‘These clouds will have a silver lining’
Judi Bevan meets Sir John Parker, who chairs National Grid and the Court of the Bank of England — and takes an optimistic view of the deepening recession Few people would have dared to walk out of lunch at the Savoy Grill leaving behind the irascible Lord King. Sir John Parker, the softly spoken Irish charmer who now chairs National Grid, did just that. When he took over as chief executive at the ailing engineering firm Babcock & Wilcox in 1993, he first had to deal with the late John King, then chairman, who believed he should still call the shots despite the decline of the company under his command.
‘We had a real dust-up and I left the lunch early,’ explains Parker. ‘I said, “Either you back me to do what I want to do, or you’ll have to find somebody else.”’ The tactic worked. King capitulated and Parker saved the company, to the delight of its shareholders. ‘He never tried it on again and he became a great friend and supporter,’ says Parker with a chuckle.
The story illustrates Parker’s two bestknown qualities — a gentle, humorous manner combined with a steely resolve. He is admired for his skill at handling powerful personalities, which explains why his authoritative presence graces so many boardrooms, including the Court of the Bank of England (which he chairs), and why, despite a low public profile, he is one of the most influential businessmen in Britain today.
National Grid now operates from the old Enterprise Oil offices in the Strand where Parker’s office, formerly that of Sir Graham Hearne, overlooks Trafalgar Square from the fourth floor. Round and dapper, Parker sports a multicoloured silk tie and a navy pocket handkerchief with tiny pink spots to liven up his sombre suit. As an engineer who also understands financial markets, Parker is well suited to his role at the Grid — which owns all the pipes and wires that transport gas and electricity around the country. He is currently overseeing the spending of £3 billion a year until 2012 to upgrade the national infrastructure and ensure the lights do not go out, as some press reports have suggested they might. ‘There is a lot of hysterical talk at times,’ he says wearily. ‘You have one or two academics out there who don’t appreciate the full details of life.’ Even so, the challenges of ensuring that the nation’s energy needs are met in the future, as North Sea oil and gas supplies decline, should not be underestimated. Natural gas is taking an increasing role along with nuclear and wind power and all have to be delivered to where they are needed. ‘We have built a billion-pound pipeline to take Norwegian gas through the whole of South Wales, right through the national park and up into Gloucestershire to connect with the main arteries,’ says Parker with some pride. Along the way National Grid had to appease numerous councils and armies of environmentalists. ‘We have had to preserve special grasses and look after voles.’ It has taken five years — and if Parker has one fervent wish, it is that the new planning bill currently grinding its way through Parliament is passed to allow projects of national importance to be speeded up.
Parker’s clutch of other jobs include being the joint chairman of the packaging group Mondi and vice-chairman of DP World (Dubai) which took over P&O in 2006 — a transaction that he largely negotiated, again to the benefit of shareholders. For most 65-year-olds — or even 35-year-olds — that would be a full dance-card, but Parker also finds time to advise the Prime Minister through the Business Council for Britain, sit on the board of the cruise group Carnival and lead the Young Offenders into Work initiative, plus a few other commitments.
He and his hospitable wife Emma moved to the Devon coast a few years ago so that he could sail his yacht — but he spends less time aboard than he might wish. Parker is the non-executives’ non-exec and he believes passionately in the role. ‘Being in someone else’s boardroom is the best business school you could go to,’ he says adamantly.
Everyone I talk to mentions his skill with people. ‘He makes people feel wanted,’ says Ken Harvey, one of National Grid’s nonexecutive directors. ‘I have worked with many non-execs and John stands head and shoulders above everyone.’ ‘He was a good chief executive, but he is an outstanding chairman,’ says one long-term adviser. ‘And he’s frighteningly efficient.’ At Centrica, one of National Grid’s suppliers, chairman Roger Carr particularly admires the way Parker chairs the 20-strong Court of the Bank of England, a role that in former times fell to the Governor rather than one of the outside members. ‘There are a lot of people in a very grand room but he has the skills to make sure it works.’ Parker has masterminded a plan to reduce the number of people on the Court from 19 to 12 by the time his five-year stint is up in May next year. He and the Bank’s Governor, Mervyn King, consult closely about pressing topics but Parker reminds me that he is sworn to secrecy. ‘The country is fortunate to have a man of [King’s] world-class ability at this time,’ is all he will say.
Parker grew up on a sheep farm in County Down near Newcastle where, as Percy French wrote, ‘The mountains of Mourne sweep down to the sea.’ Although his family were Protestant, it was a mixed community. ‘We didn’t have any tensions; the farmers all helped each other. We were brought up to respect the Catholics.’ He can still remember his father ploughing with horses. ‘That was really hard physical work, walking behind a horse all day.’ Then came the tractors which gave Parker his first love of machinery — something he transferred to ships. At the local school, there were so few children he received almost one-to-one tuition from a female American teacher who brought back films from her travels for her pupils to watch. He did well, particularly at maths: ‘Numeracy is increasingly important for non-executives,’ he says. ‘They need to understand funding and balance sheets.’ After studying naval architecture and mechanical engineering at Queen’s University, he trained at Harland & Wolff before becoming, at 32, the youngest managing director of the Greek-owned Sunderland shipbuilders Austin & Pickersgill, selling ships around the globe. ‘We built standard ships for export to replace the American Liberty ships after the war — we perfected the design and built one every 27 working days,’ says Parker with evident pride. Selling them exposed him to international markets, taking him to many far-flung places in the East, including war-torn Vietnam where he recalls having to sleep in the same room as two fellow directors because most of the hotel had been destroyed by bombing. ‘We managed to get a couple of orders though,’ he says with another chuckle.
So what is the key to doing business abroad? ‘Having the emotional intelligence to pick your way through the cultural differences is very important,’ he says.
When the shipbuilding industry was nationalised at the tail end of the Callaghan government in 1978 he was persuaded to join the nationalised British Shipbuilders. ‘On day one there was an admiral, myself, an accountant, a box of paper clips — and 86,000 employees.’ He prevailed, however, and five years later he returned to a badly holed Harland & Wolff. It was the height of the Troubles in Belfast, but when the Norwegian shipping tycoon Fred Olsen financed a management buy-out of the yard, Parker was persuaded to stay, somewhat against his will. It was during this decade that he began his non-executive career, joining the board of British Coal followed by GKN and British Gas.
Along the way he has earned a reputation for delivering value to shareholders. He turned Babcock round, negotiated the sale of the buildings materials group RMC to Cemex of Mexico and at P&O he did the deal with DP World (Dubai). ‘He is highly numerate,’ says Lord Sterling, who handed over to him at P&O. ‘And he can unquestionably be very exacting and pragmatic when need be. He really understands what managing people is all about.’ The current recession is no surprise to Parker. ‘Shipping is a very good barometer of world trade and economic activity,’ he says, pointing to the halving of container rates in the past two years. Yet despite the panics of the past two months he still feels that the early and mid-1970s were worse. ‘That was a terrific adjustment seen through the eyes of industry. A huge number of companies collapsed, unemployment rose and there were big structural changes.’ He believes the economy had become too reliant on the financial sector and hopes this crisis will lead to more balance.
‘There is a tremendous shortage of engineers in Europe and the United States because so many of the brightest brains go straight to the City,’ he says. ‘Yet we at National Grid and companies such as RollsRoyce desperately need these people. They are crucial when you are building a lot of infrastructure. These are the guys who can solve climate change; they can come up with the engineering solutions to clean up coal, to design and build nuclear power stations and wind farms.’ Amid the surrounding gloom, Parker remains an optimist: ‘Some silver linings will come out of this cloud.’
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