On December 29, 2020, the Taoiseach Micheál Martin set a target of 25,000 new homes to be built in Ireland by the end of the following year. The next day on New Year’s Eve, the government placed the country into full level five lockdown. Many construction sites closed immediately. Others remained open with builders, facing a January 31 deadline, scrambling to finish snagging lists on homes that were practically complete.

As chief executive of Chadwicks, Patrick Atkinson watched both announcements carefully. With 1,350 staff working in his builder’s merchanting company, which is part of the listed Grafton Group, he has a ringside view of the impact of the crisis in the construction sector – from sole trader plumbers and home improvement enthusiasts all the way up to the contracting giants like Sisk, PJ Hegarty, and Walls Construction.   

“This is a better lockdown if there is such a thing,” Atkinson said. “Last March that was almost a complete shutdown in terms of construction. We were just doing emergency stuff. This time social and affordable housing construction is still underway, important sites like Grangegorman and the Children’s Hospital as well as educational, medical, FDI sites that are IDA supported, are still going on.

“Where things have been shut down are residential private sites. The industry is probably running at around half where it would be normally.”

Chadwicks, he said, remained fully open. “The ambition is to keep everyone busy, working, and getting paid,” he said.

Will the government hit its target of 25,000 houses given the lockdown? “It is going to be a struggle,” Atkinson said. “If I was a betting man, I would say 22,500 or 23,000 homes but it depends on when we get back up and fully working.”

Do you think the government got it wrong when it eased restrictions before Christmas? “Hindsight is easy. I think we could have learned more from the US and what happened after Thanksgiving there,” he said. “But it is really difficult for decision-makers to call these things. People were pent up, and Christmas is an important holiday here. In hindsight, we should have stayed shut down…it depended on people completely behaving themselves which was a big ask…and we have paid a big price no question.”

Apprentice shortages

Patrick Atkinson is sitting in the headquarters of Chadwicks on the Naas Road in Dublin 22. It is usually a bustling location with 100 staff supporting its six-core brands which include Heiton Steel, Telfords, and the Panelling Centre. He has a fake background behind him that makes it appear he is in an executive-style airport lounge, when he is in fact in his more modest office.

Brian Conneely, his finance director since he left Deloitte in 2004, is on the other side of the wall, but Atkinson says if they want to talk to each other they do so on the phone. The practice of working from home has left many offices vacant like Chadwicks, so I ask Atkinson if he is concerned that this could impact his business if commercial property construction slows down.

He skirts around giving a prediction, saying he can only talk about his own experience. “I am a big advocate for a hybrid of working in an office and working from home,” he said.

Most of Chadwicks’ support functions like finance and human resources, are now based at home rather than in their head office. “I think when it comes to deep dives, and really meaningful robust debate, I am not sure (video) is the medium,” he said. “There will be more remote working in the future, but people also want to be back in and working.”

As a corporate leader, Atkinson said he missed the regular interactions and chance conversations that come organically with being in an office with 100 other people. “Walking the corridors normally I might talk to half a dozen people. All that natural information gathering that comes with being in an office is now gone,” he said.

Atkinson said just a handful of his senior team were still coming in. “We are all masked up when we walk around and are safe,” he said. “I think some people are coming in to escape from home schooling.”

“It is hard to persuade more women to become apprentices as it is seen as a man’s world”

Atkinson has three sons within seventeen months of each other, after starting with twins with his wife Linda. His two oldest sons are doing their Leaving Cert this year in St Michael’s College on Ailesbury Road in Dublin 4, with his third son in his fifth year there.

“We are lucky that they are close and have each other,” Atkinson said. “It was the right decision not to bring students back, but it is tough for them. Hopefully, this will be over when they finish school, as these are such formative years. Half the point of going to college is learning how to work in a group, it is not just the books.”

The Chadwicks boss invests a lot of his time outside the business into education and promoting the skills required to sustain the Irish construction industry. He is chairman of the advisory board on access to an apprenticeship program in TU Dublin.

Getting more apprentices is crucial to the Irish economy, and important to Chadwicks too. After all, the business is reliant on enough people being available to work in construction. These shortages, he said, are going to especially hit home as the industry moves back to normality.

What’s the biggest challenge stopping Ireland from training more apprentices? “The biggest challenge we have are probably parents. If you look at places like Germany, vocational and academic education are seen as at the same level,” he said. “There it is about what is right for the career of the child.”

Irish parents, he said, too often turned up their noses at the prospect of their children pursuing apprenticeships. “One of the reasons we changed the name to TU Dublin (formerly three institutes of technology in Dublin) was so that parents wouldn’t feel they were shortchanging their kids by not sending them to UCD, UCC, Trinity, or wherever. I think that is a game-changer,” he said.

The day before our interview, Atkinson said he spoke to the president of TU Dublin, Professor David FitzPatrick, about the skills shortage. “The new numbers of apprentices aren’t accelerating at the rate it needs to,” he said. “We need to attract more young people. Lack of diversity is another issue.”

Atkinson said he worked with inner-city children in Dublin who had fallen out of the education system to help find them jobs as apprentices. “We usually get two or three females out of a group of say 16,” he said. “It is hard to persuade more women to become apprentices as it is seen as a man’s world which is a shame as learning a trade has so much to offer as a career.”

Supply chain, Brexit, and lockdowns

“The biggest challenge is keeping people motivated.”

Grafton Group, the parent of Chadwicks, is a cross-border business with operations in Britain, Ireland, and the Netherlands. Its origins are Irish, and it is headquartered here but it reports in sterling and is an FTSE 250 company. It has a strong business closing 2020 with liquidity of £800 million on its balance sheet. Its most recent trading update on January 12 gave detailed information about the company’s performance and the impact of Covid-19 but Brexit does not get a mention.

I ask Atkinson about the impact of Britain leaving Europe on his part of the company and what it will mean for his customers. “Prices will go up,” he said. “You see that every January when you see suppliers putting things up by a couple of points.”

But you didn’t block it? “No, I didn’t!” he laughs.

However, he said that Chadwicks had carried out a lot of preparatory work ahead of Brexit so it was ready. “There are some shortages globally in terms of timber,” he said. “The felling license issue we have in this country has created a big shortage of timber which is putting prices up.”

Coillte warned about logjams last year and the government moved at the end of 2020 to ease things. Will the price of building materials go up cause the price of a new home to go up? “There is a lot of talk around shortages of insulation for various reasons, capacity issues in the UK and so forth but bar that the cost of materials in a building is not near the biggest driver of price. Labour and land are, any marginal increase in the price of building materials is not going to impact the price of a house so much.”

Are you concerned about your supply chain with Brexit? “We tend to buy Irish manufactured products and products distributed through Irish companies. Only about 10 per cent of our products would come directly from the UK,” Atkinson replied.

“It is not a huge proportion of our business, but it is a lot of finicky bits,” he admits. Large suppliers have been able to cope with Brexit, aid, but some smaller suppliers who make specialised products were struggling with the new bureaucracy. It is a challenge for the supply chain to get the paperwork done but it is not having a big impact.”

Covid-19 is of much greater concern to the business right now. Chadwicks employs 1,350 staff in the Republic of Ireland and keeping such a big group together has been tough. “The biggest challenge is keeping people motivated,” Atkinson said. “We treat our people well. Throughout the first lockdown, we paid everyone. We communicated with them every day. We have lots of meetings and communications. We did our best, and we kept people safe, so we got a lot of positivity.”

He said a knock-on impact of Covid-19 has been the increased demand for tradespeople. “People who are working from home are often saving more, so they want to do up the bathroom, or the kitchen, or convert their attics,” he said. “Tradespeople are getting the benefit of this, and they just can’t cope with the amount of demand.”

As a key supplier, Chadwicks is seeing the upside from this, as well as the resilience of other parts of the building market. “When we came out of the last lockdown, our business went right up,” he said. “You can see it in our interim results, we had a fantastic second half of the year. It didn’t quite fill the whole hole, but we did well. Our docket count – the number of transactions – was up 15 per cent every day.”

Enniscorthy, New Hampshire and Mars

Patrick Atkinson did his degree in international marketing at DCU graduating in 1987. As part of his degree, he did a six-month work placement with Mars, the confectionary maker. “It was the number one choice because you got a company car – that was half the fun!” Atkinson laughed. “It was a great experience because they take you on as a full colleague and not an intern.”

Atkinson found himself driving a two-litre Opel Rekord, a big deal for a student. “When I finished my six months, I was in my final year and they asked me would I stay on to do some cover work, so they left me with the car.” After DCU Atkinson decided to try his luck in the United States.

He has American citizenship as he was born in New York and lived there for 15 years. “My mum (Sarah) was a supervisor in a hospital in New York City, while my Dad (Paddy) worked in the equivalent of the ESB after they both emigrated in the 1950s.”

Atkinson’s mother grew up in Enniscorthy, and his grandmother ended up living next door to the family of the author Colm Tóibín. His father’s family farmed land in Wexford. Atkinson’s grandmother didn’t have a phone but the Tóibín’s did.

“When we rang home, Colm would be inevitably sent to answer the phone,” Atkinson recalled. Where in New York did your parents emigrate to? “Brooklyn,” Atkinson replies. Is there any chance parents inspired the book and Oscar-nominated movie? “Maybe, Colm used a bit of poetic license!”

Atkinson went to school in Wexford for ten years after his parents moved back to Ireland, and he considers himself from the county. I digress from his personal story to ask is it a coincidence that Chadwicks sponsors Wexford GAA’s home ground? “I have been accused of favoritism,” Atkinson said smiling. “But I actually didn’t bring that project to the table…it was somebody else from Wexford.”

But you didn’t block it? “No, I didn’t!” he laughs.

To hold onto him after DCU, Mars got him a job in its confectionary division there in the hope he might eventually return to Dublin. Atkinson moved to New Hampshire, in the North East of the United States. He spent the summer bartending in a friend’s hotel, before working for Mars in the winter. When he returned to Ireland, however, there were no jobs going in Mars, so he got a job as a brand manager with Beaver Distribution, which sold appliances like Bosch and other goods.

“Then I got a call from a headhunter who was looking for a marketing head for Wavin,” Atkinson recalled. It was the summer of 1992, and he knew little enough about the plastic pipes business, but that changed quickly.

Wavin set up in Ireland in 1958, and it was one of the early success stories for the IDA and the then minister for enterprise, later taoiseach, Sean Lemass, a visionary credited with helping to shape modern Ireland. “From a brand point of view it was punching above its weight,” Atkinson said.

The business was embedded in Ireland. Its short-lived launch of a plastic hurl in the late 1970s had fizzled out, but the attempt had helped raise its profile at a community level where the demand for pipes was surging as Ireland invested in new housing estates, manufacturing facilities, and schools.

Atkinson spent 13 happy years there until in 2005 he was offered a job with plasterboard maker Gypsum Industries. Gypsum, like Wavin, had a long history in Ireland, after starting manufacturing in 1936 using Gypsum rock mined in county Cavan and produced in Kingscourt, Co Cavan. In the 1960s a British stock market listed company called BPB took control of the business. No sooner had he joined the business than it was acquired by a much bigger business, the global building materials giant St Gobain.

“I went to 40-odd countries a year at one point”

“I got badly robbed once in Brazil in my last weeks with St Gobain before I moved home.”

Patrick Atkinson remembers reading about the deal in The Financial Times. St Gobain had launched a hostile takeover for BPB which eventually succeeded at a price of £3.9 billion. “I remember reading the FT that summer saying the most boring product in the world is probably plasterboard, and now finally someone has made it interesting by having this giant takeover battle between the French and the British,” he recalled.

In early 2008, St Gobain asked Atkinson to relocate to Paris as its global marketing manager. He went for it – moving his young family to France and immersing himself in learning the language. He joined St Gobain in the “eye of the storm. Some people said you’re lucky you got out of Ireland in the middle of an economic downturn, but I was in the middle of a global one.”

He added: “So much of the business was dependent on North America, and Europe which had both crashed. Southeast Asia, India, and China were doing fine, but our exposure to them was still quite low. I learned a lot about resilience.”

Atkinson said he recalled discussing plans to shut down some plants in North America, but that the company was also laying the groundwork to open three more plants in a few years’ time. “That was learning,” Atkinson said. “Our North American president was already moving onto the next cycle, which was a fantastic, resilient attitude to have.

“Americans are brilliant at moving through cycles. Try it in France or Italy! I remember we were trying to shut down a plant in Pisa, and the Italians came and protested in the court of the St Gobain office. They egged the building, had a band, and got BBQs going. They waited until someone important came out and talked to them…and somebody did and said we won’t close it down so much! The Mediterranean attitude runs differently to Americans.”

As a manager, how did that experience help you in Chadwicks? “What I brought back into this business was a global view,” Atkinson said. “A global view of the different ways that people do business and the best good practice from around the world in our industry.”

He said it helped him to ask questions, and the experience handling large budgets made him comfortable around numbers. “St Gobain was a $45 billion business,” Atkinson said. “I learned how to manage a budget that was in the tens of millions.”

The pace was relentless. “I went to 40-odd countries a year at one point,” Atkinson said.

“I had a good 15 years of knowledge of working on these islands with them,” Atkinson said.

How did you get your head around marketing so many products in so many different countries? “I took the mindset that it is about moving boxes,” Atkinson said. “Once you understand the customer and their needs the same principles applied. The products may not be the sexiest but it is interesting. Consumer behavior whether B2C or B2B is about moving boxes and if you keep that as a mindset it is easy to translate that to different markets.”

Atkinson enjoyed the adventure of travel, an experience, he reflects, once taken more for granted.

“If you think about a less developed country like India in terms of building distribution or manufacturing it is very different from America which is more evolved. Bringing good practice from one country to another was fantastic. Going to places like Myanmar gives you a kaleidoscope of experiences.”

Were you ever in danger? “I got badly robbed once in Brazil in my last weeks with St Gobain before I moved home,” he admits. “I was speaking at a world skills conference in Sao Paulo and I got my money, passport and laptop stolen. I wasn’t attacked or anything. I was probably in South Africa 30 or 40 times during that period too, and it never impacted me thankfully.”

After almost eight years he wanted to come home to Ireland. “Linda and the boys had moved back (from Paris) after three and a half years. We made that decision for education reasons.” St Gobain then suggested he move to North America, but Atkinson balked. “Linda’s response to me was it is too difficult a commute,” he recalled. As Atkinson was pondering what to do, a headhunter called.

“I said: ‘What’s the industry?’ And he said: ‘You know it well, and the company.’ I said if it is one of three companies I’m definitely interested in it. Fortunately, it was one of them!”

Atkinson knew the Grafton Group well from his Wavin and Gypsum Industries days, as in both companies it was one of their biggest customers. “I had a good 15 years of knowledge of working on these islands with them,” Atkinson said. He was ready to move home.

Merging businesses, building brands

“There was a lot of rationalisation. They went from 2,000 colleagues to about 900.”

The Grafton Group and the Heiton Group were once different businesses. The name of the business Atkinson leads cones from its founding family. Grafton itself was led for many years by Michael Chadwick who joined parent company the Grafton Group in 1975 and spent decades building it up before he stepped down as chairman in late 2016.

Did Atkinson get to know him? “He is an interesting character, but I wouldn’t claim to know him particularly well,” he replied. “He stepped down the following year after I joined. Michael is a very, very smart man. If you see him getting into something, you’d be wise to jump in.”

In 1999, Grafton had built a 4.9 per stake in its smaller rival Heiton in what its chairman Michael Chadwick described at the time as being for “investment purposes.”

Immediately speculation began that the two businesses would merge to create a building materials and DIY “superpower” that would combine its building materials businesses with its more consumer-focused arms under the Woodie’s brand.

At the time The Irish Independent wondered about the terms of the deal – a mixture of cash and shares – speculating that its markets were “possibly reaching maturity.”

Like so many, Chadwick himself was in the erroneous soft-landing school of Irish economics, predicting post the deal that: “We expect the number of house completions in Ireland to gradually moderate to long-term sustainable levels…”

Both predictions were proven to be far off, as the Irish construction industry and the broader economy went into steep-dive from 2008 onwards.

The logic of the merger was to drive synergies, but now this became a wave of tough cost-cutting as the company struggled to right-size itself in a dark depression.

“It was horrific,” Atkinson said. Hard decisions were made as Grafton Group closed stores in one group that were near to another as unemployment surged. “There was a lot of rationalisation. They went from 2,000 colleagues to about 900. A lot of deep surgery went on. The cuts because they had to be so deep created a lot of stress on people and division as well,” Atkinson said. “I can’t imagine what it would have been like for the management team at that time but it would certainly have been a difficult period.

Patrick Atkinson came in as chief operations officer of Grafton Merchanting ROI Ltd as Chadwicks was then called in October 2015, after the carnage had ended, but the business still bore its scars.

He reported into Eddie Kelly, a 40-year veteran with the business. “I really learned from him the distribution end of the building materials business. It was great to have his experience to draw upon.” Atkinson was lucky too that after a prolonged recession, by 2015 construction was booming again in Ireland. He began to get stuck into the business, working out what were the pain points for customers.

The business was doing a lot right in terms of knowledgeable staff, loyal customers, and so on but there was room for improvement. “I began to talk to them and understand their journey with us, and figure out what the future of the business needed to be,” Atkinson recalled. 

Chadwick’s had great staff, locations, and customers, but it had missed out on investment in modernizing the business in the years of the crash.

“It was a fantastic opportunity to create change,” Atkinson said. “Profits were starting to grow to fund this. We were probably turning over €350 million to €360 million at that time. With about a 5 or 6 per cent return. We are over €500 million now with a 9 per cent return.”

The upturn was in part driven by construction and home improvement sector growth, but also due to a lot of time and money invested in its technology and brand. Chadwicks has 36 stores in Ireland and about 20,000 customer accounts.

When Atkinson joined the company, it had four separate computer systems across its Irish business.

The multiple computer platforms were a mess for both customers and the business so he decided to bring it all into one. It took a year and a half to complete the tech side of this project. There were a lot of upsides to the investment.

“You might go in one day and buy five sheets of plasterboard in one shop, and then the next day get a different price because you argued more at the counter,” Atkinson said. “There was no real consistency. It really frustrated customers. We have put in proper pricing systems across the business.”

Having just one computer system ensured better reporting helping its supply chain, and making it easier for customers.

“Customers used to get different statements from our different stores,” Atkinson said. “Now, we have just one that works across multiple branches, so you can get just one statement.”

“For the big guys, who might have 15 sites on the go, getting one invoice, available digitally was really important. It all sits in the one portal now.”

Atkinson said the next stage of tech investment for the business was underway to build a product inventory management system. “It is not an easy thing to do but it is going to be a massive transformation in how we do business with our customers. That is the next big thing!”

The other challenge for Atkinson was that there were some 16 different brands in his business. Both Grafton and Heiton had been acquisitive acquiring independent stores, which continued to trade under their own names. “I made out a plan saying how are we going to bring these brands together,” he said. “To give the customer a better experience and make it more homogeneous, so that when a customer came into Chadwick’s branch they had a similar experience, rather than each brand doing its own thing.”

Why did you pick Chadwick’s to be your biggest brand? “It was the best known in the greater Dublin area where 60 per cent of the construction sites are,” he said.

The cumbersome name of Grafton Merchanting ROI Ltd was dumped for Chadwick’s, and the Heiton Buckley brand which featured on 16 stores of its 50 strong group was also scrapped.

In total 37 stores were refreshed and rebranded as Chadwick’s, while the company also refreshed its The Panelling Centre brand. In total, including specialist sub-brands, it now has 10 in its portfolio.

Last September Chadwick’s set aside €5 million to do this, in a project it expects to finish by early next year because of delays due to Covid-19.

Atkinson said Chadwick’s was still acquisitive if the right deal came up. In December it bought Dublin architectural hardware store Proline for an undisclosed sum, adding revenues of over €10 million, but this deal is still awaiting approval from the Competition Authority. In July it bought Daly Brothers in Dundalk, which Atkinson said it plans to rebrand as a Chadwick’s over the next 18 months.

*****

Before talking to The Currency Patrick Atkinson had two separate virtual meetings with his 50 store managers. What is their mood like? “Really good. People are feeling more nervous in the communities in terms of being out and about as you’d expect. We have had five cases of Covid-19 between March and Christmas in the business, which was a good result. Our team feels safe at work, but like everyone, they have had enough of Covid-19.”

Atkinson said his team was excited about the prospect of putting sustainability centres into key branches, to help deliver the programme for the government which aims to retrofit 500,000 homes to make them more sustainable. “We have geared up for that,” he said. “But the biggest challenge for households in terms of availing of grants to upgrade their homes is the process. Getting all the information required and then finding tradespeople to carry out the work is going to be a challenge.” Chadwicks, he said, would not be found wanting.