Lagan Construction reaping benefits of global airport expertise
Lagan Construction first started work on runway contracts 20 years ago and is now using its hard won reputation to clinch deals at aviation sites across the world, writes Clare Weir
Published 22/07/2014 | 08:05
Twenty years ago, Colin Loughran received his first project management appointment with Lagan Construction Group, working on repairs to a runway at RAF Leuchars, an air defence station in Fife, Scotland.
Two decades later and he is now the managing director of the firm, which unlike many UK-based competitors, now offers building and repair work on both runways and airport terminals.
With soaring demand in the civilian, private and military aviation industries, airport expansion is rapidly rising to the top of government agendas around the world and Lagan Construction Group (Lagan Construction), led by Michael Lagan, as well as Mr Loughran, is keen to further take advantage of the opportunities in the sector.
Lagan Construction's airports division is now recognised as a specialist in airside and landside improvement projects, laying over 6m tonnes of asphalt and concrete and delivering more than 40 successful airport contracts worldwide.
One of the biggest projects saw Lagan Construction team up with Pakistan Limited and the Pakistan Civil Aviation Authority to deliver both the airside and landside contracts at the new Benazir Bhutto International Airport in Pakistan, with a contract value of £156m.
The new airport, located on 3,200 acres of land, was the largest green field airport site in the world.
The group's latest contract took place at Bristol Airport, where workers have just completed a six-month project on a private jet hangar to house one plane and three helicopters. Lagan Construction said they could not identify their client, who will be using the hangar.
Mr Loughran said that the airport work made up around a quarter of Lagan Construction Group's £170m profits last year.
"We started airport work 20 years ago this year and it has been a growing market for us," he said.
"My first ever job as a project manager was on our first such contract at RAF Leuchars, from there we worked for the US Air Force at Lakenheath and then moved to jobs in Cardiff, Luton and Bristol.
"When working abroad, we do contract local labour because we like to leave a legacy, we want to train local people and put as much as we can into the local economy – however most of the key staff would come from Northern Ireland.
"It's amazing how many people you would meet working in these industries who originate from Northern Ireland – I think our accent is probably our best asset, too."
Mr Loughran said that airport work is high specification and high risk.
"You are taking over runways at midnight and handing them back over at 6am," he said.
"To manage the risk you need good equipment and good people. Every night is like a project on its own because there is a deadline every morning and the reputational and financial damage that could be caused by missing that deadline is huge.
"You have to treat the airport like it is your own and because of that we have a very strong reputation. Everybody involved in airports wants quality and safety. The runway is a key asset and if you can't land an aircraft safely, then you don't have an airport."
Mr Loughran said that the company was now moving into offering dual services for terminal and airside infrastructure, acting as a "one stop shop" for airport bosses.
"There will always be some sort of issue between those who carry out the work on the runway and those who conduct the work on the terminal, so we have come together to offer both," he said.
"The Bristol job has been a great success and we are now hoping to build our portfolio. We are hoping that the private side of things will continue to grow. With larger hub airports becoming too expensive for a lot of aircraft owners to base themselves, we envisage a lot more private work at regional airports."
On the military side, Lagan Construction Group is now on its third project in the USA, a £8.2m contract at Minot Air Force Base in North Dakota.
Mr Loughran said that the company has not only weathered the financial storm, but has achieved two years of growth, in some of the toughest times ever seen in the wider construction industry.
"I suppose the key thing is that we keep treating our people well. Even when times were hard, we were honest with them," he said.
"We didn't do anything silly but we knew that diversification was our strongest strategy. Another key strategy is that we self-perform – we build things ourselves. We are expecting decent growth in the next year."
Lagan Construction Group has now worked at Heathrow, London Luton, Gatwick, Cardiff, Bristol and Bournemouth in the UK, as well as in Puerto Rico, the Bahamas, British Virgin Islands and Bermuda in the Caribbean and in Hong Kong and Pakistan.
The group has since been awarded another airport contract for a terminal refurbishment and runway resurfacing works at St Mary's Airport in the Isle of Scilly, valued at £6.3m.
Airside, the Lagan Construction Group teams will upgrade airfield ground lighting, drainage and the apron.
A new car park will be built and road resurfacing will also take place.
With a number of recent reports, trade bodies and companies now calling for the fast-tracking of major building projects in order to help grow the Northern Ireland economy, Mr Loughran said that companies here need to be ready for new challenges.
This year the Northern Ireland Executive said it would be allocating £1.6bn of infrastructure spend to projects and Finance Minister Simon Hamilton has pledged to centralise procurement and delivery of infrastructure projects, prioritise schemes and change the culture of the civil service "in order to make the most of the capital budget".
"There have been calls for more infrastructure projects and there is a campaign for Northern Ireland to have a lower rate of corporation tax than other parts of the UK," Mr Loughran said.
"If that lower limit is delivered, then we need to be ready for that. Once it goes down, our financial support for London goes down, we need to have infrastructure in place to prepare for that and we need to make the very best of the skilled and well educated work force we have here in Northern Ireland."
Built on strong foundations
Lagan Construction Group was established in 1962 by Peter Lagan and delivers civil engineering and building work for roads, airports, water, energy, marine and building projects throughout the United Kingdom, the Republic and worldwide.
It now employs around 400 people and is led by director Michael Lagan — the son of Peter — and managing director Colin Loughran.
In one decade, Lagan Construction has delivered 500km of new roads throughout the UK, Ireland, Jamaica and Puerto Rico.
The firm also has expertise in the design and construction of water distribution and collection networks having laid over 1,700km of pipeline in the last 10 years.
The group also specialises in piling and foundation work for all civil engineering and building structures and delivers operation and maintenance services for roads, highways and buildings.
Sector set for take off again following dip
Earlier this month, Ulster Bank parent Royal Bank of Scotland said that demand for airport infrastructure financing is at an all-time high as governments increasingly take advantage of big investors’ appetite for the asset class.
Recent deals in the sector show increasing interest from debt investors globally to refinance existing debt and help equity investors fund new acquisitions and capital expenditure.
A number of airports are expanding to accommodate growing air traffic and improving their infrastructure to improve their passengers’ experience.
Meanwhile, airport capacity is constrained while airlines continue to upgrade and expand their fleets and global demand for air travel continues to grow, with the International Air Transport Association expecting a 31% rise in passenger numbers by 2017.
A PwC survey of nearly 40 chief executive officers at global airlines recently found that 82% are confident that their industry's revenue will rise over the next year.
The report said airline bosses are more upbeat about the prospects for their industry than all CEOs as a group.
Expanding middle classes in Asia and emerging markets such as Latin America have boosted travel demand and helped airlines bounce back from losses since the 2008-2009 downturn.