PEOPLE POWER

Peter Sanders has always believed that employees are important, which is why he wants them to take a stake in Scomagg, says Andrew Cavenagh

Plenty of chief executives have uttered platitudes to the effect that `our people are our greatest asset’, and then acted as if they are anything but. However, when Peter Sanders says he considers the people who work for his company to be the priority for its future, the statement has a ring of truth.

His firm, Scomagg, is a small private company whose lifeblood is adapting ever more sophisticated technology to a variety of customers’ needs. And, he says, it was the desire to unleash frustrated talent that led him to set up the business in the first place, 25 years ago.

Sanders, 57, sees Scomagg’s activity as the supply of high-integrity, computer-based process control, supervisory and management information systems. For such a company in a competitive market, he insists that the calibre of the workforce is paramount for a successful future. `The real differentiation is going to be the quality of staff you have in the business,’ he says.

Sanders started his career as an apprentice for English Electric in Stafford in 1956. Six years later he was sent to Ravenscraig, the Scottish steel plant owned by Colvilles, as part of the team commissioning the plant. He stayed on, and in 1964 joined Colvilles as control engineer.

In 1972, as engineer in charge of British Steel’s process control systems in Scotland, it was a desire to allow the team working under him to `get on with it’ that persuaded him to set up Scomagg with two partners.

It was a time of radical restructuring at the state-owned corporation and he felt innovative activity was largely paralysed by bureaucratic procedure.

With Willie Miller, a local entrepreneur, and Bill Goldie, the managing director of a company that supplied mechanical handling equipment to British Steel, Scomagg was established in Motherwell as a small engineering company specialising in the design, manufacture and installation of process control and automation systems.

`In the early days, that meant working at the hardware level,’ says Sanders. Consequently, the company had a strong capability in the manufacture of electronic circuit boards, and the focus of its work was on individual items of plant.

Today, Scomagg works entirely with other manufacturers’ hardware and mostly with other people’s proprietary software. Its core activity is integrating hardware and software to provide reliable systems for entire sites – an exercise that often requires linking software.

Sanders sees it as a service that enables clients to treat their software as an investment that can be developed, rather than as a consumable.

`It’s system engineering,’ he says. `If you like, we swap a skill in electronics for a skill in the customer’s application.’

The company has grown into an operation employing 160 people, and operating from offices in Rotherham, Bridgend and Aberdeen, as well as Motherwell. It has made a profit every year of its existence, takes over £10m annually, and competes with giants such as GEC and Logica for jobs worth up to £3m.

Sanders has definite ambitions for growth. `I’d like to see the company double twice [in employee numbers] before I retire,’ he says.

This is not simply ambition for ambition’s sake, but a strategy to ensure the company’s future prosperity. As an increasing number of small firms with minimal overheads compete at the bottom end of the market, Scomagg needs the critical mass to chase larger undertakings than it does at the moment if it is to remain in the high value end of the sector.

The company has expanded its client base considerably from the steel industry, which provided virtually all its work in the early years. It is now also active in the power generation and water industries, the oil and gas sector, other process and manufacturing industries, and automated inspection systems.

But steel remains a key market. It won a £2.5m contract to provide control and computer systems for British Steel’s beam mill at Teesside last year. `I think the pressures on steel are such that it will continue to demand automation,’ he says.

The oil and gas industry has proved a significant area of growth since Scomagg set up its Aberdeen office in 1994. It contributes £2m to annual turnover. In February it won a contract from Shell UK Exploration & Production to replace its offshore and pipeline supervisory control and data acquisition system in the North Sea.

Sanders believes the Aberdeen operation offers opportunity for international expansion. `l think it provides us with a window on the world market,’ he says.

The company will fund the growth from within and, in keeping with the importance he attaches to his workforce, Sanders wants the employees to increase their stake in the business. He owns 70% (Miller died in the mid-1970s and he bought out Goldie in the following decade) and two other directors the remainder.

Sanders is exploring ways to set up an employee share trust scheme that will enable the workforce to acquire a majority stake by the time he retires. `We don’t want an employee mentality, we want a stakeholding mentality,’ he says.