Among my journalistic colleagues in the Eighties, it was never a popular assignment to be despatched to the annual conference of the Confederation of British Industry. I once remarked that I wouldn’t be seen alive at it, on the grounds that being seen dead at it accurately described the state of the vast majority of delegates attending it.
There is much that is symbolically different about this week’s CBI conference. For a start, it’s being held in Birmingham, an industrial heartland (at least in comparison with Bournemouth). Its opening dinner was addressed by President Carlos Menem of Argentina, a country with which Margaret Thatcher took us to war in the Eighties. Notwithstanding that there was a time not so long ago when the CBI wouldn’t have risked so offending the Barking Baroness, it comes to something when a South American leader can teach British industry a thing or two about controlling inflation.
And then there is the new CBI president Sir Clive Thompson, chief executive of Rentokil Initial and a man who takes no hostages. For all its free-market conversion, we do have a Labour Government and even the CBI must be able to summon up some critical fire-power.
We shall know by the time this is read. But I fear that any voices offering new and tangible proposals for industrial policy will be drowned by the familiar noises that emerge from the CBI. It will call for further cuts in interest rates (it always does). It will emphasise the importance of being a part of a single European currency (which is a truism). It will express concern about regulation and European directives. And it will call for renewed commitment to skills and training.
It’s funny that ‘Britain’s bosses’, as the CBI is usually called by the broadcast media, should always be so concerned about the quality of their employees. It makes me wonder whether they protest too much, because it seems to me that if, there is a skills shortage in British industry, it is more likely to be found in the boardroom than on the shopfloor. Yes, British industry needs a trained workforce, but it sure as hell needs trained bosses too.
The fat-cat debacle ahead of the last general election was a politically-motivated nonsense, but it was fuelled by poor performance and communications from the top of our utilities industries, not by union agitation. British industry genuflects to financial institutions in the City of London, then bleats about short-termism when the economy turns against it.
As for the bosses at the banks, they have shown a talent for losing British industry’s money faster than any government can, in a vast portfolio stretching from property to developing economies and the derivatives markets.
Any fool can make money in rising markets and a booming economy. It’s in volatile markets and in the face of recession that good managers show their mettle. It may be somewhat invidious to single out individuals by way of example, but it might be said that leisure combine Rank’s performance might have been somewhat less rank of late had there been some higher quality on the board.
Of course it’s easy for commentators to kick top executives when they’ve just been kicked by their own shareholders and we have read enough about how Rank’s chief executive, Andrew Teare, ‘had to go’ last week. Suffice to say that a monumental cock-up with the duplication of Titanic videos at subsidiary Deluxe can only have been the final nail in Teare’s coffin at Rank.
More interesting from a business point of view is that Rank is now the subject of break-up bids. Deluxe is said to be up for sale for 1bn and John Garrett, former head of Rank’s leisure division, is reported to be in talks with Rank chairman Sir Denys Henderson with a view to buying his old business.
Meanwhile, retail services conglomerate Great Universal Stores (GUS) is said to have put up its finance division for sale for some 1.25bn through Merrill Lynch (which may save a couple of jobs at the investment bank that hires and fires on the basis of movements in the Dow Jones index – another demanding management skill). GUS’s chairman, Lord Wolfson, is the toast of British retail industry, having paid no more than he needed to in his takeover bid for catalogue retailer Argos earlier this year. Now he is seen to be unbundling shareholder value by concentrating on retail and information services, while selling off what he considers to be non-core.
So Wolfson is a wily fox, while Teare is a silly goose. There may be sound justifications for both those conclusions, but it is also worth asking why British industry follows such a predictable and facile pattern of expansion and contraction. During rising markets, you raise capital off the value of your paper to make acquisitions, which you break up when markets fall. As Yosser Hughes, one of the Boys from the Blackstuff, used to say: ‘Gis a job – I could do that’.
What British industry could use is some long-term strategic planning for growth that rides the vicissitudes of the equity markets. Instead of turning a fast buck and calling for a trained workforce, the CBI might be asking how better to develop such skills among its own membership.