Owen Green protege and head of BBA, Roberto Quarta has a big City fan club and a reputation as one of the country's best industrial managers. But with a recent aborted bid for Lucas behind him, says Andrew Davidson, he knows he has to get the next move right.
The moment Roberto Quarta walked off the main board of engineering giant BTR and into the top job at BBA, a considerably smaller and rather less glamorous concern, City noses began to twitch. Here was a man reputed to be among the best industrial managers in the country, tipped for the very top of one of Britain's biggest engineering manufacturers, throwing it all in for a company with a mis-matched hotch-potch of metal-bashing interests which had been knocked sideways by the recession. Did he know something that others didn't?
Evidently so, for three years later, Quarta, an Italian-American now based in Britain, has completely overhauled his new charge, doubling its share price and turning it into one of the engineering world's go-go stocks while BTR languishes in the doldrums.
Earlier this year Quarta almost pulled off an audacious bid for another engineering giant, Lucas, and he appears convinced that BBA can compete at the highest level. To that end, he has been packing the company with heavyweight, ex-BTR executives and, having sold off quite a bit of the old BBA, made no secret of the fact that he is looking to add 'another arm' to its remaining engineering and manufacturing interests. The FTSE-100 beckons. If you were looking for a pair of well-cut coat-tails to ride on at the moment, Quarta's would seem to be a pretty good bet.
No surprise, then, that a manager with ambitions of empire building should keep his base close to the financial hub of the City. BBA's relatively new headquarters is in a refurbished block in Fleet Street, London. Quarta sits in a modest office up on the fifth floor. A lean, dapper man of medium height, with the palest of blue eyes and a sweep of auburn hair, 'Bob Quarter' - as his British colleagues call him - is a fast talker but a reserved interviewee who takes his time warming up for strangers. The son of a tailor, brought up initially in Piacenza in northern Italy, and then on the east coast of America, he is elegantly courteous but at times also rather unnerving. He can, like many Italian men, give you a curious top-to-toe glance which can suddenly make your suit seem surprisingly ill-fitting.
Yet for a boss with a big City fan club and a reputation as a formidable knife-wielder, he is agreeably low-key. He may refer to himself in conversation as 'we', rather than 'I' - a linguistic trait he cannot shake off (apparently he feels uneasy using the 'I' word too often) - but those who do business with him say he is driven by ambition rather than ego. He has run billion-dollar businesses for BTR in America, and is clearly as happy as pie to have the chance, at 47, to rebuild another plc to his own remit. But it will not be a copy of his alma mater. 'We are not cloning BBA from BTR,' he says with a smile. 'Times are changing and BBA has different challenges.'
Such as working out its next move after failing to buy Lucas. BBA is now at a pivotal point in its attempted regeneration. Ever since its share price leapt on the announcement of Quarta's arrival in November 1993, it has consistently drawn plaudits for delivering on its promises. New boss, new focus, new growth. But buying Lucas, it turned out, was a bit too much for some shareholders to swallow. Their concern, plus the fact that Lucas flushed the bid out sooner than Quarta would have liked, meant that the offer never got off the starting blocks. To some, it smacked of inexperience on Quarta's part. To others, he was just unlucky. Whatever the truth, he knows he has to get the next move right.
But he has a lot of good will to draw on. BBA, originally British Belting and Asbestos, was founded over a century ago as a manufacturer of conveyor belts. More recently Quarta's predecessor John White had transformed it into a diversified conglomerate which by the '90s found itself in severe financial difficulties. In 1993, when White retired for health reasons, BBA posted a loss of £11 million on a turnover of £1.4 billion. By the time Vanni Treves, BBA's chairman, announced Quarta as White's replacement, its shareholders were more than ready for a fresh start.
Which is exactly what Quarta has provided. Since he arrived, the company's interests in automotive products, fire protection, aircraft fittings and conveyor belting have all been sold. Other subsidiaries have been closed, the workforce cut by 10% to 20,000, turnover sliced to £1.2 billion. In the meantime Quarta has reorganised BBA into four core divisions: non-woven textiles, friction materials, specialised electronics and aviation.
Last year profit (before exceptional items) rose to £118 million, and margins hit 11.4%, one year ahead of Quarta's promised schedule. Now he is ready to concentrate on growth. His acquisition of Fiberweb, the non-woven textiles division of Holvis AG, a publicly quoted Swiss company, was hailed as a brilliant move last year, transforming BBA into one of the four largest manufacturers of non-woven textiles in the world. Incontinence pads and nappy liners (Fiberweb supplies Procter & Gamble, manufacturer of the Pampers brand) may lack appeal to some but they satisfy Quarta's requirements: they allow BBA to compete on a global basis in major markets with good returns. The aborted Lucas bid, however, brought everyone down to earth, raising a lot of questions, not least why Quarta wanted to push BBA back into more automotive products when he had already said he wanted to reduce the company's dependency on such cyclical markets.
The answer, it seems, was that it was simply too good an opportunity to miss. 'It was my idea, I took it to our advisers. I take full responsibility,' he says briskly, speaking his English like Italian, words tumbling out as he explains the logic of the link-up. BBA friction systems were, he says, a natural fit with Lucas's brakes business. The combined companies would have been able to supply a total brake product to car manufacturers worldwide. But the price, probably around £2.5 billion, simply became too high and a number of BBA shareholders thought the deal smacked of over-ambition. There were other complications too, such as the fact that BBA's brokers, Cazenove, also worked for Lucas. When it stood aside because of the conflict of interest, BBA lost an experienced link with its own shareholders. Given more time, Quarta says, he could have convinced shareholders of the industrial logic. In the end he had to announce that BBA would not make a bid without the Lucas board's consent. And the Lucas board was rather keener on its proposed merger with US brake-maker Varity.
That, of course, is hardly surprising, given that Quarta would have been just as tough on Lucas as he has been in reorganising BBA. While Quarta's speed of action has won praise, some critics have raised concerns about the ruthlessness of his methods, which in the past has earned him the nickname 'Bob the Knife'. It is all very curious, he says, as at BTR he was far better known for building up businesses - principally the group's valve and seal operations - than cutting them back. In fact, the Bob the Knife soubriquet probably says more about certain folk in the City who wanted BBA pruned.
Quarta has always had a popular following among engineering analysts, who watched his rise at BTR with interest, noting that Italian-Americans are pretty exotic creatures in blue-chip British boardrooms. When BBA managers wanted to know more about the new boss before he arrived, they found it was analysts, rather than others in the engineering business, who really knew what the company was getting.
No one doubts Quarta moves as fast as he talks. He is, by reputation, an impatient man: it took him just three months to make his mind up about what he wanted to keep and what he wanted to sell at BBA. He travelled to every plant and office and then 'sat back with a cold towel' and worked out his criteria: he only wanted companies with critical mass and international presence, companies that could be developed into global businesses, or companies in specialist markets that were capable of delivering above average margins. 'And as an umbrella over the top we needed to get BBA right in terms of performance as measured by gearing, return on sales and cash generation.' All measures designed to regain investor confidence, but they came with a catch.
'One of the other things we said was that we wanted to do things through our own means. This company has done about six rights issues in five years.
It kept going to shareholders but it was not generating cash.' Cash is king, he adds, the real test of management performance. Consequently he cut the dividend (from 7.5p to 4.8p) and promised to hold it down until performance returned. By then he was already into a radical restructuring programme, which included pushing out nearly all BBA's senior executives.
'As well as identifying people who can help you push forward change,' he says coolly, 'you are also trying to remove those who are so entrenched in the old culture that they are not going to change.'
It's enough to send a chill down the spine of any long-serving manager.
Quarta is known to have a hard side which is not revealed to the press - 'Put it this way,' laughs one former BTR colleague, 'he knows when to be modest, and when not' - and he is not one to shirk a hard decision.
Yet in his defence, George Cartwright, who heads the friction materials division and is the only BBA old boy left among the senior executives, says that many of the old managers were simply too protective of their territories and too unwilling to embrace the new culture, which involved a much closer working relationship with head office. The benefits of it were soon apparent. 'Bob simply removed roadblocks that were in the way of the business developing,' says Cartwright. 'His ability to look at a business, sum up its strengths and weaknesses and to know what the opportunities are, is quite exceptional.'
So what sort of manager does the BBA boss like? 'A hands-on manager,' says Quarta. 'A manager who is willing to stretch, who doesn't feel confined, and who is committed. I believe that loyalty is very important, both to the company and to the employees.' But how does that square with reducing the workforce by 2,000? That doesn't smack of loyalty to anyone. Quarta looks pained. 'I think you're disloyal to a workforce if you allow a company to go further and further into the red where you are either going to be shut or subjected to takeover. The loyalty we have to the BBA family is to ensure their future. The best thing we can do to ensure the future is to provide performance, even if it means cutting the workforce, because in doing so we are ensuring the future for the workforce which is left.
You can't add jobs until you have got the company right.'
Does he see himself as an American-style manager? 'No,' he says, 'I am a global manager.' But does he perhaps have a different perspective having trained abroad? 'No, you have to give credit where credit is due. I worked for BTR, which is an English company, and my training was on the job.
I have managed in the US and been in Europe since 1979. It is managing international businesses that makes a manager better able to assess management, companies, markets and products. Frankly, I don't think we should talk about US or UK managers, we should talk about global managers, who have experienced a variety of business situations around the globe, and who are capable of going into any situation, making an assessment and turning round that position. A global manager has to have that kind of profile in my mind.'
Inevitably BTR now casts a long shadow over BBA. Quarta has three senior executives with BTR experience reporting to him (David Miles, head of non-woven textiles, Dick Dodson, head of Signature Aviation Services, and James O'Connor, head of corporate development), all working with financial systems closely based on the model used by their old company. It doesn't surprise his old BTR boss, Sir Owen Green, who first spotted Quarta's potential when his group snapped up the company Quarta was working for in the US (some analysts also believe it was Green who suggested the Lucas bid to Quarta). 'He's a BTR manager,' says Green, 'very dedicated, committed, numerate, good at selecting and managing people.' And, most importantly, internationally focused. It is logical that if he couldn't find the same qualities in BBA managers, he would want to ship others in.
All of which begs the obvious question, why did he leave BTR in the first place? As a protege of Green, and the youngest board director in the group's history, he was widely expected to reach the top slot eventually. Was he just, as his old colleagues say, impatient? Quarta smiles enigmatically.
'Well, much was written about how, if I had stayed, I could have and should have run BTR, but "could have" and "should have" are things you should not take to the bank. I just felt the timing was right, the opportunity was right, and that's it.' It is worth noting that Quarta had left the company before, in 1985, after failing to convince chief executive John Cahill about a major acquisition he wanted to make. Then he went to work for a smaller components manufacturer in New Hampshire, attracted, he says, by the offer of equity. BTR had to buy him back in 1989.
Green himself, who has the highest regard for Quarta's abilities, says BTR lost him again because Quarta felt he was still too far down the pecking order and BBA simply made him an offer he couldn't refuse. 'Bob is an American and Americans believe in something called The Score,' laughs Green. 'The amount of money you are paid represents your value in the world.' Vanni Treves, BBA's chairman, says this is nonsense, however.
Although Quarta was given generous share options (he now holds over a million BBA shares exerciseable at different prices), he was still brought in on exactly the same salary package he earned at BTR (just over £600,000, including bonus and pension, in 1994). 'BBA simply offered Roberto all the attributes he was looking for,' says Treves. 'It had the right size, it needed things doing to it, it had core businesses he understood, it was internationally based with a large American presence, and, given certain actions, it would command a great deal of support in the City.'
Even so, Quarta was a tremendous catch for BBA, which had been presented with a shortlist of two by headhunters and was delighted to get its first choice. Few are sure what drives Quarta.
It might be the tough times in his childhood. He was brought up principally in Italy, while his father emigrated first to Venezuela, where he ran a shop, then later to the US, where he worked as a tailor. Quarta and his mother followed at odd intervals, first to South America, then back to Italy. Eventually Quarta got to America before his parents, staying with an uncle and aunt in Massachusetts. He was thrown straight into high school knowing little English yet ended up majoring in languages, which says something for his determination, and perhaps for the sense of discipline instilled by his education in Jesuit institutions. One American colleague says that, like many immigrant sons, Quarta probably still feels the need to prove himself. 'I think he wants to demonstrate first to himself then to anyone else who cares that he can do it.'
Chance has played a part, too. Quarta says he never considered a career in business when he was young. His sights were aimed at a position in the UN or even in the FBI. But a job in a language school led to Quarta meeting a textile boss who gave him a start. Later he talked his way into Worcester Controls, the valve manufacturer, even though he failed their basic intelligence test (he hadn't a clue how to answer most of the basic questions about US culture). Worcester was taken over by BTR in 1978, and Quarta was quickly spotted as a potential leader by the group's senior managers.
Now, nearly two decades later, Quarta appears fairly settled in England.
He has a flat in London's Kensington and a house in Somerset, where he gardens. He says he likes to be outdoors as much as possible and lists his time working in construction as a college student as one of his favourite jobs. He doesn't miss America or Italy and anyway his job gives him plenty of opportunity to travel.
He is even trying to learn the rules of cricket. So where, if it's not too old-fashioned a question, does he feel his real home to be?
Well, he says, he has American and Italian passports but he sees himself as 'a European' now, rather than belonging to any particular country.
OK, he did cheer for Italy in the European Championships, but, he laughs, he was happy to switch to England when Italy was knocked out. Even so, it must be something of a wrench. His parents, his younger brother, who works for Digital, his wife (from whom he is separated) and his son and daughter all live in the US. For Italians especially, family bonds are strong. Yet those who know him say that, for whatever reason, it looks like he is here for good.
And the main reason may be just what he can do with BBA. He will, say those who know him, aim for performance, rather than size, a sensible option given how unfashionable large conglomerates have become. Analysts are already comparing BBA's potential not with BTR, but with the TI Group in the '80s. 'Sir Christopher Lewinton did exactly the same thing with TI, sold the businesses that didn't make the right returns, identified the three or four core areas, and built global businesses following a strict strategic focus,' says one engineering specialist. The problem at BBA, says the same analyst, is that after the aborted Lucas bid, Quarta may need to convince some people that he really does know what he is looking for, and that he knows what to pay for it. In the end, the market may decide that for him, since building up large industrial groups is no longer as cheap as it once was, and Quarta may have to stick to smaller, bolt-on acquisitions such as Holvis.
The question will be whether Quarta's famous impatience will allow him to stick with it. 'It is a calculated adventure,' he grins. 'I didn't say when we came in that we were going to double our sales. All we said is that we are going to build up performance and we're committed to that.
What will emerge will be a stronger BBA. Is it going to be larger? I don't know.' Hogwash. BBA shareholders would be advised to hold on to their seats.
1949 Born 10 May, Italy
Educated in Italy and the College of the Holy Cross, Massachusetts, US
1971 Management trainee, David Gessner Ltd, US
1973 Manager, purchasing and production control, Worcester Controls Corporation, US
1978 Worcester bought by BTR plc
1979 Manufacturing director, Worcester Controls Corporation, later managing director, Worcester Controls and group managing director, BTR valves group
1985 Chief executive, Hitchener Manufacturing Corporation
1989 Chief executive, various divisions, BTR
1993 Executive director, BTR plc
1993 Group chief executive, BBA plc
What People Say
'He's a man of extreme intelligence and extreme vitality. Unusually he also has the ability to listen and he struck me as a decent human being.'
Vanni Treves, BBA chairman
'Bob is dedicated and numerate and good at selecting and using people. He has learnt over the years to hold back against his natural impatience - he does like things to move.'
Sir Owen Green, former chairman of BTR
'He'd already made up his mind after three months what to keep and what to divest at BBA. Some people had their doubts but he has been proved to be right. I don't know who else could have done it.'
George Cartwright, head of friction and landing gear, BBA
'I think he would have loved to have got his teeth into Lucas - it must have seemed a massive opportunity. But he has got to be harder on strategy now. From the City point of view, people don't like it when they don't know what he is going to do next. He keeps going on about buying another leg and it's not terribly helpful.'
An engineering analyst
'His biggest plus point is his sheer energy level, and the fact that he knows how to motivate people. He's a very challenging manager but he likes to have fun too. He enjoys a good laugh.'
A former BTR colleague.