27 March 2014
In 1984 Robin Murphy sold his bridge building business, Construct Pty Ltd, to a Danish concern called Christiani and Neilson for $1 million, back when a million was a million. A couple of years before that, my wife and I bought our first house for $24,900; that place is now worth 50 times what we paid, and yes, we should have kept it.
Three years later Robin bought his business back for $2.
Now, compare this with Kerry Packer’s famous Alan Bond deal nearly a decade later, which led KP to later remark: “You only get one Alan Bond in your life and I’ve had mine.”
Packer sold Channel 9 for $1 billion and bought it back three years later for $250 million, a discount of 75 per cent. Robin Murphy’s discount after four years was, oh… just a lazy 99.998 per cent.
It came about because the Danish firm went broke and the banks installed an American McKinsey consultant, who rang Robin one day to tell him: “We’re closing all third world operations — that includes Australia.”
So Robin Murphy, down in third world Australia, got it back for two bucks and set about rebuilding it. Now it’s turning over $250 million a year.
In addition to that the Murphy family now owns a modular building operation called Force 10 that turns over $28 million, and properties that produce about $5 million a year in rent.
All things considered, and taken on the whole, it’s a pretty happy story you’d have to say. But like all construction businesses, the Murphys have had their ups and downs.
A few years ago the business was worth nothing at all, but Robin Murphy even managed to turn that into a happy ending: he transferred 60 per cent of the company to his three sons — 20 per cent each — without crystallising any capital gains tax because it had zero value. Every cloud has a silver lining.
As a result of that transaction, the Canstruct and Force 10 group is now a true family business.
Robin is now in his mid-70s, semi-retired, and his three sons run the business. Rory Murphy is CEO of the group, and reporting to him are his brothers Adrian, general manager of Force 10, and other brother Dan, general manager of Canstruct Pty Ltd, as it’s now called (after Christiani and Neilson — Robin wasn’t able to change the name back to Construct because someone snaffled the business name).
And the early days of this business had its ups and downs as well.
Robin graduated in 1961 as an engineer and went to work in Papua New Guinea for the Australian administration of what was then a colony.
A few years passed. He was married in early 1964 and had his first child, Jane, later that year. This obviously made him think he was capable of doing anything, so, with total assets of one Volkswagen Beetle, he bid on a contract to build three bridges deep in the jungles of PNG.
The bridges were to cross wild rivers on the Highlands Highway in the north of PNG, west of Lae – truly in the middle of nowhere in other words. He had no cranes and employed two expats and 100 natives, and he built the bridges. They’re still standing 50 years later.
Robin and Margaret stayed in PNG for five years, living in grass huts with dirt floors in remote villages — with two little kids. When child number three, Rory, was born in 1968 (Adrian had been born in 1966) Margaret put her foot down: it was time to go back to Australia, and civilisation.
Robin got a job with John Holland in Tasmania and worked for them for two years, building mine shafts and the Gunns woodchip mill. Then once again he got the entrepreneurial itch and tendered on his own to build a wharf in Launceston, which he won against Readymix Concrete.
That’s when he started Construct Pty Ltd and looked for jobs where he’d be bidding against lazy monopolies, so he could undercut them. He was very successful.
In 1979 Margaret was pregnant with their fifth child (Dan had been born in 1971) and once again the wifely foot went down: it was time to go back to Brisbane to be near her family.
And that’s when the fateful offer came from Christiani and Neilson to buy the business. He asked for $1.5 million and got $1 million, and worked for the Danes in Brisbane for four years as managing director of the company, before his employer went broke and sold the business back to him.
Dan Murphy (his son, not the liquor merchant) started working with him in 1988 and Adrian joined three years later. Rory was a lawyer with a big firm in Melbourne.
The three Murphys, later joined by Rory, carved out a solid business doing remote engineering projects in Australia and around the region, especially in PNG until in 2003 there was an opportunity to buy the modular building operation called Force 10 (named that because the buildings are designed withstand cyclones — a natural extension of the remote engineering work they were doing.
There’s a bit of a tale about this as well. Force 10 had been owned by the Beazley family, New Zealand’s largest home builders, but in 2000 they had a misunderstanding with the Australian Tax Office over some tropical subsidiary companies, and the business went into voluntary administration. The administrator sold it to a dog food manufacturer who stuffed it up, and the company went into liquidation; the Murphys bought it from the liquidator in 2003 for $400,000.
So maybe Robin Murphy had two Alan Bonds, not one.
Anyway, this is now a significant Queensland manufacturing and construction business, with 75 per cent of its products exported around the world. The next challenge is to complete the succession to the second generation.
Robin and Margaret have decided that their 40 per cent of the business will pass equally to the three boys, and the two girls, Jane and Kelly, neither of whom are full-time in the business (Jane is a part-time PR person) will inherit property to equal value.
It’s clear talking to them that the family love working together: Robin said that he figured out the other day that his kids have been working with him for a total of 66 years and they have never had a serious argument.
I asked Jane whether she and Kelly were disappointed they wouldn’t inherit any ownership of the business. “Not at all”, she replied. “The boys have worked hard, for below market rates, and deserve it. We don’t begrudge that at all.”
Having interviewed plenty of family business over the past couple of years, I can assure you this is all quite unusual. It’s clear that the foundation of this business is the respect and love they all have for Robin Murphy, and that looks strong enough to last a few more generations.
Unless, of course, another Alan Bond comes along.