Delivering

the.

goods

Alastair Morton

About a third of the way through these two books one feels sorry for the three authors and one subject. For the three, it is simple: their books have coincided and in a very large part rely on the same extracts from Weinstockian memoranda and colleagues' memories. You do not need to read both: Brummer and Cowe have more on the private child and man, Aris is better — much better — on the business issues.

I felt sorry for Arnold Weinstock because, while directly and indirectly manipulating his anecdotal flow to these three journalists, he put our image and memory of him in the hands of a journalis- tic canter along sources not at all percep- tive, not many objective and, at the end of the day, without himself balancing them properly.

Like many sources of the anecdotes, I have my own personal memories of Arnold. I was a minor member of the IRC team that put him at the head of the British electrical industry in 1967/68. He and I 'did battle' again at ten year intervals, over North Sea oil platform turbines and Eurostar trains, and I benefited from my experience.

Arnold Weinstock's epic journey through Britain's industrial history in the second half of the 20th century began in 1953 at a small radio and later television supplier, owned by his father-in-law. A decade later, in a style soon to become familiar, he and the company had been injected into a major industrial combine (GEC) to revi- talise management, and five years later again he had brought the rest of the sec- tor's 'heavy end', AEI and English Electric, under GEC control. He was in the right place at the right time as UK plc began to wake to the loss of global manufacturing and trade pre-eminence, by then gone or going to the Americans, Germans and Japanese.

The IRC and the Wilson government charged him with the task of rationalisation and the achievement of international com- petitiveness and growth as a national cham- pion. He delivered the former over five to seven difficult years; he delivered the latter in only some sectors. It was an immense achievement, however, deserving more than a journalistic salute.

Aris is not alone in thinking it was down- hill from 1976 to 1996. A manufacturing giant and financial powerhouse did not grow like its international rivals, did not develop and capture the world markets for new products and systems, and did not find positive employment for its notorious 'cash mountain'. Arnold Weinstock did not deliver the second half of the IRC's man- date to him. Why?

Aris puts and handles this single question rather well. There is no doubt the question has to be put and taken ad hominem. Arnold Weinstock was the master in the house.

I once heard Wolfgang Hager, a Swedish-born professor from a Swiss university, active in Brussels, say that continental Europeans invest to create value, while the Anglo-Saxons (British and Americans) invest to cut costs. Weinstock epitomised the 'Anglo-Saxon' in this, although, like so many of the 'Anglo- Saxon' business elite on both sides of the pond, he is of central European stock.

Perhaps it is enough to say that GEC employed 57,000 in the mid-Nineties, com- pared with 228,000 in 1968 — 75 per cent of the jobs gone; and second, to note two comparisons with the USA's great electri- cian, Jack Welch of General Electric (no connection). First, selection of managers, as reported by Brummer and Cowe. Both chieftains believed in accountability of their managers, unimpeded by bureau- cracy. Weinstock hired, fired and shuffled in pursuit of profit. Welch, seeking to `change the software' of his group, decided to remove 'Type IV' managers — people who deliver short-term results by 'grinding people down, squeezing them, stifling them'. Second, utilisation of surplus capi- tal. GEC's cash mountain camouflaged the sideways, sometimes downward progress of operating profits. In the very early Nineties, with sterling rates far into double figures, something towards 15 per cent of GEC's pre-tax profits are said to have come from passive deployment of cash. Contrast this with Welch's hyper-aggressive development of GE Credit Corporation, later GE Capital, deploying surplus funds with such success that GE Capital now overshadows the progress of the industrial divisions.

Both books catalogue the missed oppor- tunities and failed initiatives from the mid- Seventies to late Eighties. They make sad reading and no doubt GEC and Arnold Weinstock would wish to have responded more firmly to the charges. Brummer and Cowe put it aptly: 'Running through them [Weinstock's memos to his troops] is an enormous sense of context, of responding to a political or economic imperative.' Herein are the roots of an apologia: there was or is always a reason why a choice was made which did not turn out well, why a development failed to materialise, why the government-dominated research did not produce commercial products.

But the charge as put by these three journalists, particularly Aris, must stand, however sympathetically it may be put in personal terms. Having rationalised GEC, AEI and English Electric by the mid Sev- enties, Arnold Weinstock settled, grum- bling fiercely, for dependence on domestic, public sector procurement, especially of defence, electricity and telecommunica- tions equipment. As Aris puts it, in the early Seventies 'even more than now, GEC's commercial life depended on the patronage of the state and its monopolies'. The dependence on defence electronics and government funding of R&D did much to weaken GEC's market competitiveness, compounded by the continuing failure to develop internationally — unlike the much- admired Percy Barnevik at Asea Brown Boveri.

So the 1968 vision of the IRC shone high in the sky after five years, and then declined inexorably to the sunset of a strange trio of deals 15 more years on, when Arnold Weinstock put GEC into de facto junior partnerships with Alsthom in power engineering, with Siemens in telecommunications and with GE in con- sumer durables.

Perhaps the real lesson is, quit while you are ahead. A fascinating person, a great intellect, an immense achiever, drifted on until 'GEC had become a prisoner of cir- cumstance' (Aris); pie] must be judged to have achieved great things in his early career, but to have allowed those achieve- ments to wither' (Brummer and Cowe).