Utility player: the five-year reign of Clancy’s CEO

Former rugby union professional Matt Cannon is celebrating five years in charge of engineering contractor Clancy, a period marked
by continuous growth

Pulling off a quiet country lane and through the entrance gates of Clancy’s Middlesex headquarters feels a little like entering the grounds of a grand country estate. The long tree-lined driveway is flanked by a scene of English rural tranquillity. Passing fields and trees, a large lake appears between the trees, dappled light from the bright winter sun bouncing off its surface.

The bucolic setting belies the site’s strategic location less than a mile from the M25 motorway. Former managing director Dermot Clancy, son of founder Michael J Clancy, discovered the site in the mid-1970s while driving around looking for a new west London home after the firm outgrew its original Wembley base. After acquiring the site, home to a quarry and asbestos factory, the office officially opened in 1983. The quarry was filled in to create a fishing lake, which is now fringed by a nature trail for staff.

Reaching the business end of the driveway feels more salt-of-the earth than Saltburn, however. A typical 1980s brick office block sits beside a sizeable workyard with a collection of low-rise workshops. Outside, a large collection of plant, painted in the firm’s distinctive green and red livery, awaits attention. As I arrive, a muddy digger, fresh from site, is being prepared for a washdown, repair and fresh lick of paint.

I meet Matt Cannon, the firm’s chief executive, in a modern meeting room sitting within a formerly dingy wing of the office, which is now full of light. During Covid, Clancy took advantage of the absence of administrative staff to brighten up and reconfigure the office building. Steps away from the meeting room, the building’s canteen is now adorned with quotes from Michael J Clancy. A black-and-white 1960s photo transfer of the founder and his young offspring adorns one of the walls.

From rugby to construction boss

Cannon is the son of Doreen, one of Michael J Clancy’s four children. Two decades ago, Cannon was a rugby professional, turning out for London Irish and at one point selected for England’s sevens team while working part-time for Clancy. Since then, he has worked his way through the business in a series of operational roles. “It gave me exposure to pretty much every facet of the business,” he says. “For us as a family, that’s been really important. If we’re going to be a hands-on operational owner and manager, we need to have the right skills in place to do that.”

Cannon celebrated five years as chief executive in January and is starting 2024 in upbeat mood. In December, the infrastructure-focused contractor reported a 14 per cent rise in turnover (to £334.5m) and a 25 per cent rise in profit (to £11.4m) in the year to April 2023. The 2022/23 accounting period was the fifth consecutive year of growth, with Cannon dubbing it “one of the best” in Clancy’s 65-year history.

“Like a lot of things in life, there isn’t really one silver bullet.It’s a combination of new areas and coming out of areas that didn’t work for us”

Matt Cannon, Clancy 

So how has the firm ridden out the recent economic turbulence that has marked his reign so far? “Like a lot of things in life, there isn’t really one silver bullet,” Cannon says. “It’s a combination of new areas and coming out of areas that didn’t work for us.” On the latter, Cannon cites a move away from multiutility contracts and housebuilding as key factors. “We stopped operating in these areas and ultimately have focused on the things that we’re really good at – water and wastewater, energy, and civil engineering.”

In addition, a couple of frameworks that Cannon describes as “quite difficult” due to the original pricing calculations, have now ended. “The challenge with frameworks is that you’re tied in for quite a long period,” he says. “You don’t have to be wrong by much [on high-value jobs] for it to have a pretty catastrophic impact on your ability to make money.”

But these experiences have not dulled Cannon’s taste for frameworks. Clancy’s expansion from its roots carrying out work for London local authorities into a nationwide utilities player has rested heavily on securing places on utilities frameworks. In November, the firm was appointed on a five-year £3bn capital works framework for South West Water. This expands the firm’s geographical reach by joining framework places in East Anglia, the South East, North of England and Scotland.

Cannon says the inflation indexing that comes as part of most framework deals has provided a key protection from rising prices (the firm reported an increase of 13 per cent in cost of sales in its recent results). “We’re relatively stable,” he says. “We’re not exposed to so many fixed-price contracts, which I think is one of the key things that’s causing lots of problems for a number of companies.”

In addition, the firm’s involvement with HS2 – via a £180m utilities-diversion framework – is limited to the southern, rather than recently-scrapped northern, section.

Clancy is also moving with the times. In December it signed a smart-metering partnership with communications infrastructure firm Arqiva, a relationship initially forged through the work that both firms carried out on Anglian Water’s Integrated Metering and Development Services Alliance. The new joint offer is aimed at providing a one-stop shop for utility firms to implement their smart-metre plans, providing installation and data collection in one contract.

Describing what he calls a “unique” offering, Cannon says: “Installing the smart meters is one part of the process, but getting the data from them so that you can understand usage, behaviours, etc, becomes the next bit. Another bit that goes with it is also creating a framework and a network to actually get the data out of the metre. You have to have masts in the right place, you have to have a network that feeds into them. You can’t just install the smart meter and go across the existing networks.”

With a raft of new utilities frameworks set to come online, Cannon is upbeat about continued growth. He says that the firm’s financial forecast for this current year expects revenue to rise at a similar level to 2022/23. “There will be opportunity for us in the coming months with the frameworks, particularly the new frameworks that are up for grabs linked to our base in the water sector.”

Cannon also points to the four-pronged business strategy that has guided the firm since he introduced it in 2019. Each prong – technological transformation, skills, decarbonisation and investment – has a raft of separate implications. But three of the strands come together in the firm’s spending on its fleet of equipment, vehicles and plant.

Cannon says fast progress is being made around decarbonisation. A £250,000 investment last year saw the installation of solar panels on the workshops at its headquarters. Across the wider business, the easiest wins are achieved on fixed sites, he says.

“You can set up battery-storage compounds, you can set up charging. We have invested heavily in solar pods to generate power to take site cabins off-grid. If you look at things that are coming down the line, we are talking to manufacturers about things like hydrogen [to power] the plant
and equipment.”

Transport provides different challenges. The firm is spending big on overhauling its telematics system to give it a more granular view of plant and vehicle usage, in an attempt to eliminate unnecessary journeys. The firm now has 140 electric company cars on the fleet, while last year it took delivery of 70 new electric vehicles for its operational fleet. It is also rolling out HVO fuel for its HGV vehicles.

However, Cannon says that suppressing fuel use via telematics only gets you part of the way to net zero. And he voices frustration about some of the factors that are slowing Clancy down in meeting its ambitions on vehicle electrification.

The scarce availability of semiconductors following Covid has inevitably impeded progress. But he points to a more fundamental factor affecting the firm. The major pinchpoint, Cannon says, relates to the high-volume, low-value repairs and maintenance work the firm carries out. Here the staff have to be “very mobile – doing three, four or five jobs a day in different locations” and then driving their vehicles home, he says.

“The challenge for manufacturers broadly is the weight of batteries,” Cannon says. “The best electric range on [transit vans] at the moment is about 60 to 80 miles, right now with nothing in. As soon as you put the type of equipment our teams carry on a daily basis in, you’re talking about 40 miles. At the moment that is not really viable from a productivity and efficiency basis.”

Two other technological investments in the past year have resulted in the refresh of Clancy’s financial-control systems and the introduction of new depot-management software. Here, Cannon hails great strides in the user experience in recent years. “This is part of the technology evolution,” he says. “Historically, systems used to be quite clunky. They used to need styluses and had tiny text. Now they’re designed a bit like phones are from a user-interface perspective.

“Whereas we used to design systems around what does the back office need, now it’s ‘how do we make it easy, big, simple, intuitive?’. We’ve invested a huge amount of time and effort, and we’re trying to do things in a controlled way, trying to make sure it works, trying to get it adopted and get people to understand the benefits. I think where we’ve got to now, people in the field want it, they recognise the benefits. It makes people’s lives easier. And it works. And if the teams get that from a systems point of view, we’ll get the benefits we want from a business point of view.”

Workplace culture

Despite its ongoing financial growth, Clancy is not immune to problems caused by the construction industry’s skills shortage. “It’s pan-business,” he says. “Yes, we need engineers, but we also need finance people. We need HR professionals and we need quantity surveyors, we need technology people who can actually help us embrace AI.”

Existing staff are a key plank of the firm’s strategy. The firm made 170 internal promotions in 2023 and, since 2021, more than 380 appointments via references from members of the workforce (making up around 15 per cent of total headcount. “The single biggest recruitment tool we have got is internal recommendation,” Clancy says. “Being seen as a good employer is a really positive part of that. People don’t tend to recommend a company they don’t like.”