THE RECESSION AND DOWNSIZING
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When the banking sector collapsed in 2008, Denis Morgan took the decision to cut the operating size of D Morgan. He reduced the 180-strong workforce by 44 over the next three months.
We took the view that we wanted to get smaller rapidly. We didn't want the same amount of work coming in. We felt an awful lot of companies would be going out of business because the banks were out of business, and because they wouldn't then lend to property businesses," he says.
-I personally thought that making 44 people redundant pre-Christmas. I'd be re-employing them at the back end of the summer [2009]. Ifs only now that we are re-employing people, and that we can see the fall-out of firms going bust as a result of the banks going bust it didn't take six months, it took 14 months," he says.
The workforce is now up to 160, During that period, the company didn't incur one single bad debt. By downsizing, Morgan says that the firm avoided the pressure of having to work to keep people employed for customers it knew were risky in terms of not paying.
"Now the risk profile of the customer is improving, we are working for more companies where we think we will be paid.
"We are now employing plant operators and civil engineering operatives there is growth in the market for us, but. in general, the volume is still very depressed."
Morgan continues: "Housing starts are the lowest since 1923. Who is building shops and retail parks? There is no volume in that, no speculative development. And banks cannot afford to write down development projects because it would further destroy their balance sheets. There is a lot more pain to come as property values have yet to become more realistic."
He adds: "I believe the construction industry will get much worse. because 40% of the spend in construction is government funded you don't have to be a brain surgeon to know what is going to happen there it doesn't matter what colour [of] government gets in, there will be cuts."
The reason D Morgan has survived for 60 years and will continue to survive is because the company is run extremely conservatively, Morgan says.
"Since we have an exceptionally strong balance sheet and a very strong capability in delivering a service to customers, we will grow on the back of customers' clients wanting both of these.
'We won't gamble the crown jewels,he concludes.