Working from home will not derail HS2, says contractor chief
In many ways, Steven Demetriou's success is the epitome of the American dream. Having left school without any qualifications, his father jumped on a boat from his native Cyprus to set up a new life in America, where he set up a Cypriot restaurant. "I started peeling potatoes and washing dishes," says Demetriou, who grew up in Boston. "Before I was finally promoted to waiter." These days Demetriou ranks among one of the world's most influential executives in the engineering, construction and consulting arena as chairman and chief executive of Jacobs.
He is responsible for 60,000 jobs worldwide, 13,000 of which are in the UK. While the £16bn (GBP12bn) corporation may not be a household name, the projects it is responsible for overseeing are. In Britain, Jacobs oversees the High-Speed 2 rail link, the Hinkley Point C nuclear reactor, the refurbishment of the Palace of Westminster, the Lower Thames Crossing, London's Crossrail and the Dogger Bank wind farm - to name but a few.
Operations in the US extend beyond construction and civil engineering: Jacobs handles classified information, surveillance and dealing with cyber threats. Work isn't everything for Demetriou, however. "I'm a big diehard Boston Red Sox fan," he says, cutting a relaxed figure from his office in Dallas, Texas. "[But] basketball is my number one sport. I peaked in high school, and I was elected to my high school hall of fame."
And so, naturally, the millionaire sports fanatic - who took home £16m in pay last year - bought a minor league basketball team. "It's based outside Orlando, Florida and called Lakeland Magic," he says. "And by the way, we won the championship last year." After 17 years working for oil major Exxon, Demetriou moved to a series of smaller manufacturing firms, successfully turning their fortunes around and allowing US private equity firms to cash out with big returns. In 2015, a recruiter called to say Jacobs was looking for a chief executive.
Then, he says, Jacobs was predominantly known for its work "for the likes of Exxon and Shell and Rio Tinto. It was very much a traditional energy type engineering consultancy". Demetriou claims he could see the impact that climate change campaigners would have on the energy industry.
Oil and gas would become "dirty" words. "We made a bold decision, a couple years after I joined, to divest [sell] the industry that I was hired from," he says. The money raised was used to accelerate an expansion into consultancy work.
The acquisition of rival CH2M for £3.3bn was a key - the Colorado engineering consultancy is best known in the States for masterminding the expansion of the Panama Canal in the noughties. In the UK, it was chosen to oversee the GBP4bn development of stadia, sports venues and London's Olympic village.
HS2's future after the pandemicHS2's tunnel boring machine under Long Itchington Wood in WarwickshireCredit: Jacob King/PA Wire
One of Jacobs' most high profile projects is the Government's controversial HS2 rail line - Europe's biggest building project. The company will be responsible for organising the myriad contractors and subcontractors.
The last official cost estimate for HS2 was GBP98bn - but that was before the eastern leg of the scheme was nixed. Demetriou's tone changes as the conversation shifts to HS2 and whether he understands the frustration among critics. "Of course we do," he says sheepishly. "[But] it takes investment to get there." He says the project is about much more than the economic benefits, a key piece of the argument that critics are missing.
"When we ask the question about investment, it's not just the typical economic investment of: 'we're gonna invest billions of dollars here, what's the return?'," he says. "It's also what's the social value? Is it driving equality?
Is it driving the needs of the people to connect and to a well being and health and well being and the communities."HS2 routes of the eastern leg scrapped
Many believe the decision to plough ahead with HS2, finally given the green light just before the pandemic hit Britain, has been fatally undermined by the fallout from the health crisis. Demand for rail will never return to pre-pandemic levels as many decide to stick with working from home, some say - as a result, the project should be pulled. "No, not at all," Demetriou hits back. "The pandemic has given us an opportunity to pause, and really think about the future of infrastructure.
But it's also a future that's post-pandemic, it's dealing with potentially future pandemics, but it's still obviously still connecting people around the world. "The worst thing that we can do is just optimise the near-term and the short-term, and then be left with a huge disconnect in the longer-term. "I feel positive about what we're doing with HS2," he adds. "It's easy for maybe the outside, look and say Jacobs is going earn significant fees for just throwing money at this project.
This is about delivering the outcome in a unique, optimised, innovative way for society."
Nuclear ambitionsUnder Demetriou, Jacobs bought the nuclear arm of John Wood Group during the pandemicCredit: James Breeden for The Telegraph
Aside from construction, acquiring the nuclear arm of former FTSE 100 engineer John Wood Group in 2020 leaves Jacobs playing a crucial role in the energy sector, too. The timing of the acquisition looks good: with the UK in the middle of an energy crisis, Boris Johnson is backing nuclear electricity generation as the answer. Demetriou says: "Compared to the US, I look at the UK as being bold and really trying to think through this."
He is as supportive of smaller advanced modular reactors - dubbed "mini-nukes" by their critics - as he is of the need for larger power plants like Hinkley Point C. "The UK is actually in the forefront of the next generation of bringing nuclear energy as a solution to this whole clean energy transition. "I am hoping that eventually it's going to be labelled as one of the key solutions, because I don't think the world is going to achieve the climate change objectives without nuclear being a part of the solution - in the UK and globally."
Following the acquisition of PA Consulting last year, in a deal worth GBP1.8bn, the UK is now Jacobs' second-biggest market after the US.
That Demetriou has forged ahead with acquisitions in Britain is testament to the fact fears about Brexit have been over-exaggerated: "This thing about Brexit, and it's going to stifle talent - we just haven't seen that." Large building projects remain controversial. Few in Britain are delivered on time and on budget.
In recent years, London's Crossrail has been emblematic of this. Now nearly GBP5bn over budget and still not completed - it was supposed to open in 2018 - the project does little to instill faith that history will not be repeated. Jacobs' role is to monitor and report back to Sadiq Khan on progress - filings suggest that Jacobs' warnings of delays fell on deaf ears.
But Demetriou swerves questions about the blame game in relation to Crossrail. Instead he reflects on Boston's "Big Dig" - a one-and-a-half mile road tunnel under the New England city that was widely derided as work dragged on between 1991 and 2006. At the time it was America's biggest construction project and when it opened in 2007, the tunnel had cost £8bn - four times the original budget.
Demetriou admits that for many in the industry, the Big Dig was "probably one of the worst projects".
"But it has transformed Boston," he says. "These are needed for infrastructure modernisation and expansion, to provide societal outcomes."
- ^ the High-Speed 2 rail link (www.telegraph.co.uk)
- ^ would become "dirty" words (www.telegraph.co.uk)
- ^ the eastern leg of the scheme was nixed (www.telegraph.co.uk)
- ^ HS2 routes of the eastern leg scrapped (cf-particle-html.eip.telegraph.co.uk)
- ^ smaller advanced modular reactors (www.telegraph.co.uk)