PROFILE George Simpson. GEC’s new boss makes things happen, says David Bowen, and if he reinvigorates the company he’ll earn his huge salary
George Simpson is a fat cat. It may be a cliche, but it is nice to be able to apply it to Mr Simpson – because it is difficult to find anyone with anything else bad to say about Britain’s fastest rising industrialist. Ten years ago, nobody outside the world of lorries had heard of him. Next week, after whizzing through two of the highest-profile jobs in industry, he reaches what many people regard as the pinnacle and starts work as managing director of GEC. In the process, he seems to have collected remarkably few enemies.
So let us be incensed by the package he is being offered. His pay could be up to pounds 1.5m a year, plus share options based on pounds 4.8m worth of shares. Shocking. The trouble is, if he succeeds at GEC he will have earned his beans many times over. Lord Weinstock’s deeply conservative management style kept the company stuck to the safe areas of power generation and defence, ignoring more exciting ones.
Simpson has just completed a two-and-a-half year stint as chief executive of Lucas, where he showed himself capable of great imagination. He increased capital expenditure and went all-out for growth – in the end this led to his merging the British company with the US car parts group Varity, which is one of the reasons he is now leaving.
Simpson could of course keep pushing GEC along the same path as Weinstock has – but he will not. He is good at extracting the best out of people who work for him, and there is some first-rate technology and management in the group. Loosen the purse strings a little, and great things could surely emerge
He and Weinstock could hardly be less alike. A clubbable man who has endeared himself to City analysts and journalists by many long hours in the bar, he likes golf and rugby. Weinstock, despite his string of race horses, is famously austere. Their business styles contrasts too. “George is less concerned with meticulous details than with strategy,” one motor executive says – the same cannot be said about Weinstock.
George Simpson was born in Dundee 53 years ago, the son of a flax-mill manager. He went to grammar school, Dundee Institute of Technology, then became an accountant. An unexotic start that could easily have turned to disaster when he joined British Leyland in 1969, a year or two before it started plummeting to disastrous losses. But he was lucky because he was a “trucky” – he worked his way up mainly on the lorry side and avoided the worst catastrophes of the car business.
That is not to say the group’s experience of coming within a gnat’s whisker of annihilation did not fire-harden him. “The BL man is someone who has had to cope in the most adverse conditions,” says another Blobby (British Leyland Old Boy). “We worked for a company that was constantly front-page news in the most negative way.” More tangibly, he says, BL managers understood well that the company had got into a mess because it had failed to take action – which is why wherever Simpson has gone, things have always started happening.
By the mid-1980s, Simpson was senior – running the van operation – though some way from the apex. Then the Canadian Graham Day took over and started shaking the group violently. He changed its name to Rover and declared that reality must move upmarket to match this image. Under instruction from the government, he sold off what he could. The lorry business was bought by Daf, and Simpson became the only British member of the Dutch firm’s board. Then Day lured him back to become Rover’s chief executive at a time when it was starting to do well. Rover was bought by British Aerospace in 1988, and in 1991 – by which time BAe was itself in crisis – the Canadian moved to BAe as chairman and pulled Simpson across as his deputy chief executive. By now his path to the top was set.
Why did the celestial finger of promotion point at Simpson, rather than anyone else? Because he was lucky and good. Lucky, because he was running an increasingly successful truck operation at a time when Day was looking around for competent lieutenants; and Day’s coat-tails were good ones on which to hang. Also because Rover was on the turn when he took charge. “He’s well remembered at Rover but with a slight cynicism,” one executive says. “British Leyland/Rover has had nine chairmen since 1974, so one person cannot be credited with the complete turnaround. There’s a feeling the credit deserved to be shared more.”
But he was, and is, good. Everyone says so. In the early days, a former colleague says, he stood out because “he was not the normal bookish accountant – he had that broader feel about him”. Current views are just as positive. “George is very easy to get along with,” a motor executive says. “He makes it clear what he expects of you, and always seems to have time to listen.” From another colleague: “He is one of the easiest managers I have ever worked with, a very straight no-nonsense guy. He has an interesting blend of having a good grip on the figures and being good on the human side.”
There is one strange incident that does not fit with his pragmatic image. At a conference in 1992, he launched a full-frontal assault on the government’s handling of the economy, demanding a national economic strategy on the lines of Germany or Japan. Without that, he said, “the possibility of Britain re-emerging as a significant industrial force in the new Europe seems very remote indeed”. It was just the sort of speech that regularly emerged from middle industry, and Simpson apparently decided it was a mistake. At least he did not make it again.
His job at BAe was to sell Rover, which had never fitted comfortably with the group. He flew around talking to Mercedes-Benz, Ford, Honda and BMW, before negotiations narrowed to the last two. Both companies made offers, but after a last-minute dash to Tokyo Simpson told the Germans they had won. Shortly afterwards, he was head-hunted by Lucas and moved to the automotive and aerospace group as it struggled with the recession and poor reputation in the City.
One again he was lucky, because the worst of the recession was over and profits were anyway recovering. But he did not sit still, because he became convinced that the group needed desperately to change. When he joined, Lucas was a mix of the very bad and the very good. It was one of the few large British companies with genuine technological leads in a number of areas. But it was also a bit of a ragbag and suffered from uneven management quality.
Simpson started selling off operations and increasing the size of what was left by investment and bolt-on acquisitions. He quickly decided this was not enough, however. “He had a very clear idea he wanted Lucas to be bigger,” a former group executive says. Simpson believed that size and international coverage on their own were enough to justify a merger – unless Lucas got bigger, he believed, it would continue to be a bid target.
That is why next week Lucas will merge with the American firm Varity, and also one of the reasons (if pounds 1.5m a year were not enough) why Simpson is moving on. A former colleague muses on the correlation between Simpson being in charge and a company being sold. “People are wondering how long GEC will last,” he says, only half joking.