Scottish Power's chief executive must be a sharp political operator to have persuaded politicians and the regulator to let the utility snap up Manweb and Southern Water. Andrew Davidson takes a look behind his bluff and jovial exterior.
Ian Robinson, chief executive of Scottish Power, the Glasgow-based multi-utility, is a man on whom authority sits easily. Big, burly, with a warm handshake and the scraped-back white hair of an old Russian Politburo chief, he exudes jovial acumen and bluff good humour. Trained as a chemical plant engineer and project manager, he is a well-liked team-leader, good at setting out strategy, bringing young executives on and backing them to the hilt, and smart enough to present a concerned, thoughtful face to the watching world.
Don't be fooled, say some who have worked for him, Robinson is a tough nut. Watch his dark, wary eyes, flashing occasionally behind steel-rimmed bifocal glasses, and you will get a hint of the very sharp political operator that lurks underneath.
So, not a pussycat. But even Scottish Power's critics - and in the hypersensitive world of utility politics there are a few - acknowledge that Robinson, alongside his chairman, Murray Stuart, has played a canny hand of cards in the three years since he joined the company. As the driving force behind Scottish Power's expansion into a £3 billion-turnover utility juggernaut with interests in electricity, gas, water and telecommunications, he clearly lacks neither ambition nor stamina. As the deft diplomat who has persuaded politicians and regulators to let Scottish Power grow, snapping up Manweb and Southern Water in the process, and in the manner in which he has kept the company out of the carping headlines that have dogged other privatised utilities, he has also proved himself pretty adept at presentation. Some rivals feel the company has been too adept: it has, they allege, snuggled too close to the current Labour administration and its trade union backers for comfort, but it is not a criticism which is likely to keep Robinson awake at night. For at 55, he sits atop an admired company perched halfway up the FTSE-100, with its shares also listed on the New York Stock Exchange, and with a lot of interested parties waiting to see what Scottish Power's next big move is going to be. Not a bad position to be in, surely?
Robinson beams warmly from his cherubically round face. He is sitting in shirtsleeves in the boardroom of Scottish Power's London office, a converted townhouse tucked away down a side street west of Portland Place.
It is a curious place for a London base: not so convenient for investors in the City, but perfectly positioned for entertaining politicians and regulators - an indication, perhaps, of where the real priorities lie in utility management these days. Robinson, after 30 years working around the world in building plant for the oil, gas and petrochemical industries, is clearly proficient at pacing the corridors of power. How else, ask his rivals, can Scottish Power have persuaded the last government to let it become the only generator to own an English regional electricity company as well? Why else, after Scottish Power's rather muted protests against the windfall tax, was Robinson appointed head of the Welfare to Work campaign in Scotland? A man for all persuasions, clearly, who takes a very pragmatic approach.
'I was really irate about the windfall tax,' protests Robinson. He speaks with a hint of Geordie inflection, a nod to his roots in County Durham.
'It was a key shareholder issue, but there was nothing we could do about it. Once it was established, you just have to get on with life.' So Scottish Power, no doubt with a tight smile, will pay around £317 million extra to the Government this year, a chunk of cash which is expected to halve its pre-tax profits for 1998. Then it will get on with managing its steady earnings growth. Most City analysts predict that, while there may be doubts over strategy, the company will continue to outperform its rivals. They cite its proven track record in 'sweating its asset base' and delivering value. They also believe Scottish Power's efficiency, customer focus and perceived model employer status give it a natural advantage over its peers when it comes to dealing with the regulators that oversee their markets.
All of which is good news for Robinson, the first Englishman to head Scottish Power. Typically, he puts the company's success down to teamwork.
'I have got tremendous people around me - I listen to them for ideas.' Those who know Scottish Power well say that his prime influence has been to widen its horizons, make it look seriously at creating an impact outside Scotland and to lead the changes enthusiastically from the front. 'We were looking for a certain kind of chief executive,' remembers his chairman Murray Stuart, 'someone who was full of energy and totally committed, with large company and international experience. Ian fitted the bill.' The fact that he wasn't a Scot was never an issue. Most importantly, says Neil Hood of Strathclyde University, corporate adviser to the company, Robinson brought a change of style and pace to the company. 'He arrived when it was on the cusp of making major decisions and has proved very motivational. He is very good at transmitting his vision to people.'
Robinson joined in 1995, four years after Scottish Power had been privatised.
The company had already undergone considerable change. At the time of privatisation, Scotland had been divided between two energy companies, Scottish Power and Scottish Hydro-Electric, both of which were allowed to generate and sell directly to consumers - unlike in England and Wales, where a clear division had been maintained between generators and regional electricity companies. Both Scottish companies also had to buy a fixed amount of energy off Scottish Nuclear, which runs the country's nuclear power stations and supplies around half of Scotland's energy. Prior to Robinson's arrival, most of Scottish Power's efforts had been focused on re-organisation, benchmarking itself against other utilities, launching a new telecoms business in Scotland, sorting out its string of electrical shops and introducing new efficiencies. The question then was, what next?
Robinson describes what he found as a 'very Scottish' company. 'There are lots of companies in Scotland which are very high quality but don't always understand the boundaries of attainability. There were qualities at the highest level but you have to keep expanding the boundaries.' The company had already looked at expansion overseas but decided that there was better value to be had in the UK. Manweb, which sells electricity to customers in north Wales and north-west England, was an obvious bid, an £1.1 billion acquisition in the same sector but with considerable political hurdles to be overcome. Southern Water, which cost Scottish Power £1.7 billion, was more important simply because it was different, according to Robinson. 'We had got going in telecoms and gas but water was the one utility that was missing. But there were the same management principles involved as with Manweb: we put in an acquisition team, we dealt with the people issues, there was significant downsizing that had to be sorted out, and a much greater focus on customer service introduced.' Ironically, the bid grew out of a mutual benchmarking exercise, which Robinson, laughing, says was not an opportunity for industrial espionage.
'Southern Water was very keen to benchmark against us,' he points out.
For many, of course, the Manweb bid was already a bid too far. While certain utilities have been allowed to pool their assets - water and electricity companies, for example - the generators in England have been blocked from owning regional electricity companies, and still cavil against how Scottish Power's bid was waved through. Robinson shrugs. 'Everyone said we couldn't do it, it would break the rules. But we knew the rules of regulation: they determine how the charges are fixed, everything else is a judgment on whether something is satisfactory from a customer point of view.'
Was Scottish Power just lucky? Robinson, understandably, looks rather pleased with himself. 'No, you make your luck. The early bird catches the worm. It also catches the value. There was a wave of bids after us and they proved too big a bite for the government. So we got the value.' The figures certainly show that Scottish Power is good at squeezing efficiencies out of its subsidiaries. Between 1994 and 1996 operating costs at Manweb were cut by more than £60 million, while customers have seen three price reductions in four years and the company's electricity network performance has improved. Likewise at Southern Water, staff have been cut, the business refocused on its core water and waste water activities, performance has been improved and non-core subsidiaries sold off. Success breeds success, says Stuart. 'Ian has given the company a great deal of confidence about itself, it feels it is offering a good quality service and has pride in what it does. That's very important.'
Those who know Robinson and the company well say the values of both have merged fortuitously. Much of Robinson's character - driven, ambitious, unflashy but congenial and conscientious too - is attributed to his North-East upbringing. He was brought up the eldest son of a stationmaster, helping drive the shunter in the yards as a boy, attending grammar school in Middlesbrough and spending his Saturdays down Ayresome Park. 'That was when Brian Clough was centre-forward for Middles-brough,' he laughs.
It sounds idyllic - apart from the fact that Middlesbrough FC never won anything, of course. He read chemical engineering at Leeds University, and instead of going to work for ICI, like so many Middlesbrough boys, he pushed for a job at the US engineering giant, Kellogg International.
He was the company's first British graduate not to come from Cambridge or Oxford.
His career progressed through Kellogg and another American giant, Parsons.
He built plants and engineered projects round the world: Scotland, Europe, the US, the Middle East. By 1983, he was the only non-US national in the Parsons' corporate management team. In the end the travelling took its toll. Commuting between Los Angeles and Saudi Arabia every month, and faced with pushing his 13-year-old daughter through the US education system, he asked for a move back to Britain. It was, he admits, one of the 'downs' in his career. Parsons was furious. 'It was tough. They played poker with me, saying they couldn't guarantee what I would do. I had to hold my nerve.' Eventually he was made managing director for Parsons Europe in 1985 but a year later he left, taking over as managing director of John Brown, another engineering specialist, which was snapped up by Trafalgar House.
Nine years later, unhappy with changes at Trafalgar House, he jumped at the chance to head Scottish Power. He has always loved Scotland, he says, and his wife is Edinburgh-born.
He describes his management style as 'open'. He feels he is a good communicator and a good delegator. 'When I was 30 I wanted to do everything. Now I am in my fifties I want the best people in the world working for me, and my job is to lead them and harmonise them and draw the people beneath up.' He cites a collection of initiatives as the bedrock of Scottish Power's progress: sorting out the company values, communicating them to staff, inspiring managers, showing you care about customers, constant benchmarking against other companies. And always being straight about what you want from people. High-quality, motivated staff who enjoy their work, know they will be rewarded if they succeed. Hence every penny spent on employee development initiatives, on educational and arts sponsorships, on ecological schemes, even on the company's famous pipe band, pays for itself. These, of course, are the initiatives that have also caught the Government's eye and appeased trade union leaders.
Does being a Scottish company help? Undoubtedly, says Robinson. For one thing, being Glasgow-based, the company has had long relationships with many of the senior Scottish MPs that dominate the Labour Party. The company is also imbued with a local tradition of corporate responsibility. When VAT was introduced on fuel, for instance, Scottish Power was one of the few energy companies which donated to charity the interest it raised on early payments (made in advance to avoid the tax). Its executive salaries, too, seem restrained compared to those at other utilities (Robinson's £397,000 salary, bonus and benefit package in 1997 is, for example, rather less than Keith Henry's £500,000 at the £3.5 billion-turnover National Power). Good PR? Maybe. Certainly the company has worn its Scottishness shrewdly. Each subsidiary is always branded 'a Scottish Power company' and Robinson says all the evidence is that English consumers value the Scottish link. 'Scots have a reputation for being canny, reliable and not throwing their money around. People like that.'
There are still considerable hurdles ahead, however. No one is sure just what opportunities - and problems - the slowly deregulating markets will bring. Competition for the household market in electricity begins in September. British Gas' monopoly in gas provision is also gradually being unpicked. City analysts believe that good management must be the key to success in these sectors, and that so far Scottish Power has held up well, but things can change. What if customers, faced with competition, simply stick with the companies they know? What if a multi-utility strategy, which relies on customers trusting a company so much for one service that it will buy a host of others off it too, doesn't work?
Robinson is adamant it will. He expects consumers to benefit from big savings in gas prices, and slightly smaller ones in electricity. He cites a request from councils in the Isle of Wight for Scottish Power to provide multi-utility facilities for consumers across the island, packaging electricity, gas and water together.
He cites the figures for gas take-up in areas like Brighton and Eastbourne.
There is a huge education process to go through, he concedes, but if consumers get a good financial offer from a company they trust, they will go for it.
But there are cracks in the Scottish Power facade. The recent exit of director Mike Kinski, who led the acquisition teams sent into both Manweb and Southern Water, to join Stagecoach raised eyebrows in the City. Kinski, a former Jaguar Cars personnel director, was being groomed to succeed Robinson. Clearly the chance to head his own plc played a part in Kinski's decision to move, but these days, shouldn't a company such as Scottish Power, already one of the top 20 utilities in the world by market capitalisation, be able to hold on to its stars?
Especially if it prides itself on being a 'people' business ...
For a moment, the only moment in the interview, Robinson looks genuinely needled. 'Agh, that's just one guy,' he says suddenly, his face creasing into a deep frown. 'When I sent him into Manweb he was just our human resources director. Apparently he is a leading businessman now.' Clearly, Robinson is seething, and given that he works hard at his affability, the outburst is even more surprising. He quickly stops himself from going further and smooths his tone. 'Don't get me wrong,' he says. 'Mike is very good. He has done the transition at Manweb and done the transition at Southern Water and now's a good time for him to go. He wants to be a chief executive. It's part of life.' Did money have anything to do with it? 'No,' says Robinson, absolutely not.
Kinski, who earned £268,000 last year heading up Southern Water and is expected to earn considerably more at Stagecoach, says money was not a factor and refuses to be drawn into any criticism of either Robinson or Scottish Power. Yet the fact that Scottish Power could not accommodate his ambitions sounded a warning note for some City analysts, who feel that the decision to plump for a multi-utility strategy has not yet been fully vindicated and that Scottish Power may not quite know what to do next. There are hints that Robinson might be looking for another big acquisition.
But where? America is a possibility. The market is gradually being opened up there and Scottish Power recently listed its shares on the New York Stock Exchange. The key issue, says Robinson, is finding value for his shareholders. 'There are opportunities but so far not with value. Remember we looked at Australia before we bought Manweb, and we got 30%-40% more out of buying here than over there. We have so many opportunities here.' Not enough, though, to keep its star executives on board.
Perhaps the key to Robinson's outburst is that he is, in his own words, 'a man who doesn't like surprises'. He clearly feels wounded by Kinski's resignation. What does that say about him? Despite being gregarious, Robinson is not, according to friends in the business world, a particularly easy man to fathom. Chris Gibson-Smith, managing director of BP, has known him well since his John Brown days. 'Ian is something of a still water, he runs deep,' says Gibson-Smith. 'He doesn't really reveal himself.' No one is quite sure what drives him on.
He is, clearly, passionate about what he does, a characteristic which makes him an invaluable leader to have on board for the Government's Welfare to Work campaign. 'That's what you should be writing about,' he tells me, cheekily. The first figures are beginning to come through in Scotland, and it really does look as if the new welfare initiatives are working, he says. Ironically, some of the ideas behind the scheme were taken from Scottish Power's own retraining initiatives, principally Scottish Power Learning, the subsidiary set up in 1996 to help find employment for the workers whose jobs had been cut. Scottish Power has so far backed the company with £2 million a year. Rivals might say that the firm, which has TUC general secretary John Monks on its board, is just a clever sop to the unions, but it is indicative of a string of smart human resource ideas pioneered by Scottish Power. The catch, according to insiders, is that most of these ideas came from Kinski, another reason why his exit may be all the more galling to Robinson.
But enough of Kinski. How does Robinson relax? Playing a bit of golf, he says, or staying in his flat in the south of France. He loves the sea.
Otherwise, he doesn't read books, he just works, normally taking 'a foot' of paperwork home at weekends. His week is usually split between Glasgow and London and he has homes in both cities. Generally, he says, he loves the work, but then he always has. And when there have been tough moments, like returning from America, his family have helped him through. They keep him sane, he says.
That and Middlesbrough Football Club, of course. He went to watch his home town team play twice at Wembley last season - they won nothing. When we met, in March, he was still wondering if he would go and see them again in the Coca-Cola Cup Final at the end of the month. No, he thought, he couldn't take the disappointment. He looks rather perplexed as he says it, that broad brow creasing up again. I would guess his heart spoke differently.
By the time this is printed, you will know whether he has had a happy Easter or not.
Born 3 May, East Boldon, County Durham
Educated Middlesbrough High School, and Leeds University
Graduate trainee, Kellogg International
Project manager, Ralph M Parsons
Vice-president operations, Ralph M Parsons
Managing director, Parsons Europe
Managing director, UK engineering and construction, John Brown
Chairman and managing director, Trafalgar House engineering division, and main board director
Chief executive, Scottish Power
WHAT PEOPLE SAY
'Ian's style is that of the classical managerial coach. He reviews performance regularly but he is never aggressively on top of you. He is always very supportive. And he works as a team player.
He really brings people through the organisation. I have learnt a lot from him.'
Mike Kinski, chief executive, Stagecoach, and former director, Scottish Power
'He has got passion and he is very good at transmitting his vision to people. He's tough, there's no doubt about that, but he is also very human.'
Professor Neil Hood, University of Strathclyde
'Ian has huge energy. He is incredibly active and works extremely hard.
He is also very disciplined and has the kind of determination that, when he sets goals, he really does go for them.'
Murray Stuart, chairman, Scottish Power
'Ian is something of a still water. He runs deep. He's an interesting man. He doesn't really reveal himself. When you agree things with him they tend to happen without flounce or demonstration, and they happen through other people. That's part of his camouflage.'
Chris Gibson-Smith, managing director, BP.