Archive for June 2nd, 2007

This month, Rupert Bates talks to Persimmon chairman John White about building, rugby and the price of a pint.
John White, chairman of Persimmon Homes, looked distraught. The pain was still raw. Had a huge land deal fallen through? Was the FTSE 100 housebuilder about to issue a profits warning?

No, his beloved rugby team, Northampton Saints, had been relegated from the Guinness Premiership. It has not been White’s sporting year. He travelled to Australia last Christmas for the fourth and fifth Ashes Tests. Enough said.

We meet at Simpsons-in-the-Strand, Piccadilly. “Will your guest be wearing jeans and trainers?” said the sniffy guardian of London’s most expensive scrambled eggs.

The temptation was to reply: “I don’t know. Is that the dress code? My guest’s company has a market capitalisation of £4.5 billion; sold 16,700 homes last year and made pre-tax profits of a smidgen over £582 million. If he is wearing Levi’s and Nike, put the bacon in the oven and I’ll send him down to Savile Row with my credit card.”

In his dreams White wears the green, black and gold jersey of Northampton, with Persimmon, the club’s shirt sponsor, writ large. He played for the Wanderers, the club’s second XV, but having just broken into the first team as outside half suffered a serious knee injury and had to give up the game.

Obviously there was much to talk about. The proposed merger of Taylor Woodrow and George Wimpey to create the UK’s largest housebuilder Taylor Wimpey was the talk of the City, with the spectre of Persimmon to counter bid for Taylor Woodrow looming. Was it a merger or an acquisition? Who was buying whom? Whose books would Persimmon be allowed to see?

“Have you been in the Crooked Hooker?”

Suddenly a Show House interview had potential to mushroom into a sleazy News of the World exclusive. Relax, Persimmon shareholders, the main topic over a pot of coffee and a bewildering bowl of suspiciously healthy-looking fruit, was rugby, with The Crooked Hooker the name of the former players’ bar at Northampton’s ground, Franklin’s Gardens.

“Give me a call next time you are covering the Saints for The Sunday Telegraph and we’ll have a beer there,” said White. Sorry John, might have to wait a season. I usually only cover the Premiership. Ouch.
White then spoke with lashings of common sense about professional rugby in general, Northampton’s problems in particular. White’s friend Keith Barwell, Northampton’s owner, could do worse than get White on the board.

Where were we? Sorry, housebuilding. Naturally with Persimmon linked to every takeover except Boots, White had to be corporately sensitive, but was happy to talk generically about industry consolidation.
“It will continue. If you get the basics right and are big, you have a huge advantage. Just being big, however, is not good enough. You need disciplines throughout the business and contrary to some people’s perceptions, innovation and enterprise too,” said White.

“As a sector we need these mergers and acquisitions to work. They are very challenging to put together.”
White also disagrees that consolidation will by definition reduce volume.

“Chasing volume for the sake of it ends in tears. If with consolidation the stronger takes out the weaker, it makes the new company stronger and strengthens the industry. You would have bigger reductions in volumes if mergers did not take place.”

I mention planning and the fruit platter is almost pebble-dashed with coffee.

“It is so frustrating. Planning has to be more efficient and reliable, taking volatility out of the market. If we had 18 months of relative certainty we would not have to carry five years of land supply. Consistent delivery would keep inflation under control.”

He admits that the ‘big is not always beautiful’ tag is a fair one in terms of design and kerb appeal, but points out that if planning was not so restrictive, you would see more variety in elevations and less stereotypical products.

“We do not as an industry handle our PR and profile well and are not proud of everything we have built. But remember designs are drawn up by qualified architects and approved by planning committees. Lots of professionals participate before a home is built. CABE seems to assume poor design, which is subjective anyway, is always the builder’s fault. ”

He rejects blanket criticism of the volume boys, now labelled the ‘Super Housebuilders.’

“We should be building homes, not fighting planning regimes and prescriptive policies. We build because of demand and we want to deliver homes at affordable prices.”

White is not a political animal, leaving lobbying to other captains of the industry, but politics is becoming a housebuilder.

“The industry has only recently been challenged to deliver £60,000 homes. Now we are expected to deliver zero carbon homes, while also supplying the affordable end of the market. I certainly do not disagree with the sustainability agenda in principle, but it is already being undermined by the sheer pressure and timescale.”

“Everyone needs to understand it far more and we require consistency of implementation from local authorities. Let us focus on what can really be achieved without dramatically increasing building costs. Some of the new technology and energy efficiency being demanded is not yet proven,” said White, although Persimmon, through Space 4, is already doing its bit.

White does not enjoy the limelight, but he effortlessly and heartily defends the business of housebuilding.
“It is such an exciting industry, offering opportunities to all sorts of people with a variety of skills. You can be a tradesman, a surveyor, a land buyer, a lawyer, an accountant, or in sales and marketing, or in a suit, and you have the chance to work anywhere in the country.”

He knows all about career paths, having left school at 15 to become an apprentice bricklayer, rising through the ranks to chief executive and now chairman of Persimmon. The boss in the suit, Northamptonshire born and bred, can look the man on the tools straight in the eye, for White knows the trade.

“Look at Duncan Davidson (founder and president of Persimmon). He started the company in 1972 with a wheelbarrow and two shovels and turned it into a FTSE 100 business with a market cap of £4.5 billion,” said White.

“Think of the wealth he has created for thousands of people, both for customers who have bought homes and for employees, directly and indirectly.”

White’s background would explain why Persimmon is so keen on apprenticeships and promoting the housebuilding industry in schools as a career.

Give White a magic wand and he would allocate a couple of paddocks for development in villages and towns over a reasonable time frame. “More new homes equal more schools, shops and pubs.”

Ah pubs. “Yes, the story about me buying my local village pub is true.” He bought it from under the nose of developers, looking to turn it into flats.

“Housebuilding is easy by comparison. I did run the pub for a while with a manager, but I stay the right side of the bar. Talking of affordability, a penny on a pint is a big issue in the Midlands, I can tell you.”

Actually, as he well knows, the building game is not easy. “Yes we make good profits, but it is high risk. We lay out millions before we see a penny back,” said White.

“It is technically challenging too, even if some in the commercial building sector look down their noses at us. The job satisfaction is immense, seeing an old quarry, putting in roads and sewers, spending £10 million turning it into a community and giving people homes to live in.”

Before White leaves for a meeting with Stewart Baseley - “Stewart is doing a great job at the HBF” - he is concerned he has not spoken about his successor as chief executive Mike Farley.

“I was delighted to hand over to Mike. He has lots of industry experience and will drive the business forward.”

A return to my office and a look at Persimmon’s Annual Report. A dry old tome, until you notice the personality is in the boardroom. White, the man who saved his local pub and would have swapped hands on the tiller of a housebuilding giant for hands on a rugby ball at Twickenham, has beside him, amongst others, the chairman of Leicestershire County Cricket Club Neil Davidson and the chairman of Marston’s brewery David Thompson. Has he told Thompson that the beer served at White’s thatched pub is Adnams?

First published in Show House Magazine June 2007.
The greatest care has been taken to ensure accuracy but some information contained within this article may have changed since it was first published.

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