CITY AND SUBURBAN
He looked after the cash as if it were his own, and quite a lot of it was
CHRISTOPHER FI LDES
How distant are the days when Arnold Weinstock was the apple of Anthony Wedgwood Benn's eye. The technological revolution was hotting up whitely, and he was the wide-eyed minister in charge of it. This would require nothing less than the reconstruction of British industry, which meant promoting mergers, with an inside track for favoured managers. None was in higher favour than the man who in the space of a few years took control of our three biggest electrical companies, one after the other, rolled them all together into the General Electric Company, ended up on top, and stayed put until this week, when he formally retired. As a hero of the revolution, he was always more of a capital- ist. He made no claim to technological skills, stayed away from factories as a mat- ter of principle, came into business by the time-honoured route of marrying the boss's daughter, and could speak for enough of GEC's shares to make him seriously rich. For all that, he was seen as representing a new era and a new style of professional management. The companies he rolled over all had vast head offices and boards to match, pullulating with committees and shored up by consultants. He cleared them out. He ran the General Electric Company from a pocket-sized Kremlin in Stanhope Gate. He and Kenneth Bond, his right- hand man, put their trust in careful budget- ing, financial control and reporting. He managed the cash as tightly as it it were his own, as indeed quite a lot of it was. Consul- tants were barred by decree. Instead, man- agers were encouraged to make up such minds as they had. Others learned from GEC's example.
Arnie's army
THE Brookings Institute once parodied the policy of reconstruction. The idea was, said Brookings, to find the most efficient company in each industry and merge all the others into it. Of course, like that, it might be less efficient on a larger scale, like the British Leyland Motor Corporation, whose soul has now transmigrated into the dog called Rover. GEC, by contrast, was the policy's showpiece — which is to say that it was the creature of its time as well as of its managing director. (Lord Weinstock never bothered to be chairman, reserving that post for a sequence of former ministers who could be sent on trade missions that required long and uncomfortable air jour- neys, and once using it as a sweetener in a takeover.) This was the heyday of corpo- ratist government, when ministers fancied their chances at picking national champions and backing winners. The British govern- ment, with all its offshoots and agencies, was GEC's best customer — for power plant, for weaponry, for equipment for the railways and the telephones.... This sym- biotic relationship was not, in the end, good for GEC's development. Public sector cus- tomers tend to be difficult rather than demanding. There were times when GEC flunked the Ross Harvey test of an efficient company, which is, as you may recall: do the things they make work?
Of mice and money
IN THE Thatcher years that followed, GEC fell out of fashion. Its customer base in public-sector industry was broken up and sold off. Its cash pile became a reproach to it — when was GEC going to do something with all that money? City shareholders told one another that it was time to look for Lord Weinstock's successor, and the Bank of England made known to the mice in its parish that if they wanted this cat belled, such a thing could be tactfully arranged. Nothing happened. Nobody dared to take him on. There was a challenge of a sort when GEC bid for another electrical com- pany, Plessey, whose advisers conjured up a counter-bid for GEC. This would in effect have displaced the management but left the shareholders where they were. Lord Wein- stock saw it off in double-quick time and shifted his strategy towards the making of alliances. Without fuss he managed to swap GEC's power plant business, which was painfully dependent on its home market, for a half-share in GEC Alsthom — power in France, but also shipbuilding and high- speed trains. His final deal will merge GEC Alsthom with Framatome, which is French and nuclear. One of these days a whole generation of reactors, 60 of them in France, will have to be decommissioned. It's a dirty but remunerative job and some- one's got to do it. Meanwhile the cash is still there, enabling GEC to choose its moment and pick up what it wants — Fer- ranti, VSEL (warships) and, so the City expects, British Aerospace.
Shirts get stuffed
NOW the dominant British industrialist of his long day bows out. He had hoped that his son would succeed him, but that hope has been cruelly frustrated, and instead his legacy must be the company that bears his stamp. His critics still say that as a national champion it falls short of being a world- beater, and that his mistake was to wrap its talent in a napkin and bury it in the bank. That is my kind of mistake. I have seen enough businesses destroyed by vanity in the thin disguise of imagination, and the sure way to kill any business is to run it out of cash. Now the cycle has come round, and in today's companies, the committees have found their way back to the boardrooms. Directors are so busy going though the pro- cess of complying with their codes of con- duct — shored up, of course, by consultants — that they think their responsibilities end there. The committee of GEC directors who wrote such a preposterous contract for the man they brought in to succeed Lord Weinstock now look as a fine a bunch of handmade shirts as ever got themselves stuffed. May the cycle now bring our com- panies a boardroom revolutionary who will cut through all this rigmarole and waffle, disband the committees, fire the consul- tants and get down to business.
Hard touch
WHEN Jock Bruce-Gardyne was the Trea- sury minister in charge of Value Added Tax, his collectors boasted to him of their ferocity in chasing up late payers. Oh, yes, said Jock, and who are the biggest VAT payers in your district? GEC at Stafford, minister. And do they pay on time? Well, not exactly, minister.... Jock was not sur- prised. It would be a brave exciseman who dunned Arnold Weinstock for payment.
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