UK: The Davidson Interview - Bill Alexander.

UK: The Davidson Interview - Bill Alexander. - The chief executive of Thames Water claims that he's not ambitious, that he never planned to be a boss - and certainly not of the third largest water company in the world. It's his wife who's the pushy one,

Last Updated: 31 Aug 2010

The chief executive of Thames Water claims that he's not ambitious, that he never planned to be a boss - and certainly not of the third largest water company in the world. It's his wife who's the pushy one, he tells Andrew Davidson.

Bill Alexander is something of a surprise package. Tall, slim and angular with dark slashes for eyes and a little boy's smile, he radiates the calm reassurance of a man who knows his purpose. If you bumped into him in the street, you would more likely mistake him for a surgeon or a solicitor. If you exchanged words with him, and heard him emphasise his points with the gritty thump of Northumbrian certainty, then you might picture him in manufacturing or mining. But head of Thames Water, one of Britain's larger and more controversial privatised utilities? I don't think so.

Somehow you expect your average engineer-turned-utility boss to be a big, bluff, driven individual with a Machiavellian bent for politics and a masochistic urge to compete with whatever the weather, the regulator and the tabloids can throw at them. Alexander, on first meeting, seems rather different, quiet and uncomplicated, perhaps. At 51, he has been chief executive of Thames for nearly a year, but up until this summer you would have been hard pushed to notice, so low has his profile been.

He ran the company as managing director for a year before that too, equally unobtrusively, prompting the Sunday Telegraph to dub him 'the hidden man of industry'.

Well, it seems as if Alexander is coming out of hiding now. No wonder.

His first year as chief executive has gone well. Thames' pre-tax profit jumped from £384 million last year to £407 million in 1998 (on a turnover of £1.4 billion). The £230 million windfall tax was paid off without a murmur. A massive £900 million overseas contract to build water supply services outside Istanbul was finished three months ahead of schedule.

Another overseas contract, this time with the discredited Suharto regime in Indonesia, was deftly salvaged from the local turbulence. A huge new development in London, combining a housing development next to a wildlife centre on 110 acres of lagoon at an old waterworks site in Barnes, has garnered widespread acclaim. The company has even won praise from water regulator Ian Byatt for cutting leakage - a perennial problem since it was privatised - by 16%.

Not bad going for a man who, a few years ago, wasn't even seen as a contender for the top slot, and for a company which until recently was one of the whipping boys of British business. The received knowledge in the utility industry is that Alexander's star is now very much in the ascendant.

Son of an engineer, 19 years in the coal industry, hard manager, admired builder - he masterminded London's vast ring main for Thames Water - and cautious owner of one red E-type Jaguar, which he drives on Sundays in heavy disguise (an Anderson Consulting baseball cap; privatised utility bosses, you see, have to have fun incognito): Alexander is probably not as simple and uncomplicated as he appears. For example, he remains a northerner to his roots (he is not just a fan but a shareholder in Newcastle United) yet now has homes in leafy Henley and Barnes and says he will never go back. He is also the first to protest that he is not ambitious, he never planned to be a boss, or shift jobs every two years, or move house every four years. In fact, he protests, laughing, it's his wife who's the pushy one. I think he protests too much.

We meet in Thames' Cavendish Place office in London. He enters the boardroom in shirtsleeves, looking leaner than his photos, and sits down quickly next to me, waiving the traditional protection of a table-width. It is the morning after Thames' AGM and he says he is happy-ish with the way it went, though disappointed that there were still questions from disgruntled shareholder/customers at the end. Disappointed, because he thought his managers should have sorted out the problems long before they reached the AGM. 'I have had a few words with people this morning,' he says. There is something chilling about his authoritarian tone. He is, it is said, a tough taskmaster who is unforgiving of those who don't come up with the desired results. But then, as he explains later, Thames has got to show proficiency at providing a good service. In the old days, he adds bluntly, it was rather better at just providing excuses. Blunt, you could say, is Alexander's style.

Thames has certainly had a chequered history. Since its creation in 1989 as the largest of England and Wales' privatised water utilities, it has repeatedly come under fire for its poor leadership and the high rate of leakage from its pipes. Its last chief executive, Mike Hoffman, left under a cloud two years ago. Its chairman, Sir Robert Clarke, stepped into the breach (cue row over his remuneration). Eventually the baton was passed to Alexander (1998 pay: a basic £250,000 plus bonus), since when the criticism has eased. The company has even won acceptance from some of its sternest enemies. Alexander, a Labour supporter in his youth, recently chummied up to John Prescott, a fellow north-easterner, on a ministerial visit to one of Thames' overseas ventures, a new waterworks in Shanghai, China. 'They really got on,' says one surprised aide.

Alexander says Thames, which serves nearly 12 million customers in London and the Thames Valley, probably deserved the old criticism. 'When I joined we were selling an awful product, and the whole company was underfunded.

Bills were going up to pay for the ring main, and yet improvements were not coming through.' No wonder consumers turned against the company. Ten years on the profile of the business is at last improving, he says. It may still be Britain's leakiest water company, but then again, it has London's crumbling Victorian pipework to contend with. At least it has the lowest bills of any water company in Britain, and, crucially, it believes that its service is now improving.

Service is clearly a key word with Alexander. His Thames Water CV cites that, as well overseeing the building of the ring main, he has been responsible for 'introducing customer service focus in the utility'. Much of it has been done through a heavy investment in IT, and an insistence, right from the top, that managers stop hiding behind their desks and get out onto the streets. Yet curiously, for a man who is credited with driving through the service ethic, Alexander has never worked for a service company in his life. Born in Corbridge, west of Newcastle, one of five children, he was always going to be an engineer and had done little else before he came to Thames. His father built turbines for GEC and Parsons. Alexander, who says he 'grew up young' as his father was always away on business, left school early to go to technical college, signed on for an apprenticeship at the National Coal Board and then moved straight into its graduate trainee scheme. He stayed until Thames snaffled him up 19 years later.

Was joining the coal industry the right choice? 'It was the right choice for me,' he says. 'I was head of engineering for the whole of British Coal by the end. I got a new job every two years, I always wanted to learn and try new things, they gave me that chance and it wasn't until Thames approached me that I even thought of working for someone else. When you are making progress you don't look over the fence.'

Alexander's conversation has a directness that some might mistake for vanity - 'put it this way,' laughs one friend, 'he makes sure you are not misinformed about his achievements' - but perhaps his style is not that surprising, given his background. In coal, you earn your credentials the hard way and are proud of them, you don't pussyfoot around. Alexander started his traineeship working shifts on the coal face, drilling, blasting, shovelling. 'I was working nights, the 12 o'clock shift, shovelling rock to where it was going to be used to support the roof. I was in a line of three. One hardbitten miner shovelling to me, and I had to shovel to another behind me.' You can imagine the kind of response that management trainees got from men who had been doing the job for 20 odd years.

It was a formative experience, and one, you suspect, that he carries into every meeting every day. It is also, of course, a factor in Alexander's perceived toughness. For those who deal with him on a regular basis now, working in conditions like that would be unthinkable, unimaginable even.

Roger Carr, chief executive of Williams and a non-executive director at Thames Water, was one of Alexander's early champions at the company and says that his background inevitably does give him added credibility. It has left Alexander with a sharp, no-messing approach that can make him seem quite hard. 'I think he is probably quite tough to work for,' says Carr, 'but Bill is very determined and very committed. People like dealing with him.'

He was clearly a talented engineer, progressing quickly through the ranks. By 1982 he was chief engineer for the Scottish region, by 1984 he was immersed in the year-long miners' strike. It made his work impossible, he says. 'Working in mining you have to get close to people, especially in a technical job, you have to talk through issues. The strike just put up a wall to that communication.' He worked through the intimidation and abuse. 'All good character-forming stuff,' he adds quietly. The decline of the mining industry was disappointing but inevitable, he says. Extraction simply got increasingly expensive as the good seams proved more difficult to find. There had to be change, and he supported that. 'I have always been a moderniser, after all, my job in mining was to modernise operations.'

Thames first tried to lure him away before privatisation in 1988. By then Alexander was head of engineering for British Coal, managing one of the biggest investment budgets in the country and, as he points out proudly, with 33,000 engineers reporting to him. His expertise made him an obvious choice to oversee Thames' push to finish the London ring main. Alexander wasn't convinced, but Thames came back a year later and finally got its man.

Alexander insists that he thought he would only be at Thames for a short period, to get the feel of the private sector before he went back to what he presumed would be a privatised coal industry. He never expected to stay, certainly never expected to become chief executive.

He arrived at Thames to find small sections of the ring main built but completion a long way off. One tunnelling machine had already been lost under Tooting Bec. 'We just turned it all on its head,' says Alexander.

'We said, "Right, we have got the money, how do we manage the project efficiently and effectively, what are the risks, how do you engage the contractors in a different way and give them some incentive to make progress?" What was important was to make the direct link between physical and financial performance.' A typical Alexander strategy was to insist on a running progress report, scoring up the 'metres driven' each morning when he got into work. He likes to see figures regularly, he says, for any kind of project. In that, he guesses, he is a typical engineer.

Others attest that Alexander turned the ring main, which averages 2.5 metres in diameter and is the longest tunnel ever built in Britain, into one of the country's greatest feats of engineering - and brought it in ahead of schedule with a fraction of the fuss accompanying Eurotunnel's dig under the Channel. Yet the Thames' headlines ever since have been dominated by recriminations over bad investments, poor judgment over pay and the like. That must hurt. Where did Thames go wrong? 'I think when we went private we were like kids looking in a toy shop,' says Alexander.

'We had a very strong balance sheet and could buy anything. That was driven by the belief that we would have very limited opportunities from improving efficiency so we should move into other water-related products. The strategy was right but we moved too early before the management was ready. It was just a hiccup along the way.'

As it turned out, it was a hiccup that cost his predecessor, Mike Hoffman, his job. Was that fair? Alexander contemplates his hand resting on the table. 'I think if you are the man at the top,' he says eventually, 'and things are going wrong you have to take responsibility. Mike wanted more time to sort it out but the capital markets said no. I admired Mike and learnt a lot from him. He was a great engineer.'

But great engineers do not always make successful managers. Alexander, whose only grooming for the top was a short stint at Harvard last year, has won as much praise for what he has not done, as for what he has changed at Thames Water. He sold the design and construction businesses that had caused many of the problems, but did not retreat from the international scene altogether, a brave decision considering the pressure on him to shift strategy. Now, with turnover from overseas ventures likely to top £200 million by 2000, that resilience has paid off. Thames is currently the third biggest water company in the world and those overseas' ventures look like being its most attractive area for growth away from the highly regulated UK market.

There have been problems, however. Thames' contract to supply water services to Jakarta involved signing up a relative of the now discredited premier Suharto to share in the deal. Once revealed, it led to considerable criticism.

Thames has now found a new local partner but Alexander is unrepentant.

'We needed political support in Indonesia and the way it ran there was through links with families,' he says. 'It doesn't matter where you are in the world, you have got to have an indigenous element.' But shouldn't a large British plc be careful of who it signs its deals with? 'The board were fully aware of the links and that it is common business practice in Indonesia,' he says coolly. He might also add, of course, that the company was only following the lead of its own government.

He is clearly immovable on the subject, and you can see where his perceived toughness is an asset for a company that finds itself repeatedly under fire. The eyes narrow further, the lips purse. He looks like a man who is used to digging in and winning. He put in an assured performance in a grilling before the House of Commons select committee on the environment earlier this year. 'That would have scared most businessmen half to death,' says his friend Dermot Gleason, chief executive of Gleason, a long-standing Thames partner, 'but Bill can handle it.'

The key strategic question for Alexander now is how to build on Thames' recent success. Next year it faces a crucial pricing review by the water regulator Ian Byatt. No one is sure what will happen. The initial indications are that Byatt wants to cut bills for consumers, but environmental groups are adamant that prices must be held so more can be spent on cleaning up rivers and beaches. Whichever route is chosen, the best opportunities for growth are still abroad, he says.

So no chance of Thames buying its way into being a multi-utility here?

'Can't see the logic,' retorts Alexander bluntly. 'We talk to our customers and they don't want one big bill.' So the likes of Scottish Power and Hyder, both of which combine electricity and water, have got it wrong?

Alexander looks uneasy. 'No, er, well, I think it is working well in Wales, because Hyder is Hyder. It is less likely to work here because we have a more volatile base'.

Would he like to buy another water company? You bet. 'I think it is wrong that I can be bought but I cannot buy. I don't think that is going to change this side of the 1999 price review. But I think the way to change it is by example. That is the whole tenet of the way I operate as a manager. Get our heads down and do the job and people will say: why can't we have Thames Water? We want their prices and their efficiency.' The next price review will probably push the industry into consolidation. He is equally certain, he adds pointedly, that this government doesn't want all its utility assets to end up in American hands. What is important is getting the balance right.

'It is a myth to think that business is always about the bottom line. There has got to be a profit motive in any business or it will close, but a business also has to work to sustain the community it serves. The big thing about our new wildlife centre development in Barnes, for example, is that it is private sector funded, and that a profit has been made on it. But you have got to take time on these things and get them right.'

Tony Pidgley, chief executive of Berkeley Homes, which has worked with Thames on the scheme, says Alexander should be given credit for pushing partnering hard. Thames is now involved in a range of joint ventures that appear to be paying off. 'And the one thing about Bill,' laughs Pidgley, 'is that he doesn't do anything that doesn't make money.'

Alexander liked the Barnes development so much that he has even bought a flat there. At full price, he adds quickly. He says the purchase was really his wife Dorothy's idea, as she was tired of 'vegetating' in the country. Dorothy, he says wryly, is responsible for a lot of things (including the 1966 E-type which she gave him for his 50th birthday). They have been married 30 years, and were brought up in the same village. 'No, she was not my childhood sweetheart,' he says, smiling, 'she went to a posh school in Newcastle and I didn't.' Those who know the Alexanders socially say that, despite his success, they are still a remarkably low-key couple.

'When we go out with the Alexanders we never talk business,' says one associate, 'we talk about schools or what the kids are doing. They are just strong family people with no pretensions at all.'

In fact, what is remarkable about Alexander, adds another, is just how firmly rooted to the ground his feet are. He doesn't play the Northern big cheese, nor does he have any time for those whose behaviour he finds unacceptable. Ask him about Newcastle United, for example, and he will say bluntly that, as a shareholder, he is very unhappy about the return of Douglas Hall and Freddie Shepherd to the club's board so shortly after their resignation last season. And he has known Hall's father, Sir John, for years. 'I worked with him some time ago and we are still great friends. He is a man of the people for all his money but I don't think his son is the same,' he says. He won't be drawn further but adds, smiling, that his wife has ordered his brother, who is even more of an ardent fan than Alexander, to stop going to matches. Whether he will or not ...

Time to go. 'When can I sign off the copy?' asks Alexander, trying it on again with that deceptively innocent smile. Well, never, actually.

He laughs, shakes hands and strides off. As he goes round the corridor I can hear him barking at his corporate affairs director: 'I want to talk about the press coverage of the AGM, in my office, soon as you can, please.'

Biographical Notes

1947: Born 15 February in Corbridge, Northumberland

Educated at Dudley Grammar School and Northumberland Technical College

1970: Graduate trainee, British Coal

1982: Chief engineer, Scottish region, British Coal

1986: Chief mechanical engineer, British Coal

1987: Head of engineering, British Coal

1989: Engineering director, Thames Water Utilities

1991: Technical director, Thames Water Utilities

1992: Managing director, Thames Water Utilities

1994: Executive director, Thames Water

1996: Group managing director, Thames Water

1997: Chief executive, Thames Water

What People Say

'When Bill was identified as possible chief executive we had to fill in the gaps, things like the City and marketing in its broadest sense, but he has taken it all in his stride. What he is good at is getting things done.'

Sir Robert Clarke, chairman, Thames Water

'Bill knows what he wants and articulates it extremely clearly. And he's dependable. You know that what he wants today is what he wants tommorow. You also know that if you fail Bill won't conceal his displeasure.'

Dermot Gleason, chairman and chief executive, Gleason plc, Thames Water's partner in Stirling Water

'The thing that Bill attracts from people is respect. He is very honest and direct, and he does know what he is talking about. His energy and determination gives his engineering expertise a cutting edge, and that expertise is vital as the scale of the projects Thames is involved in is vast.'

Roger Carr, chief executive, Williams plc and non-executive director of Thames Water

'Bill is single-minded and determined, but he knows he cannot do it all by himself.'

Tony Pidgley, chief executive, Berkeley Homes, Thames Water's partner in St James' Homes.

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