When the son of a miner took over at Berisford, he turned the clapped-out trader into a success and became the darling of the City. Andrew Davidson talks to the rescuer of lost causes.
On the day two and a half years ago that chief executive Alan Bowkett stepped into the top slot at Berisford he signed a cheque for £1.1 million to buy a bundle of shares in the company. It was designed not just to show his wealth - he had walked away with a fortune from his last position - but also his commitment to the troubled commodity trader-turned-conglomerate. That very same night - as he slept soundly, dreaming of the outfit's rosy future - the coffee market dropped like a stone and plunged Berisford into a new liquidity crisis. Bowkett woke to find Berisford's bankers yet again preparing to pull the plug.
Most of us, points out one friend of Bowkett's, would have stopped the cheque then and there. The fact that he didn't, and that he stayed and sorted out a bigger mess than he can ever have expected to find, convinced the banks to stick with it. No sooner had he extricated Berisford from its coffee fiasco, than he co-ordinated a bold bid for ailing shoe giant Clarks, which narrowly missed out. Unfazed, he was in like Flynn for Magnet, the joinery and kitchens business, a one-time £630 million management buy-out that he took for £56 million in January this year. Observers did their sums. The company, with £30 million cash in it, cost him just £26 million net. Jaws dropped at the deal. 'Is it a bird? Is it a plane? No, it's SuperAl ...' gushed the Daily Mail. Woomph went the hype. Woosh went the share price. So, two years after signing the cheque, Bowkett's stake became worth a lot, lot more and his own reputation, like the stock of his company, is now riding very high indeed in the City.
Too high? The thought has crossed a few minds. The problem now is that Bowkett has a whole heap of expectations to live up to, and not just in the City. The media, too, is pining for the days when bosses were brassy and takeovers were 10-a-penny. And Bowkett, the miner's son trained by BET who made millions from a ball-bearing sell-out before promising to build a new style of conglomerate at Berisford, could so nearly fit the bill.
Yet sitting with him in a fourth-floor meeting-room at Berisford's old City HQ - the company has just moved head office to Baker Street - it doesn't take long to realise that anyone yearning for a bit of '80s flash from the million-pound man is going to be very disappointed. Tall, chubbily sleek and bearing a passing resemblance to the BBC's foreign editor, John Simpson, Bowkett in interview is deceptively charming and thoughtful. Deceptively, perhaps, because as another of his friends told me: 'He did not get to where he is by being the nicest man in business.' For all the hype, the task he faces at Berisford is huge. Murray Stuart, the previous chief executive, had acted as 'company doctor' to sort out the mess left by Ephraim Margulies, Berisford's guiding hand in the '80s, but even so the company was still a clapped-out trader with horrific debts and huge tax liabilities in America when Bowkett arrived. Now 42, he has been given a free hand to cut, close or sell anything he wants, and rebuild anew sticking to his own philosophy of what will work in the '90s. It is an extraordinary gesture of faith by shareholders in one man.
The Bowkett principle is simple. Anything he builds at Berisford, he says, has to be for the long term; he is not a financial engineer. In that, perhaps, he is an interesting example of the new '90s-style conglomerate chief, although at times it can seem an uneasy mix of old and new.
'Certainly,' he says, considering how conglomerate bosses differ from others, 'running a conglomerate means you don't have the emotional baggage that some bosses have. It means you can be brutally objective.' He stops to savour the words. 'Yes, brutally objective. You work out what is essential to make the outfit work for the future, and if that means closing factories that have been operating for 200 years in the community, you do it.' Then he goes on. 'Should there be other considerations? I don't make the rules. But if you talk to others, they might argue there should be social considerations and, in the long term, capitalist considerations, too, in that if you keep making everyone unemployed and don't train them, the economy will be jeopardised. I do not disagree with that, but so long as we are measured by shareholder performance, profit before tax and dividend performance, we work to those rules. The interesting situation is that if it were less easy to close factories or make people redundant, would a manager be more creative in finding value-added opportunities? That is a highly theoretical question that I don't know the answer to.' Bowkett, as is swiftly apparent, is quite capable of conducting an interview with himself and still making it interesting. He has, confirm others, a degree of self-fascination and vanity common to many self-made men, but it is leavened by a smooth wit and a canny ability to get on with people, from the shop floor to the poshest City boardrooms.
Nor does he avoid the awkward questions. Later when I ask him: 'Would he consider himself a working-class boy made good?' He laughs at the impertinence then looks so genuinely uncomfortable that he makes you feel rotten for asking. 'Well, er, it's never mentioned really, um, if you look at others ... no, if you put me on the spot I would say a public-school background is probably a disadvantage in industry now.' The great irony, he goes on to point out, warming to the theme, is that while a whole tier of people taking power in industry and the civil service are products of the grammar school system, most, like himself, now send their kids to private schools.
There is a lot of the politician about Bowkett: he speaks well, anticipates criticisms, is a good rescuer of lost causes and inspires trust and loyalty. He is, say some of his friends, the best MP the Tory party never had. A one-time councillor in Ealing during the late '70s - 'My wife told me to stop shouting at the TV and do something' - and Thatcher fan, he now admits to being disillusioned with the current government and has recently been an outspoken critic of its industrial policy. 'What industrial policy?' he asks, raising an eyebrow. 'I am hard-pushed to identify it.' He has also been forthright on social policy, for years telling all who would listen that the Government should simply increase teachers' salaries by 50% and bring in continuous assessment to solve education problems.
Of course, even a 50% hike is unlikely to bring many teachers into the Bowkett earning bracket. Last year he earned £370,000 at Berisford to add to his share pile. Now, say friends, he enjoys playing the rich man too much to rekindle his political ambitions. Those hobbies? Opera, shooting and gardening, and when not running Berisford, he can usually be found sorting out the lambing at his Norfolk estate or sunning himself at his Tuscan villa outside Lucca. Then there are the holidays in Barbados. While not flash, he can, say friends, be a bit showy.
'I'm always pulling his leg that he does these things because that's what he imagined rich people did when he was a little boy,' laughs Roy Hammond, an old friend who followed him from RHP, the ball-bearing company, to Berisford. Not that it all comes effortlessly, adds Hammond, mischievously. A lot of Bowkett's jet-set gloss has been groomed into him by his wife, Joy. So what makes a successful conglomerate boss in the '90s? Calculation, perhaps; vision, certainly. Bowkett arrived at Berisford with a ready-made philosophy and a view on history. What he had gleaned from management in the '80s, he explains, is that turnarounds were easy.
'As you were working in an inflationary environment, you could manipulate the prices up quite easily. You could also rationalise the product range, make a fortune selling off spare capacity in city centres to Sainsbury's, and sort out all the key problems that had been going on for about 20 years. Basically, you had done 80% of the job.' That was the key to conglomerates in the Thatcher years, if only because there were a whole host of undermanaged companies around. 'But in the '90s,' he continues, 'one of the driving things is that the easy work has been done. Inflation is non-existent, so there is no hiding place. You have to focus on achieving real benefits which are not just one-off reductions from rationalising the product range or taking a factory out. You have to differentiate yourself through product development and quality improvement, all of which has a longer gestation period to perform than just doing the easy stuff in the '80s.' He cites the management methods of the Japanese as a major influence. 'We did joint ventures with them at RHP for three years and it was very interesting to see how they approached particular issues.' He tells a long, complicated anecdote about ball-bearing manufacture, the gist of which seems to be that whereas British management are happy just to pick off isolated problems on a production line to improve short-term performance, the Japanese approach would be to tear everything up and start again properly, aiming for the long-term gain. That kind of thinking is going to be crucial in the '90s, says Bowkett, as the key issues become continuous improvement and unit cost reduction.
He has travelled a long way from the Nottinghamshire streets where he was brought up. Born the elder of two sons to a one-time miner and later garage owner in Bilsthorpe, Bowkett whizzed through grammar school, University College London, and a first job at the Economist Intelligence Unit with barely a backward glance at his pit-village roots. He was glad to get out, he says flatly. He has no time for the common sentimentality about mining communities. Why?
'I have never met a miner yet who wanted his child to go down the mine,' he says, 'and as for protecting their communities, I always felt they were strange communities. Very bigoted, very intolerant, very masculine oriented, certainly in the 1950s. I don't know whether that still pertains now.' His big break, he says, came not at the London Business School, where he did an MBA after the EIU, but at BET's Lex Service which he joined shortly after. There he trained under Trevor Chinn in a management hothouse with a whole host of up-and-coming stars: Gerry Robinson (Granada), Jim White (ex-Bunzl), John Lovering (Tarmac), Mike Williamson (Appleyard), Jim Maxmin (ex-Laura Ashley). 'Chinn hired very bright people and paid them lots of money and you had to run very fast to keep up,' he says now. Those who knew him then remember that his foremost qualities were always his ambition and his almost old-fashioned steadfastness. He was keen to kick the traces of his working-class background but unlike some racing to get the top in the '70s and '80s, he operated to a very strict moral code. He has always been absolutely straight with everyone and never lets people down, says Hammond. Another friend attributes it to the major event in his up-bringing: Bowkett's father running off and leaving his mother. 'That left a scar,' says the friend.
Bowkett always wanted to be rich. Bored with 'bag-carrying' at BET, he talked his way out of corporate strategy at Lex and into a proper management job. At 34, he was given BET's Boulton and Paul, an ailing building-products group, to sort out. Within two years he had turned that around. Hungry for more, he then led the management buy-in bid for RHP in 1987. No one has ever discovered just how much he made out of his time there. Suffice to say that after selling RHP to Japan's NSK for £210 million, including debt, in 1990, Bowkett took the biggest slice of a £22 million hand-out to the key managers. His ambition to be a millionaire was fulfilled.
Many would have just concentrated on lifestyle for a bit. But Bowkett, with a sharp eye on Tomkins and Williams Holdings, had long ago worked out his own conglomerate game-plan. He was just looking for the right vehicle. Intriguingly, he took a lot of convincing that Berisford fitted the bill. When he was first offered the top job in a Sunday-night call from a headhunter he barely gave it a second thought. He just remembered the bad headlines about Berisford. 'I said no, it's a pile of shit, I'm not interested,' he admits bluntly. He had reckoned without the perseverance of some old friends at Barings. Berisford's non-executive directors, including BAA's Sir John Egan and Brian Smith, turned on a concerted charm offensive. Eventually he was seduced.
What changed his mind? Bowkett doesn't quite answer the question directly. His initial reluctance, he says, was because he associated the new Berisford with the old problems. The non-executives put him straight: 'When you have four non-executives of the calibre of John Egan, Brian Smith, Murray Stuart and John Sclater, men of utmost integrity, telling you that they have solved the problems, that these are the issues and that they really think this is an opportunity to take the business forward, then it becomes highly attractive.' Bowkett also did his homework, spending time with the full range of Berisford's advisers - Clifford Chance, Coopers Deloitte, Barings and Hoare Govett - and making sure he got the conditions he wanted. One of those, unusually, was that he didn't want a contract. 'The day the board would not support me in what I wanted to do I would say fine, and go and look after my sheep.' In the end, he compromised on a contract with a three-month notice period - something which, if Berisford is a rip-roaring success, just might make company shareholders sleep a bit uneasily (although a man with a million of his own money in the company is not going to dent the share price by walking off too fast at the first attractive offer). Smartly, given the press's fascination with the topic, Berisford also softened any PR fall-out by settling on a much lower basic starting salary (£250,000) than that of his predecessor Stuart (£410,000). The total package has, of course, risen rather fast since then.
Once inside Berisford, and on top of the various problems such as the coffee collapse, he ran his slide rule over a host of targets - some of which had been touted round the City for years, others that weren't even up for grabs at all - to see if they fitted the Bowkett criteria. 'What I was looking for was businesses operating in large markets so that even if the market is down, there are still opportunities. They might have been market leaders in the past, and involved in something with substantial value added, hence probably in manufacturing rather than in the service industries, businesses which you felt offered organic growth opportunities through a change of direction, either in product range or markets.' It sounds logical, and quickly won over the City - 'After RHP,' says one banking Bowkett fan, 'many think Alan walks on water' - but putting it into practice is a lot tougher. Bowkett missed out on Clarks, the Quaker-founded, family-run firm, which eventually rejected his takeover bid by the thinnest of margins. It was his first real taste of public failure. Did it hurt? Yes, but it also helped, he says, hardening his team's resolve. Others at Berisford, noting Bowkett's fierce drive to win and his dislike of losing, say that they all kept out of his way around that time.
Then he pulled the rabbit out of the hat with Magnet, a £180 million-turnover joinery business he had looked at for a long, long time. So favourable was the deal's reception that Bowkett's advisers began to get worried. 'We tried to get the froth taken off the coverage but it didn't work,' says one. Within weeks newspapers were talking of Bowkett targeting America for an imminent deal, even though he had said that expansion there, where Berisford carries huge tax debts, was years away.
So now Berisford carries huge expectations as well. The difficulty is that the hard work is only just beginning. As one analyst points out, economic recovery in the UK runs in Bowkett's favour, but despite his success at Boulton and Paul and RHP, he actually has little track record in running a big listed conglomerate and is now suddenly on a very fast treadmill. There are some nasty decisions ahead, especially over the old Berisford. Does he keep Ketlon, the motor components arm? Can he ever sell the agribusiness interests? And what will he buy? As he found with Clarks, takeovers are much tougher now, both in political and market terms.
'What he has to watch out for is not to become a victim of his own hype,' warns one banker. In short, any evaluation is premature. It is on Magnet's performance, and that of the next major buy, that Bowkett and Berisford will eventually be judged.