Texan Tim's timely price cut.
In the West Midlands Tim Kelleher is seen as a saviour but the deal he most relishes is the one he wooed and won in faraway Jinan. Chris Blackhurst.
It is 22 years since Tim Kelleher lived in Texas. But wherever he goes, this short, nattily-dressed, bespectacled figure is known as "Texan Tim". In the West Midlands he is revered as the American who, through his Verson International Group, has kept the area's heavy engineering tradition alive.
In 1982, Kelleher bought bits of failed metal basher, Wilkins Mitchell, from the receiver and has bolted on a string of similar acquisitions: AI Welders, parts of Glynwed Engineering, and British Federal and Metform engineering. In 1986, he made his biggest purchase, reversing into Bronx engineering, the Dudley-based coil processing equipment manufacturer. While other British heavy engineers have gone to the wall, Verson has prospered by attacking overseas markets. This year, some 85% of its output will be exported.
A student of Peter Drucker, Kelleher left business school for Verson Allsteel, an engineering business in Chicago. His first major assignment came in 1975 when Mel Verson, the owner, asked the 24-year-old Kelleher to go to Belgium and close the company's only plant in Europe. The Belgian factory is still in business and part of Verson. Rather than close it, Kelleher applied a dose of sensible management. "It struck me that the plant suffered from the defect that afflicts all capital goods businesses. It was too dependent on its local market".
He set up overseas sales offices and added complementary businesses. In 1979, he moved his based to London. His break came when Continental Illinois, Verson Allsteel's banker, went bust. "It was the best thing that ever happened to me", says Kelleher. "The board had no choice but to shed things that were eating cash." In 1985, the European operation was sold to its management, led by Kelleher, for £2.8 million. Within a few years, Verson was worth £60 million.
Kelleher and his colleagues still follow the business plan he devised for the Belgian factory. "The plan identified 10 businesses we wanted to acquire and to date we've bought eight of them." But for his best deal, the tough-talking cigar-smoker doesn't choose a takeover.
In 1977, the Chinese completed a huge state-of-the-art metal press factory in Jinan. Ten of the largest metal press builders in the world, including Verson (then still under American parentage), were invited to visit and partner the Chinese. Over the next two years, Kelleher visited Jinan nine times. By 1989, only Verson and a Japanese company were left. A year of arduous negotiation and repeated trips to China followed. Kelleher's then boss lost heart but Kelleher was not prepared to let the opportunity slip. In the summer 1980, he was invited to make a two-week trip, at the end of which the final decision would be taken. "Every week, the decision date was put back and put back. Eventually, I'd been there negotiating every day for nine weeks." The Japanese contingent was in one room with Kelleher next door, sometimes facing as many as 20 Chinese. From the outset Kelleher determined not to back down on price until the last possible moment.
It became clear that the talks were going against him; fewer people were coming to his room. Finally, the local government minister announced that at 10am the following day, Kelleher could make a final presentation. Kelleher asked what time the Japanese were making theirs and was told 11 am he asked for noon.
The minister agreed. "I also insisted that he gave me his word after that there would be no more negotiations." Kelleher followed the Japanese and changed his stance. He cut his price - below the Japanese.
Pandemonium followed. The Chinese asked for more time. Kelleher refused, pointing out they had agreed there would be no more negotiation. At last, after a long pause, "they looked at each other, smiled, said 'yes'."
Since then the factory has produced $200 million to $300 million of press equipment, with a percentage still going to Verson despite its change of ownership, and Kelleher supplies the components to boot. "Of all the deals I've done, it's the one I'm most proud of and the one that took longest."
Chris Blackhurst is senior business write for The Independent on Sunday.