Thrasos Thrasyvoulou of Habtoor Leighton Specon
Thrasos Thrasyvoulou of Habtoor Leighton Specon
Thrasos Thrasyvoulou, managing director of Habtoor Leighton Specon, on how a patient and prudent approach in recent years means his company is well positioned for a move into new markets
If a book were to be written on the history of the MEP industry in the Gulf over the last 35 years, there may be no better author than Thrasos Thrasyvoulou, managing director of Habtoor Leighton Specon (HLS). Having worked in the region since 1977, he has seen it all, and with a boundless enthusiasm can relay much of it in such incisive detail that it would be sure to make interesting reading.
The master-raconteur’s wealth of experience has undoubtedly been central to the steady rise of his company’s fortunes in the years since it was established in 2005 as an MEP partner to the Habtoor Leighton Group (HLG).
It was certainly put to good use during the trauma suffered by the industry in recent years. Although exposed like the rest of the industry to the rougher elements of the economic climate during that time, HLS has seemingly weathered the storm better than some of its competitors, and is now preparing to make the most of that advantage with committed moves into the rapid growth markets of the region.
For Thrasyvoulou, this is a big moment for HLS. “We are at a very important time for the company,” he says. “This year will see our efforts in 2012 to move into other countries materialising, particularly in Iraq and Saudi Arabia. It is the beginning of a very interesting period. Our vision to expand geographically is underway and it will see us continue to be one of the major players in the region.”
Of all the Gulf states, Thrasyvoulou believes that Iraq holds the most promise. He says that the relentless tragedy which the country has suffered since its war with Iran in the 1980s has left the country in need of major reconstruction, development and investment.
With proven oil reserves in the country on a par with Saudi Arabia, currently the world’s largest oil producer, Thrasyvoulou says it is only a short matter of time before Iraq is transformed into a hotbed of fevered construction activity.
“I personally believe in two or three years that Iraq will surpass Saudi Arabia in terms of the amount of [construction] business there,” adding that “it is always in my thoughts to enter in there very decisively.” HLS is already assisting HLG in securing two or three oil and gas and infrastructure jobs in Basra and North Iraq, and Thrasyvoulou says that this is a precursor to HLS “developing something very serious in Iraq by the end of the year.”
More predictably, Saudi is also of huge interest and HLS is expecting to make significant inroads into the market in 2013. Currently the biggest construction market in the Gulf, Thrasyvoulou says the work needed in Riyadh and Jeddah should mean Saudi is busy for years to come.
While other companies have “rushed into Saudi over the last five years”, HLS has been patient, which has given his team and he ample time to analyse the market before proceeding.
They have concluded that the best approach will be to establish strategic partnerships in pursuit of individual projects. With this approach Thrasyvoulou expects the company to pick up maybe “two to three” projects there by the end of this year.
Like several other Dubai-based MEP contractors, HLS has already made a significant dent in Qatar.
It has had a presence there for the last two and a half years and is currently finishing work on three hotels, Merweb, Rotana and Shangri-La, with a total value of around QAR 600m.
Further projects are being sought in the power sector with Kahramma, the Qatari power and water corporation, and other discussions with several main contractors for upcoming work are ongoing.
According to Thrasyvoulou, Qatar needs to build around 55 more hotels before the 2022 World Cup in order to meet the accommodation needs of the expected visitor numbers attracted by the tournament.
Along with the imminent rail and metro project, for which HLS are pre-qualified along with their Spanish partner Cobra, and work on the stadiums, he says that there should be sufficient contracts to be won there by most of the major contractors in the region.
However, he is doubtful of predictions that Qatar will replicate the construction boom experienced by Dubai between 2003 and 2008.
“I believe that, because of the smaller size of Qatar and the fewer number of tourist attractions in the country, it will never reach the peak that sometime ago Dubai had, but it will reach an enviable level of business for all big contractors to get their fair share,” he says.
Thrasyvoulou also predicts that Dubai itself will recover significantly but will never return to the crazy heights of the last decade: “It has already built most of what was required,” he says. “Maybe the healthcare sector and education may offer something, but I don’t think other sectors require much more work, for now at least.”
Beyond the big growth markets of Iraq, Saudi and Qatar, HLS’s ambitions for geographical expansion also extend to Oman and Kuwait, where they currently have invitations to tender for hospital projects.
However, HLS’s plans for growth do not stop there with Thrasyvoulou revealing that the company is targeting growth through diversification of specialities as well.
“We are one of the few companies who have in-house oil and gas, energy and power, and solar capability,” he says. “Together with Cobra [HLS’s Spanish partner] we have submitted a tender to Kahramma in Qatar for seven substations in the past few months. We are also in a good position to secure an award for a 12MW power station in Corsica.”
The aim of this growth, both geographically and by diversification, is to make HLS “number one in terms of turnover and profit”, Thrasyvoulou says. He describes HLS as “a 1bn dirham company in terms of turnover”, although a difficult 2012 for the entire industry saw that figure drop.
The companies backlog currently stands at approximately AED 1.5bn, with a workforce made up of 150 qualified engineers, 500 to 600 support staff, and 4000 technicians spread between the UAE and Qatar. With the moves into new territories and new sectors, Thrasyvoulou expects the company to reach AED 2bn in revenue in the next few years.
However, he is quick to highlight that turnover is not his or the company’s barometer of success. A healthy bottom line is fundamental to his thinking and central to the daily operation of any sound business, he says. “I want the company to do well and make a profit so I can look after my people. If I don’t have a profit we cannot take care of our employees.
We could win ten contracts tomorrow morning and have a huge turnover, but if we don’t make a profit from those contracts then it is of no use.”
Such behaviour, unfortunately, has been quite common in the industry of late. The HLS managing director can offer a glut of tales about other contractors, who he is too polite to mention by name, undercutting his company – only for those parties to run into trouble on the job and HLS to be brought in to clean up the mess.
He believes that the current price-cutting war besieging the MEP industry can only end badly, but he thinks main contractors are beginning to realise the danger of encouraging this behaviour.
“You are not getting the best service on a difficult MEP project if you get the lowest price,” he says. “We want to maintain quality and, speaking to main contractors in the last few months, they are realising that it is not in their interest to keep squeezing sub-contractors.
It’s not as difficult to secure work these days with our reputation for quality and history, but if it is a matter of price we have our red line on price – and we don’t accept projects that we know will not provide a return to the group.”
This restraint in a time of difficulty for the industry, particularly in the UAE, has apparently allowed HLS to avoid the pitfalls into which others have walked.
While 2012 saw its balance sheet take a marginal hit, its backlog of projects following the construction market collapse has enabled it to carry on without too much of an upset to its structure and finances.
Work on the Paris-Sorbonne and Zayed universities in Abu Dhabi, as well as the ongoing New Mafraq Hospital project, have meant the company has been kept occupied during the darkest days of the downturn. Thrasyvoulou believes that the worst is certainly over and expects a return to growth for the entire industry this year and in the years to come.
“We have been hearing in the last six months that liquidity has increased in the banks, investors are more confident now and there will be a lot of projects,” he says.
“We are having discussions about three to four major projects in the region, in which our partners HLG are also involved, that are more than AED 2bn in total in terms of MEP works. We expect those to come through and the backlog to grow once again, which will set us up well for the coming years.”
Going forward, Thrasyvoulou says that his vision to firmly establish HLS as the number one diversified MEP contractor in the region will depend on maintaining its reputation as a company that delivers quality on time and within budget. But he also stresses that this vision must be shared by everyone in the company and that, without their investment in it, the vision is unattainable.
“As a leader, you must share your vision with your people,” he says. “You must have a strategic plan on how to get there and they must know how it is to be implemented. If your people don’t know where you are going, they cannot follow, and no one can make it happen alone.”
The group dynamic
HLS was established in October 2005 following an agreement between Thrasyvoulou (Specon Ltd) and Al Habtoor Engineering (now HLG) to establish a standalone MEP partner to the group, with ownership split 49/51 between Thrasyvoulou and HLG respectively.
“When we signed the MoU (Memorandum of Understanding) we set out the basic principles such as the legal status, working capital, finance and management” Thrasyvoulou explains.
“I undertook the overall responsibility for the company’s operations and was appointed the first managing director and deputy chairman of the company. Obviously we regularly consult the group’s board of directors on major issues and strategy, but the agreement is that I have the responsibility for running the company.”
These first few years saw HLS focus primarily on projects on which HLG was the main contractor as the company had an extensive backlog of work. This dynamic continued up to 2011 when Thrasyvoulou decided that HLS would like to expand business with other contractors.
“We are now in search of work and the objective is to have at least 50% of our turnover coming from other contractors,” he says. “It was 15% at times, and sometimes even lower, because there was no need to over-expand. Recently we are looking for more work beyond HLG as part of our longer term strategy in becoming the leading diversified MEP player in the region.”
- 1bn HLS’s approximate turnover at its highest peak in UAE dirhams
- 2005 The year HLS was established as an independent partner of HLG
- 2bn Turnover target in coming years in UAE dirhams