Strategic evolution

Over the past decade a strategic transformation has created the financially strong, diversified and uniquely structured contracting and project development group that is Leighton today.

For the first 30 years of its existence, ‘Leighton’ was essentially one company specialising in one area – construction – and operating in one geographic market: Australia. During the early 70s, the company pushed into Asia and the property market, creating Leighton Properties in 1972 and Leighton Asia in 1975. But the diversification began in earnest in the early 80s with acquisitions, investments, and forays into new geographic markets.

Leighton acquired Thiess Contractors in 1983 adding a competing brand to what had been a collection of Leighton-named entities and gaining HOCHTIEF as a major shareholder. Investment in companies brought new skills into the Group and provided access to new geographic markets. However, a combination of rapid growth and over-extension of management resources, coupled with losses on projects in Australia and poor performance in the US, saw real pressure placed on the Group.

By 1987, when Wal King was appointed CEO, the focus was firmly on rebuilding the Group’s financial strength ahead of an inevitable downturn in construction markets at the end of the 80s. As the 90s commenced the Group’s recovery plan was well underway, with under performing assets being divested, property development activity cut back, and an exit strategy for the US put in place.

The Group re-focused on its core skills to lay a solid foundation for future growth aimed at creating sustainable long-term results. New markets began to open up driven by governments and corporations outsourcing work they previously undertook themselves. Build-Own-Operate-Transfer (BOOT) infrastructure schemes emerged. Leighton Contractors entered this market when it was awarded a development contract for Sydney’s M5 Motorway. Thiess began to develop a significant business in the coal mining industry, increasing productivity for clients by applying core-contracting skills with flexible work practices.

The Group’s presence in Asia expanded when Thiess returned to Indonesia in 1992, undertaking work for major international resources companies and giving the Group two respected brands in the region.

Around this time, the Group also saw opportunities arising from the pending deregulation of the telecommunications market. In 1992, Leighton Contractors became a strategic partner to Optus, developing its nationwide infrastructure. By 1996, Leighton Contractors had acquired Telstra’s contracting arm – Visionstream – again diversifying its skill base and providing another stream of activity in a new market. Since that time, each operating company has developed a telecommunications contracting business undertaking a wide range of activity.

As the 90s drew to a close and yet another construction downturn loomed, the Group’s challenge became that of maintaining the momentum. The strategy now focused on delivering growth through the application of a broader range of contracting skills – like operation and maintenance – to the core markets of engineering and infrastructure, mining and resources, and building and property.

At the same time, the Group was utilising its financial strength and cash reserves to build an ‘investments pipeline’ through an ongoing process of investment, development, divestment and reinvestment in selected projects. This pipeline, supplied by selective development of property and resources assets, and transport and telecommunications infrastructure opportunities, provided an additional stream of revenue for the Group. Having a different cycle to the construction/project management or operation and maintenance activity, the investment pipeline continues to contribute to our earnings diversity.

Diversity became a strategic advantage and the central theme of the Group’s operations: diversity across markets and industries, in the locations in which we operate, and in the skills and services we provide. Diversity supported growth, and growth gained through acquisitions brought new or complementary skills into the Group. In 1999, the John Holland acquisition added yet another brand to the mix, complete with professional people and an established client base. Other acquisitions since that time include two telecommunications services providers; LSE Technology was acquired by Leighton Contractors and Quantum by John Holland. In 2002, further rationalisation in the building market occurred when Leighton Contractors acquired a 70% interest in WA based Broad Construction Services and John Holland acquired Fletcher Construction. In 2003, John Holland was further strengthened by the purchase of selected contracts and resources of Transfield Construction, and the transfer of its employees.

Through the acquisition John Holland has enhanced its specialist national businesses in the telecommunictaions and power transmission, structural mechanical process, tunnelling and underground mining, and water sectors.

In 2002, Leighton Asia was restructured to provide greater management strength to enable the business to continue growing. Leighton Asia had doubled in size over the previous five years and gained a far broader footprint across the region. To better manage this growth, Leighton Asia seperated into two companies, Leighton Asia (Southern) and Leighton Asia (Northern). Since 2002 however, both companies experienced considerable expansion both financially and geographically and the names no longer represent their operational footprints. Leighton Asia (Southern) saw substantial business growth in Malaysia, Indonesia, Singapore, Sri Lanka, India and the Arabian Gulf region. To reflect its growing diversification, the company was renamed to Leighton International. Leighton Asia (Northern) continued to establish itself as a multi-disciplined contractor in Asia, with operations in Hong Kong,  China, Macau, Taiwan, the Philippines, Thailand, Vietnam, Laos and Cambodia. To reflect its strong standing positioning in this region, the company was renamed Leighton Asia

In 2006, Leighton Contractors strengthened its position in the contract mining market with the acquisition of the Australian and New Zealand contract mining assets of Henry Walker Eltin Group Limited (HWE). The acquisition included work at 15 mining projects and a workforce of more than 1,800 people.