Graham Love: Making a mint from defence research
A day in the life: With a new £16bn contract, Graham Love is hoping to take QinetiQ to the next level
Saturday 20 January 2007
Graham Love, chief executive of the defence technology company QinetiQ, starts his day as usual with a spot of physical exercise this morning, it is a run around Battersea Park. He is burning off the calories from the inevitable business dinner the night before. Today, however, he has more need than usual to be in tip-top form. The Ministry of Defence (MoD) is preparing to award a £16bn contract to train the three armed services to a consortium called Metrix in which QinetiQ has a half share. It is the perfect first birthday present for the company, which floated on the London Stock Exchange a year ago. But it will also cause a political rumpus QinetiQ is still 20 per cent-owned by the MoD.
Ordinarily, Love would have been up even earlier. He normally rises at 5.45am so he can fit in a gym session at QinetiQ's headquarters in Farnborough, Hampshire before the working day begins. A motor racing enthusiast, Love makes the 45-minute tripfrom his Chelsea home in his TVR, one of four high-performance cars he owns. He uses the other three (all vintage Jaguars) for racing at weekends. "I probably race a dozen times a season, normally in the Jaguar XK150. But I also have an XKSS and a Mark7, which is a bit like racing in a coach. I enjoy it, but I was never good enough to be a professional."
QinetiQ's London office, where he will base himself for the day, is in Buckingham Gate a 15-minute walk from his home and conveniently situated for Love's biggest customer, the Ministry of Defence, and his favourite eaterie, Mosimann's near to Belgrave Square. His first task is to clear the overnight emails from America. Since being part-privatised in 2003, when the MoD controversially sold a one-third stake in QinetiQ to the US private equity firm Carlyle, it has grown by leaps and bounds in the American market.
"Carlyle coming in was quite an energising experience for us," he says. "Suddenly we had a group of people around whose only interest was in shareholder value and making more money. One thing it did was give us the impetus to expand in the US, it opened doors for us. A third of our business is in the US and we reckon we can comfortably grow that to over 50 per cent. It's not rocket science, this is a global business we are running and America's defence budget is 10 times the size of the UK's."
Love sits down for a meeting with Martin Bryant, the man who now heads the Government's Shareholder Executive (the body which looks after the taxpayer's interests in privatised companies). Both men know that the announcement later in the day of the training contract will draw political flak from opponents, accusing the MoD of a conflict of interest in awarding such a plum deal to a company in which it is the biggest shareholder. " It's an easy shot for our critics to take," says Love. "But the firewalls within the ministry between those who look after the shareholding and those who award contracts are absolutely rigid. Personally, I'd rather the MoD wasn't a shareholder, because it means we have to work that much harder and be that much keener with our bid to get the work. The fact is, it makes it harder for the MoD to award us contracts, not easier, precisely because they know they will get this sort of criticism."
Love calls in to the offices of Land Securities Trillium, its partner in the Metrix consortium, to watch live television coverage of the Defence Secretary, Des Browne, announcing the contract to the Commons. There is relief all round at the subdued political reaction, which is limited mainly to grumbles from MPs in constituencies supporting the rival bidder. It is a picnic compared to the torrent of parliamentary fury unleashed by QinetiQ's flotation. Politicians of all parties were angry about lots of things, but mostly about the huge profits Carlyle and the QinetiQ management would make from the float. (Love netted £18m; his chairman Sir John Chisholm made £22m). "Obviously all the personalised coverage was unwelcome," reflects Love. "People seemed to ignore the fact that in the previous 15 years we had turned a publicly-owned defence research agency costing the taxpayer £800m a year into a business worth more than £1bn. But it goes with the territory. If you can't take it, you shouldn't be in the job." And, he might have added, it enables him to indulge a very expensive weekend pastime.
Love arrives for lunch in Mosimann's, where this interview is taking place. Today the clientele is the usual mix of businessmen, the odd politician, some Knightsbridge types and a smattering of ladies-who-lunch. Despite his passion for fine food and a gruelling schedule of business lunches and dinners, Love still looks trim and fit for his 52 years. He had asked for a quiet table, but still has to make himself heard above the hubbub. " I've known Mosimann for 25 years. It's his only franchise so unlike other celebrity-chef restaurants, you actually get to see Anton now and again and know he will have been involved in the food you are eating."
Back to Buckingham Gate for a teleconference with City analysts to take them through the MoD contract, hosted by Love and QinetiQ's chief financial officer, Doug Webb. This is the position Love himself held for four years until he was made chief executive in the run-up to flotation. He first joined QinetiQ's forerunner, the Defence Research Agency (Dera), in 1992 after spells with the financial public relations firm Shandwick and KPMG. An accountant by training, it was a big jump. "I had no experience of either the public sector or defence so it was the last job I could have imagined taking. But the organisation was like a greenfield site. Our job was to start from scratch and turn it into a business. It was almost like a Harvard Business School case study."
If this were a more normal day (Love spends most of the week at Farnborough unless he is visiting the States), then QinetiQ's chief executive would be down in the laboratories talking to the front-line staff. Of QinetiQ's 9,000 workforce in the UK, only a sixth are what its chairman Sir John has called "boring accountants and the like". The rest are engineers and scientists searching for the next liquid crystal display or microwave radar to name but two of the inventions that have emerged over the years from this hothouse of ideas.
One of the things Love is proudest of is the modernisation of the Farnborough site from a series of self-contained cubby holes where scientists worked on their own to open-plan state-of-the-art facilities. The boffins did not thank him at the time because it meant they could no longer bring in their own kettles and teapots but had to use the new staff canteen. "It was the nearest we came to a strike."
But it has paid dividends in terms of a working environment in which lateral thinking could flourish. "We are never short of ideas, but we only have so much resource so we concentrate on technologies which address a new problem and have a big potential market." One such is millimetre wave technology. It is already in use at airports in the shape of QinetiQ's Tarsier system which can detect an object the size of a table knife from two kilometres. The aim is to spot runway debris the cause of the Paris Concorde disaster in 2000. "There 6,500 runways in the world and every one is a potential customer." Other applications include airport or train station security portals to detect passengers carrying guns and explosives.
Another business dinner. This time, it's with his chairman and is in a local Italian. "I can't afford to eat at Mosimann's twice a day," he jokes. Tomorrow, nevertheless, it will be back to the treadmill.
From accountant to defence group chief
Name: Graham Love
Job: Chief executive, Qinetiq
Education: Degree in English from Cambridge
Career history: Management roles with Ernst & Young, KPMG and Shandwick before joining Defence Research and Evaluation Agency (DERA), forerunner of Qinetiq, in 1992 as finance director. Left in 1996 to lead management buyout of Comax Secure Business Services from DERA. Rejoined DERA in 2001 as finance director, then became chief executive of Qinetiq US in 2003. CEO of Qinetiq since 2005
Family: Married with 2 children
Outside interests: Keen amateur racing driver and chairman of Racing Green Cars
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