A princely position

Reigning supreme in the world of construction Wal King, CEO of Leighton Holdings, reveals why evolving with the times has proved a key strategy to getting – and staying – at the top.

Having spent 23 years at the helm of one of the world's major project development and contracting organisations Wal King, Chief Executive of Leighton Holdings, has seen a fair amount of ups and downs - not least the global recession that hit last year. At the time King admitted that "a few of our tail feathers were singed", but the company seems to have made a fast and full recovery after recently announcing an 82 percent rise in profits from AUS$220 million in 2009 to AUS$400 ­- and the company continues to go from strength to strength, by winning contracts and acquiring new work, including AUS$1.8 billion since March 2010 alone.

Looking at Leighton's operations, what would you say are the biggest infrastructure challenges in the market at large?

Big infrastructure projects are becoming more complicated in terms of design, the risk profile and community engagement whereas 20 years ago, infrastructure projects were nowhere near as complicated. In terms of environmental approvals, community approvals, sustainability, though it is the complexity of the projects as increasing, it becomes an almost square off function. The projects are getting much bigger and larger but they're also becoming much more complicated.

And what would you say are the challenges in the Middle East, specifically?

We work in 20 countries around the world and each of those countries has their own particular challenges in terms of culture and work practices, they all have their own unique cultural differences and issues. In the Middle East specifically the cultural differences are somewhat more amplified by the fact that most of the workers are actually imported workers and then of course you've got the religious aspects and different culture, which are much more magnified in the Middle East than other parts of the world.

So how do you ensure that the Middle East kind of cultural heritage is maintained, despite the advent of new developments?

Well we deliberately have a partnership with some very senior and trustworthy Arab gentlemen and so we look to build our organisation around the culture. At the end of the day it's based on mutual respect and the ability to work in that environment.

Urban planning is an increasingly important subject in infrastructure development. Do you have to work closely with urban planning departments to get the appropriate planning permissions and so on?

Absolutely and you know the planning processes are becoming much more complicated in terms of new direction with the communities, sustainability, pollution - it's a much more complicated process down the line than it was.

In the Middle East we do have a partnership where we own 45 percent of the company Al Habtoor Leighton the process that we go through requires engagement at all levels with the local authorities and with the Arab community, our partners. Our strategy is very much one of consultation and working together with the people.

And looking at sustainability; you touched on that very briefly. An increasing number of companies around the world are championing the importance of sustainability, so how is Leighton building a greener focus into the design and development processes?

I would always broaden the concept of sustainability. It doesn't only mean focusing on green issues and sustainability, in its broadest context, it means being able to have a business that goes forward and embraces all of the issues of sustainability which includes and embraces profitability - if there are no profitability, there is no sustainability - and embraces profitability.

We need to embrace the environment and recognise the needs of the community wherever we work - if we work in Indonesia or Mongolia, we need to have this cooperative arrangement recognising the needs of those communities and that includes energy conservation, recycling, energy efficiency etc, list is very long. But a lot of people talk about sustainability as only issues that relate to the environment and the minimisation of power usage for example, but it's a much broader subject than that. Sustainability in the broadest context is under the concept that you have an license to operate that will only continue to be good if you satisfy the environmental issues, community issues, mutual respect issues and include the needs of the client as well as profitability.

And what are your views on using sustainable materials and resources?

Wherever possible we use sustainable materials and resources but in some cases, of course, it's dictated by our client. If it's our own developments then we develop to the highest standards in Australia. We were the first to build the highest rated building, the Green square South Tower, which was a five-star Green Star rating for Office Design from the Green Building Council of Australia. However, quite often these things are dictated not by us but by our clients or alternatively if we're in a location in, let's say in Central Indonesia, sometimes these materials are not available. So in Sydney and Melbourne and Brisbane, of course, yes we do use the most effective and sustainable and renewable materials and we, in fact, recycle. We're a big recycler and in our earth-moving business and we strive to have more energy efficient uses of our equipment and the like. It's a complete all-embracing ecologic strategy but the strategy has to be pretty much in tune with the local situation.

To what extent are building and environmental standards important in your opinion?

Well they're continuing to evolve in terms of energy usage, material usage and it's a matter of keeping in gear or in contact with the demands of the community on one hand but also in terms of our license to operate in our own ethical standards, and our own ethical standards are that we do the best possible job, the best possible thing in the environment within which we work. Our core values very much dictate that we do the right thing.

Looking at the global economic crisis last year, what impact did that have on you in terms of your projects? Did you have to make any cutbacks, for example?

The biggest area that was affected was our property business where property work came to pretty much a standstill. However, if you went back to the start of the global financial crisis there were dire consequences predicted that the world was coming to an end and of course that hasn't happened and the recovery, particularly in Australia, has been much quicker and more powerful than people predicted.

Yes we had to adjust our business strategies, but we're always adjusting our business strategies. In our particular case, we're on a continuing journey and that continuing journey requires us to be in tune with the environment. When you encounter a rough period like the global financial crisis, you adjust your business strategy so that the things that you're doing are compatible with the economic circumstances that you encounter and again we're adjusting now. We have a continual evolving strategy and that work is never done and never will be done. It's a matter of continuing to navigate your way through the ever-changing environment and the environment is changing and it's only in the context of looking backwards that you can see the rapid changes that are happening in the community and the world at large.

You say that you're constantly evolving. Is that something that's quite hard to do as such a large organisation? How do you manage that?

We're a very decentralised organisation and our business planning process is, what I call, all about the rules of racing. The rules of racing set out the financial parameters and so on and so forth. And then we delegate to our respective managers, so they have the rules of how they operate and then they have the freedom to operate within that. So it's the financial and planning discipline but freedom to operate. So it's like, in simple terms, playing a game of football: everyone knows the rules but once you're on the field, you have to use your own initiatives and accountability. So we delegate a lot of accountability and responsibility to our senior people but it's all done within a discipline framework.

And did you feel any impact on operations in the Middle East after or during the financial crisis - there was of course a great deal made of Dubai being bailed out by Abu Dhabi ­- did any of this have an impact on your operations in the region at all?

The Middle East was more magnified in terms of the effect of the financial downturn and a lot's written about the Middle East but Dubai is just part of the Middle East is not the total Middle East. Obviously there's been difficulty in the region, and continuing difficulties in Dubai but overall, the region is very sound.

I'm a great believer that we're in a long-term growth cycle and the world will go on for another 20 years. It's like the stock market, when you look backwards in the stock market, like the crash of '87, these are mere blips on the horizon when taken over the fullness of time. There is an old saying that says that you shouldn't be too heavily influenced by recent events but if someone just beat you up and someone says to them, 'Don't worry you'll get over it,' I mean, it's pretty hard to get over at the time. But we are in a long-term growth cycle and in the next 20 years, there'll be another billion and a half people that will enter the middle class and that middle class will drive along greater growth in the world.

When we had the global financial crisis occurred, a huge economic earthquake happened, much like a real earthquake, and the economic plates of the world shifted and they're not going back to where they were. So if the last century was the century for America, this century is going to be the century for Asia. Not that America will be smaller or poorer, it will be just less important in the world scale as is the case with Europe, it will not be poorer, it will just be less important.

You're obviously very optimistic about the coming next decade. Where will you predominantly be focusing your work over this time?

Well, we are focusing our work, you know, on Asia, the Middle East and India and all of those places where we think their growth is important and will happen. Leighton have a magnificent footprint in the world and we have the resources, management and capability to continue to grow. When I joined Leighton in 1968 it was on AUS$17 million a year and about 200 people and now it's a 40,000 people organisation on AUS$19 billion and we have an aspiration that within five years, we will have a revenue of AUS$30 billion and AUS$50 billion worth of work in hand.

Finally, what do you believe to be the biggest challenges facing the industry as it goes forwards?

Well the biggest challenge is the continuing need for human capital and capable people and we're continuing to recruit and train and at the end of the day, we only have two things in our business. We have capital and we have people and assuming that you can get the capital either by equity or through borrowing, it comes down to people and it's like that pilot that's flying near a plane. Good people produce good results. So the greatest challenge for us is to be able to attract and retain and train our people to be effective in an organisation, be well rewarded and produce great results for the shareholders.

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Al Shaqab Equestrian Academy

Project: The Equestrian Department and Riding Academy at Al Shaqab share a goal of providing education of the highest calibre in classical horsemanship. The world-class equine management facility will include an equine breeding facility; an equine hospital; an Olympic standard indoor arena with adjoining outdoor arena and; entertainment facilities.

Location: Qatar
Value: AUS$317 million
Status: Construction started in June 2006
Completion: Due January 2011

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Emerald Palace

Project: The Emerald Palace is located in the Palm, the world's largest man-made island, and covers almost 100,000 square metres. The Emerald Palace hotel is a seven storey classically styled building and features an imposing Palladian dome surrounded by landscaped gardens. The 200 exclusive residences range in size from 165 to 1300 square metres, including spacious terraces or balconies.

Location: Dubai
Value: AUS$293 million
Status: Construction started in June 2007
Completion: Due June 1010

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Information Technology & Communication Complex

Project: The Information Technology & Communication Complex (ITCC) is a state-of-the-art facility that will be used as the centre of commercial and industrial business operations. The ITCC offers a viable and attractive community of knowledge-based industries such as information technology, infocom technology, high tech research and development, and office and logistics solutions for multinational corporations.

Location: Saudi Arabia
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Status: Construction started in August 2009
Completion: Due in July 2012

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Where it all began

Wal King: "I finished my first degree at the University of NSW in 1966, and I then worked with the Electricity Commission in New South Wales, which is a power generating authority where I did a Master's degree. When I finished that master's degree, I looked around to join an Australian company and eventually joined Leighton. Back in 1968 Leighton had an annual revenue in the dollars of that day of AUS$17 million a year and of course, this year it's AUS$19 billion.

"When I was looking to join an Australian company a lot of my friends went off to work for overseas companies and you know, I'm strongly patriotic and I looked, in those days, for a small company to join that had a spirit of adventure, the ability to grow and in hindsight my choice was first class."