UK: THE DAVIDSON INTERVIEW - SIR RICHARD EVANS.

UK: THE DAVIDSON INTERVIEW - SIR RICHARD EVANS. - The future looked bleak for BAe's chief executive after the £1 billion write-off five years ago. But as architect of both the multi-billion-pound Al Yamamah arms deal and the strategy of slimming, sacking

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Last Updated: 31 Aug 2010

The future looked bleak for BAe's chief executive after the £1 billion write-off five years ago. But as architect of both the multi-billion-pound Al Yamamah arms deal and the strategy of slimming, sacking and selling, Evans goes, says Andrew Davidson, from strength to strength.

Sir Richard Evans appears an uncomplicated man. Medium height, with a big eater's paunch and a rather wobbly, walrus face split by a neatly clipped moustache, he is the sort of affable host you might find behind the bar of a friendly northern golf club. A good talker, he likes his food, he likes his sport and he likes good company. Everyone calls him Dick, and he won't have anyone faffing around on ceremony. Spend a bit of time with him and you might even forget that he also runs Britain's biggest military exporter.

For Evans, 54, celebrating seven years as chief executive of British Aerospace this month, is a disarmingly direct, no-nonsense sort of boss, well-liked by his workforce and admired by his colleagues. They envy his energy and marvel at his marketing abilities. Of course, as the salesman responsible for putting together the multi-billion-pound Al Yamamah arms deal with Saudi Arabia - Britain's biggest export contract ever and certainly the deal which saved BAe from going under in the early '90s - Evans has earned their gratitude. But to have risen to the top over the past decade of BAe's rollercoaster history, you suspect he must be a bit more scheming than he appears.

He is certainly a survivor. Five years ago, when his company plummeted into loss and he had to announce a £1 billion write-off, few would have given much for his chances of continuing in the top slot. The figures were awful. Slumping car sales (it owned Rover), collapsing property values (it also had a big property arm), and the freefall in residual values of its commercial aircraft fleet (much of it leased out) kicked great holes in BAe's balance sheet. Evans, who had spent half a lifetime marketing and managing plane contracts, had few City contacts, let alone supporters.

Collapse or take-over loomed. 'It seemed like the whole of the City wanted to kick me out,' he says, leaning back in his chair, staring at the door of his first-floor London office. The worst of times? He nods. 'It was', he says, 'the most difficult period of my career, and one I would not like to have to live through again. But I never doubted that, if we could deal with the fundamental underlying problems, what we had in this country was a very valuable asset indeed.'

And so it has proved. Since peering over the edge of the precipice, Evans has led BAe through a painful process of slimming, sacking and selling that has now produced a £5.7 billion-turnover manufacturer making pre-tax profits of well over £300 million. Focus is the key. Rover has gone, construction has gone, and the workforce, at 44,000, is around 70,000 lighter, as BAe concentrates singlemindedly on efficient production in the defence and aerospace markets. Three different chairmen have also gone: Sir Roland Smith, who carried the can for the £1 billion write-off, Sir Graham Day, who stepped across from Rover to fill in, and his replacement John Cahill, who left in 1994 amid rumours of a boardroom bust-up over a proposed marriage with electronics giant GEC. Cahill was replaced by the American Bob Bauman, former boss of SmithKline Beecham. Through all of it, Evans, knighted in the Queen's Birthday Honours List last year, has sailed smoothly on. Don't be deceived by the cheery salesman exterior, say those who know him. He is a far sharper corporate animal than he looks.

And now he has the company he wants, divided into two main divisions: defence and commercial aerospace, with a small property section tagged on as well. Evans runs it all with a tight team of three: John Weston, who heads defence, Mike Turner, in charge of aerospace, and Richard Lapthorne, the finance director, who runs the balance sheet. Defence - jets, guns and missiles - is doing fine with £487 million profit on £4.3 billion sales in 1995, and the prospect of more to come when its latest plane project, Eurofighter, takes off. Commercial aerospace - which includes a 20% stake in Airbus Industrie and a manufacturing interest in regional aircraft like Avros and Jetstreams - is doing less badly than it did, with a £118 million loss on £1.4 billion sales in 1995. Most importantly, under Evans, BAe has rediscovered the art of making things efficiently and cheaply (or at least more cheaply than the opposition), giving it a good chance of turning commercial aerospace around and of getting a greater chunk of future Airbus work. The City likes this. Shares which you could buy in the bad old days for around £1 now trade for around the £12 mark. And even at that price, many brokers' circulars still say buy.

All of which might seem surprising because BAe is a strange fish. Created out of the Labour government's nationalisation of the UK's aircraft and shipbuilding industries in 1977, the company has always been focused on two difficult and cash-hungry businesses, civil and military aircraft, for which it has, in the past, been totally under-capitalised. It is also frighteningly dependent on big contracts with just a handful of customers, and has to achieve its sales in a curious dance involving foreign military personnel, overseas politicians, rival manufacturers and its own government.

Sometimes its future seems to be linked to no more than a roll of the diplomatic dice. Will the Germans buy Eurofighter? Will the Australians buy Hawks? Barely a month goes by without a big contract win or loss popping up somewhere in the press. You need nerves of steel to be an investor in this kind of enterprise. So imagine what it's like being the boss.

And then there is GEC. Speculation linking the two companies, both formidable defence contractors, has persisted since the '80s. Now that GEC has a former BAe executive, George Simpson, at the top, speculation has returned with added fervour. It seems only fair to ask: is a merger of their defence interests on the cards? Not surprisingly, Evans isn't going to say. 'It is always going to be an issue of speculation,' he sighs. Yes, he continues, the companies are hugely interdependent on each other, GEC providing the electronics for many of BAe's big projects. But it is not simply a question of GEC wishing to get hold of BAe's prime contractor status - that ability to deal directly with government which Evans describes as 'the core' of its business skill - because the electronics giant already has that status in other fields. And anyway, he says, what is the point of speculating?

In their business, you simply cannot do anything without government say-so first. 'That is the differentiator between defence and other industries,' he says with a smile.

So, enough GEC. Evans's vision of the future is a rather different one, encompassing a 'coming together' of interests among European partners to take on a new threat: the giant rivals thrown up by the recent spate of mergers and acquisitions in the American defence market (Lockheed joining up with Martin Marietta, Northrop merging with Grummand, Hughes acquiring General Dynamics). He already has a working model, Airbus Industrie, the joint venture between BAe, Aerospatiale of France, Germany's Daimler-Benz and Spain's Casa, which was created from scratch 25 years ago, sharing production among its investors, and which is due to be reorganised into a stand-alone company by 1999. He has the paradigms that he wants to follow: multinationals like Shell and Unilever. He has been punting the idea of a new European super-company around for a couple of years now but recently he seems to have turned the volume up a bit. If governments have to be mollified first, he wants it on the agenda.

'Europe is at a crossroads,' says Evans. 'The restructuring of Airbus is one of the pivotal issues. That directs you straight into the fact of how publicly quoted companies like BAe and Benz find methods of working with companies that are nationalised, such as Aerospatiale.' His view is that France will have to bite the bullet and privatise Aerospatiale, something that not everyone across the Channel agrees with. But the goal for Evans is obvious. If Aerospatiale, which recently merged with the missile maker Dassault, is privatised, it will then be on a par with BAe and Benz. Some degree of unification of the three, while keeping that all-important local identity, begins to look very attractive.

Defence, though, is not soap powder, and as BMW and Rover have found, such marriages can be very difficult to achieve harmoniously, even when a takeover is involved. Yet if anyone can sell it to the host of foreign governments involved, Evans can. 'There is no finer person to put in front of a foreign PM,' laughs one of his colleagues. That talent, before anything else, has underpinned his rapid rise through BAe since he started as a humble contracts officer with its old British Aircraft Corporation (BAC) subsidiary in 1969. 'He is basically an outstanding salesman, very fast on his feet, with a good strategic sense too,' sums up former BAe director Lord Blyth, now deputy chairman and chief executive of Boots. 'I think it is the combination of appearing a trustworthy northerner and having a brain that is is deceptively quick that wins people round.'

The strange thing is that Evans claims he has never been a particularly ambitious man. He certainly did not have a propitious start to life: his father, who had his own engineering company in Wales, died when he was young and Evans, a late child with a much older brother and two sisters, was packed off to the Royal Masonic School outside London at the tender age of seven. At 16, he had a motorbike crash which put him in hospital for nine months and left him scarred for years. He had crushed vertebrae and lost a lot of skin from his face. He spent much of the the following five years going in and out of hospital for grafts and back operations, and his schooling effectively ended.

Now, he just thinks that he was incredibly lucky to survive.

He is not convinced that the accident ever made him more determined to succeed, or more focused. His mother wanted him to go into civil engineering, where his elder brother had forged a career, and it was only chance that landed him in aerospace. He applied for a civil service job and, after a stint at the Ministry of Transport, was bundled into defence contracts at Tony Benn's Ministry of Technology. Working in contracts - sorting out who made what for how much - meant he spent time at every major company, and he quickly learnt the defence business inside out. In 1967 he moved to Ferranti and two years later he switched to the military aircraft division of BAC at Warton in Lancashire, near his mother's home in Blackpool. He turned down an offer to go GEC in Portsmouth. He also decided against joining the brain drain to America when he learnt (mistakenly) that he might be eligible for the draft. 'I could see myself having gone out to work, sitting on the bloody ground in the jungle slurping Coca-Cola and waiting for the next rat hole to open up. That quickly sorts you out,' he laughs.

Now, if that sounds a bit flip coming from the £527,000-a-year boss of one of the world's biggest weapons manufacturers - he's quite happy selling them but don't ask him to get on the other end of one - then so be it, that is Evans's style. He is used to people objecting. Last year BAe's Annual General Meeting was disrupted by anti-arms-trade protesters, and Labour MP George Galloway has repeatedly claimed the company has 'blood on the balance sheet'. Evans brushes it aside and says he has never had any qualms about the business he is in. 'I take a very philosophical view.

It is the Government that has to deal with the foreign policy which governs the sale of weapons. We are simply the designers, builders and sellers of military products. We can't sell anything without their approval because we need an export licence for everything we sell.' He does add, intriguingly, that he might have difficulty selling nuclear weapons, but planes are planes.

And planes are his real love. Once BAC was subsumed into the newly created British Aerospace in 1978, Evans's career took off. Again, he says, chance played a part. His boss at BAC suddenly developed a brain tumour and died, catapulting Evans into a senior position. That led to a role managing the British end of the Anglo-French Jaguar fighter plane programme, the first major collaborative venture for aircraft in Europe. He worked in France and South America. He moved around so much it got to the stage that he wouldn't even tell his wife and three daughters when he would be back from business trips: he didn't want them to be disappointed, he says. Once he left for a short trip in August and didn't come back till Good Friday the next year; he had ended up in India sorting out Jaguar production. 'You can't do that without a wife who is quite exceptional,' he acknowledges gravely. After India he landed a dual role developing BAe's business in Saudi Arabia and advising the Anglo-German-Italian Tornado programme. Then, in the move that made his career, he put both hats on at once and came up with Britain's biggest ever export deal.

As Evans describes it, Al Yamamah was simply a question of putting the right people and the right resources together at the right time. 'We had a major review of the marketing outlets for Tornado and I decided that Saudi would become a principal target. I knew they (the Saudis) were talking to America about buying F-15s, I had a lot of friends and contacts there and I knew the way governmental systems worked. I put together a completely dedicated team of 15-20 guys and poured resource into selling the planes.'

The deal, for Tornadoes and other equipment, is now estimated to contribute about £1 billion a year to BAe's sales figures. It has also, of course, brought the company no end of flak, not least when Labour politicians recently accused Evans of being involved in moves to deport Mohamed al-Masari, the exiled Saudi dissident at the centre of the diplomatic row between Britain and Saudi Arabia. Evans has always denied any involvement, although some close to him say he was certainly leaned on by the Saudis, who are not always totally au fait with how a democracy works.

Yet the contract remains one of the greatest bits of British deal-making since the second world war. How did Evans do it? Apart from his excellent contacts, colleagues put it down to three things: his energy, his ability to think around problems, and his knack of picking good people. 'The thing about Dick is that he never stops and he is just so optimistic.

He always has a new angle on things,' says Mike Turner, head of BAe's commercial aircraft division. And he is also a naturally good marketer.

'I've seen him in sales situations,' says Colin Price, head of change management at Price Waterhouse, who has been working closely with Evans on internal programmes at BAe, 'and he brings a genuinely strategic sense to it. He looks for USPs, at what the emotional demands of the customer are, exactly what he can negotiate down to. He always has a clear number in his head, and if it can't be done, he won't do it.'

Perhaps the most surprising thing is how Evans has managed to transfer those skills to the top slot at BAe. He has always been a good manager - you don't get to run multi-billion-pound plane programmes just by being good at lunching RAF top brass - but by some accounts, he did not find the move to chief executive easy. Those who witnessed his early encounters with City analysts remember wincing at his hesitant presentation as he struggled with hostile audiences and complex financial questions. 'But the great thing with Dick,' says one, 'is that you can tell him to his face that he was crap, and he'll take it, and sort it out.' Some believe his sharpest move was putting together a senior team which not only complemented each other in talents (Lapthorne provides the financial nous, Weston the strategic vision, and Turner the hands-on ability) but gave him the space to lead from the front, allowing him to concentrate on the future direction of the company, as well as creating a new sense of identity and culture at BAe. That has been translated into a more relaxed style inside the office too. Colleagues say it is not unusual for Evans to hold evening meetings with the television on so he can keep one eye on the football while he sorts everything else out.

The one regret, says Evans, is what had to be lost to achieve success.

The sheer number of jobs that had to go in order to save BAe is something which, he says, will live with him forever. He runs through the effects as if keener to admit them before he is accused: 'We closed complete sites, one of which was on my doorstep in Preston. We changed the whole socioeconomic structure of communities. I'd like to think - I know it was horrific for the people involved - but I'd like to think that we did it in a way that left people with a certain amount of dignity and pride. They were people who had made a big contribution ...'

At which point he stops and, for just a second, looks as if he has lost the thread. A memory perhaps, a flicker of a wince. Evans, a colleague told me later, may not be a complicated man, but he is above all a team leader and a caring boss. 'Lots of bosses don't care. He really does.' To this day Evans finds it hard to drive past BAe's old Hatfield plant, now deserted, on the A1, as if it is living testimony to his own failure.

But of course, it is quite the reverse. BAe is now estimated by some to be the most efficient plane maker in the world, and as Evans admits, without the sense of crisis he could never have achieved such a radical restructuring of the company. It all created 'a very positive piece of energy', one which Evans wants to continue to harness as he confronts the future in which he believes the company will probably have to change radically again.

So what about his odd days off? Well, say colleagues, he's never happier than when at home up north tinkering with his collection of classic MG sports cars, watching his beloved Liverpool on television or getting up at the crack of dawn on a Sunday to be first on the green at his golf club. What drives him on, they say, is simply his indomitable competitive spirit. 'Dick just likes to win,' says Turner. He remembers how Evans raised eyebrows at a recent company sports day by shaking the hand of those who came second and then announcing brusquely, 'Sorry, nothing for coming second ...' It is the Evans credo that now drives the whole of the company. His problem is that BAe's future direction looks like it will be decided on the Continent, rather than on its home turf. But as his deal-making record shows, his away form is rather strong at the moment.

Biographical Notes

1942

Born Blackpool.

Educated Royal Masonic School, Hertfordshire

1960

Joined Ministry of Transport and Civil Aviation, and later moved to Ministry of Technology

1967

Government contracts officer, Ferranti

1969

Contracts officer, military aircraft division of BAC

1978

Commercial director, Warton division, British Aerospace

1979

Director of Sepecat and director-in-charge (India) 1981

Assistant managing director, Warton division, BAe and director of Panavia Aircraft GmbH

1983

Deputy managing director, BAe Warton

1986

Deputy managing director, BAe military aircraft division 1987

Marketing director, BAe

1988

Chairman, BAe defence companies

1990

Chief executive, BAe

1996

Knighted in the Queen's Birthday honours

What People Say

'Dick is an outstanding salesman but he also has quite a powerful strategic sense. And he is very easy to do business with.

I wouldn't describe him as being particularly articulate but there is a complete lack of glibness about the way he approaches things.'

Lord Blyth, deputy chairman and chief executive of Boots and former director of BAe

'The thing about Dick is that he is very good at picking people. He puts people around him, you never feel you are beneath him.' Mike Turner, head of commercial aerospace, BAe

'Dick is great at the wheeling and dealing and glad-handing that you need in the aerospace industry, with an amazing contacts' book of Saudi names and numbers. He would probably make a better chairman than chief executive.'

A fellow industrialist

'Evans has been very important in keeping the defence side of the business going while Lapthorne sorted out the financial problems. In some ways he is the defence business. Clearly after the £1 billion write-off, the chairman and the finance director had to go - some wanted Evans to go too but if anything had happened to him, it's uncertain that the company could have pulled it round.'

An analyst.

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