kong. Balfour Beatty is a member of Constructing Excellence, the Business Services Association and Build UK, comprising members of the Confederation of British Industry.

Major projects

Projects involving Balfour Beatty include: