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Project First Engineering Ltd - The Interview

Few people would dream of leaving a successful engineering career with Tesco and going into business for themselves. But Project First's founder Mark Stratford did exactly that six years ago and he now owns a multi-million pound company, with a client base including his former employers.

Mark, former head of Tesco's engineering department, set up Project First Engineering Ltd, the independent refrigeration, project management and contracting company, in April 2001. Recognising that no-one else was meeting the multiple food retail industry's need for independent, professional refrigeration solutions and project management services, delivering full customer satisfaction from start to finish, Mark decided to fill the gap himself. Six years on, Project First has a turnover of over £20m and employs 44 staff. The Grocery Trader spoke to Mark Stratford and Project First's business manager Keith Morris.
Reflecting Project First's rapid growth, Keith joined in October 2006 as a project manager and is now responsible for one of the company's three regions, one of a number of rising stars in the team.

When we met them, Mark and Keith had just visited a major grocery retailer they hadn't previously done business with, to talk about potential projects for next year. With this growing interest in his company, Mark is eager to discuss the reasons why more and more major retailers choose to outsource refrigeration projects to Project First, rather than work with the equipment manufacturers and traditional refrigeration contractors or use their own in-house expertise:
"The major refrigeration manufacturers have traditionally supported their products with sales and engineers, but recently much of their UK production has moved to low cost manufacturing bases, and the suppliers have pared back their service. Meanwhile as retailing competition intensifies, the retailers want better service, cost and innovation, and look to companies like ours with retail and project management experience to provide it."

COMPLETE SERVICE ALL ROUND
From its base in Bletchley, Project First offers a complete portfolio of retail refrigeration services, including project management and supply of display cases, refrigeration plant and equipment. It employs fully experienced and qualified engineers to manage projects throughout the UK, assisted by a strong central resource of support services.

This proposition is clearly attractive to the major supermarket chains. Project First's impressive client list includes Mark Stratford's former employer Tesco, plus Marks & Spencer, John Lewis/Waitrose, Aldi and Budgens. Superstores and hypermarkets account for 65% of Project First's business, and convenience stores and forecourts 30% and 5% respectively.

"Our ambition is to expand our c-store and forecourt business," says Mark, "and develop our business into distribution centres and cash 'n' carries."

Project First carries out 150-200 projects per year. With major retailers refitting stores every five to seven years, two M&S stores they originally fitted out are now being refurbished, and another early project, the Tesco superstore at Gatwick, was completed this year. Some four-fifths of Project First's current work are store refurbishments, Mark estimates, but Tesco, Waitrose and M&S are also extending their estates with new stores.

Project First's nationwide team of project managers is supported by a drawing and engineering office at Bletchley and a small but growing replica in Glasgow. Glasgow's development has been stimulated by Project First's recent groundbreaking work on Tesco's eco store in Wick, which needed a local office to support it, and general business growth north of the border.

Mark is now sole owner of Project First, after a share buyback from his former partner in 2005. Company turnover is running at just under £21m, from £16m last year and £6m in 2003. "The potential for continued further growth at the same rate is considerable," says Mark. "Quite simply we offer a credible alternative in the marketplace, backed by the retail insight to fulfil it."

HOW IT WORKS
Project First has built a reputation for successfully completing complex projects, often involving difficulties with access to the site and buildings. Current noteworthy projects include Marks & Spencer's flagship Pantheon store: "Mace Plus are the main contractor," says Mark, "but M&S came to us because of our past experience. We're doing a project for Waitrose in Rickmansworth where we are the refrigeration contractor, but the nature of the building meant we led the design."

On major retail contracts, Project First's site team manage installation and subcontract pipework, civils and so on, retaining ownership of quality. The project manager is the hub of the operation, with site managers, installation managers, the technical team, electricians and health and safety people all answering to them.

Distinguishing it from the competition, Project First has a strong customer focus, stemming from the team's experience working for retailers during their careers, hence their in-depth understanding of clients' requirements. Further distancing it from the field is Project First's ability to meet short timescales, keeping up with the rapid pace of today's food retailing environment.

Project First is flexible in the equipment it supplies, says Keith Morris: "If a customer needs a specific size and colour, we can deliver: if customers want items tailor-made, we can supply them. With every project we show staff how to operate the equipment. We train subcontractors on installation practices, health and safety and so on. We recently ran training for the petroleum forecourt passport, and can cover all eventualities.

"As part of our service we make sure the retailer has what they want, and deliver complete projects, not simply a product sale. We focus on every element of a store project, not just the refrigeration: we work with the customer to select the right kit including the building, the shelving, the floor and the checkouts - the entire store."

A UNIQUE APPROACH
Project First's unique approach crystallised following an early milestone contract for the Marks & Spencer store in Shoreham. Mark recalls: "M&S's refrigeration supplier originally employed us as subcontractors. When they hit financial problems, I went to M&S and persuaded them to come direct to us. M&S told us later they had their best ever store feedback on that particular refit, and the sea change was down to us." This success led to M&S appointing Project First for regular fit-outs on a direct business basis. Lee Pope, the M&S Shoreham project manager, now heads the M&S account.

Project First has a main board of four and a five-strong operations board, of which the Engineering and Purchasing Directors are both ex-retailers. Matthew Reeves-Smith, ex-M&S and Safeway, leads the technical side, whilst Gilbert Mackay, ex-Tesco, oversees the purchasing.

Project First sets benchmarks for technical excellence. The only refrigeration specifications in force in the UK retail industry, says Keith Morris, are the food temperature regulations. However the list of demanding standards Project First works to includes British Standards, CE markings and Pressure Directives, with further general guidance on best practice from the British Refrigeration Association (BRA.)

Project First is a member of the Federation of Environmental trade Associations (FETA), the British Refrigeration Association and the Institute of Refrigeration (IOR.) Representatives sit on the relevant working parties, contributing to the further development of industry standards.

PRIMO PRODUCTS
Project First also owns a subsidiary company, Primo Products Ltd, which sells frozen food cabinets, chillers and display cases under the Platinum brand. In Mark's words, "this means Project First can supply those retailers with unique contract agreements that we currently can't otherwise break into."

Primo Products is a £8m business in its own right and employs 13 people, also at Bletchley. It manufactures its equipment in Izmir, Turkey and has intentions for additional production in China. Primo has taken on a salesman to help it break into the forecourt and convenience areas: "If major projects come from this, we'll bring them into Project First."

Primo works to 24-minth contracts for display case supply: Project First tends to have twelve-month rolling deals in place, typically with negotiations in December/January, ready to start in March.
Mark Stratford explains the difference in approach between the two companies:
"Primo Products tenders against a specific project specification and a volume requirement, and agrees a proportion of a customer's equipment supply. Hence we are currently providing forty-three percent of Tesco's UK chilled and frozen cabinet business over the next two years. Project First works differently: there's much more consultation and negotiation, because of the solution-based service we offer. Quality and performance are still key criteria, but ultimately the question is, can the proposed solution meet the retailer's operating requirements?"

A CHANGING INDUSTRY
Project First has an impressive record for meeting challenging client briefs. Being 'green' is an increasingly important factor, especially in new retail projects, says Mark: "For Tesco's new Wick superstore we delivered a refrigeration solution with a 30% lower carbon footprint. The majors are currently evaluating 'eco' stores - if these become the industry standard we're ready to deliver. We're also involved in environmental accreditation at the moment with the KIER building group, in an ISO-type programme."

The way the major retailers go about placing their refrigeration contracts is changing too, says Mark: "Four or five years ago, if you worked regularly for one of the top grocers on refrigeration contracts, it meant you didn't work for the others. Now it's very straightforward - the big retailers look at your offer and if they see you're successful with one retailer, they ask why can't you help them as well?
"People in the business talk to each other - it's a small world, and they move from supplier to retailer and vice versa, which encourages plenty of cross-fertilization."

Outside the UK Project First has carried out projects in Southern Ireland and assisted Tesco with a project in Turkey. However, as Mark sees it, "Our non-UK business is in support of our current UK activity, which will remain our core business."

"Going forward, one of our biggest challenges is to remain flexible as we grow. We're always looking for project managers and site managers with refrigeration experience: Project First offers scope for people to join at these levels and progress from there to business managers and onto the board."

A key part of Project First's success has been its close relationship with its clients. Taking this a stage further, Project First will also be offering service and maintenance for the refrigeration equipment it supplies from January next year, and bringing some of its current subcontract work in-house as it moves into c-stores, forecourts and other new sectors.

Mark's ambition is to grow the Project First business to £30m by 2010. The figure excludes Primo Products' current £8m turnover, which will also expand. Mark is clear about his strategy: "We will do that by increasing our offer to existing and new customers and being involved with more total projects, not just refrigeration, strengthening our position as the natural choice."

Underpinning these ambitions, Mark is realistic about the stresses and strains in supplying retailers in an uncertain world. He tells the story of a major UK retailer that promised them a raft of business three years ago, of which only a fraction subsequently materialised due to the retailer hitting difficulties and restructuring its business in order to survive.

In the jittery financial climate following the panic over Northern Rock, Mark remains optimistic about Project First's business prospects:
"The major retailers we speak to are very confident the economy will hold up. Several of them are looking at expanding into new areas like travel, which will call for further store developments involving us, so we are confident as well."
Contact Information
For further information please contact:

Project First Engineering Ltd
Tel: 08700 331750
www.project1st.com