The toughest job in Britain". It's a phrase widely used when the post of chairman or chief executive at a clapped-out company becomes vacant. It was bandied around, for example, when Cable & Wireless cleared out its board. For a brief period the prospect of running BT was the toughest in the country and the same went for Royal Mail, Marks & Spencer and British Energy. Now that headhunters are trawling their contacts books for a chairman for BAE Systems, running the defence giant is described as the most difficult job.
But in reality the challenge is the property of one man. For John Devaney, the 57-year-old industrialist, took a call from headhunters in late 2002 that few would relish: "Would you consider chairing Marconi?"
Midway through one of the most complex and arduous company restructurings of recent times, the telecoms equipment maker was written off as a basket case. "There was a bad odour around the company and little certainty it could be rescued," recalls Devaney. "But it was a big company with a big name and I thought it was worth doing."
His gamble is starting to pay off. After 6,000 redundancies and the sale of various non-core businesses, the new, slimmer Marconi has surprised even its chairman. Last month it announced that losses had fallen to £5m before tax and exceptional items. Profit could now be just around the corner. "I am surprised we have taken it this far," says Devaney. "Marconi is out of intensive care, but it is not quite ready to leave hospital. I think we need a few more quarters under our belts of cash generation and earnings. Hopefully, over the next year or two, we will recover our strength."
At its peak the company was worth £35bn and was the pride of Britain's hi-tech industry. Then came the telecoms crash of 2000 that ex- posed the flaky foundations laid by Marconi's former bosses, Lord Simpson and John Mayo. Today it is valued at a respectable £1.5bn, and Devaney reckons a return to the FTSE 100 is not out of the question: "We'd need a few hundred million [on the market capitalisation] but I think it is absolutely possible."
But the chairman warns of a danger that could potentially threaten Marconi's existence as Britain's only telecoms equipment maker. It could also wipe out much of the country's manufacturing, he says.
The threat, according to Devaney, is the growing dominance of countries in the East - eastern Europe, the Middle East, the Far East - which can manufacture cheaper and are increasingly moving into product design, something once considered the preserve of engineers in the West.
"The East is creeping up the food chain," says Devaney. "The established notion that manufacturing may go outside the UK but product design will stay is too simplistic."
He will press home the point on Wednesday in a speech to the Institution of Mechanical Engineers. It may shock some in the audience. He will say that the wages of the average UK worker could pay for 23 employees in China. What's more, there are currently 450,000 engineering undergraduates in China, the same number in the US. Devaney's message will be blunt: unless British companies reform quickly, they will go out of business.
So is Marconi taking its own medicine? Devaney says it is. Already the company buys 60 to 70 per cent of its components from lower-cost countries, and it is now looking to increase this by 20 to 30 per cent. Further redundancies are "not in our plans at the moment", says Devaney. Nevertheless, he reveals that the company is examining the possibility of moving some of its manufacturing, even design, overseas. "We will have to do more to stay in the game. There is no point in having a great piece of technology that nobody can afford to buy. We have to get our costs down."
Before joining Marconi, Devaney was chairman of Exel Logistics, the company formed through the merger of National Freight Corporation and Ocean Group. He was previously a non-executive director of HSBC and British Steel and executive chairman of Eastern Energy. Associates describe the Lancastrian as plain speaking but friendly, with a capacity for getting stuck in. He has a reputation as a cost-cutter, which has not always made him popular.
Along with Marconi's chief executive, Mike Parton, Devaney was barracked at the annual meeting last year over their decision to consolidate the share register. Marconi's restructuring, which involved a £4bn debt-for-equity-swap, left it with some 125,000 small investors whose holdings were worth next to nothing. Under the consolidation scheme, they were simply removed from the register, saving the company £450,000 a year in administration costs.
Shareholders, many of whom had been with the company since Lord Weinstock was running it as GEC, lashed out, attacking Marconi's executive pay and bonus plan, which has netted Mr Parton £15m in the past nine months. With hindsight, critics claim that targets set under Mr Parton's bonus scheme were too low.
Devaney says: "No one can argue that £15m is a small number - it's big. But Mike has been with the business for 14 years. All his other bonuses and options crashed and burnt when the business got into trouble. He put a lot of effort into negotiating the refinancing. He did a good job."
He also points out that Mr Parton's bonus scheme targets were set not by the company but by its creditors. "These people weren't patsies - they were some of the world's largest and smartest banks, bond houses and law firms. They didn't put in a scheme they thought was going to be a walkover. As it happened, the recovery happened sooner than planned, but it could have gone the other way."
If it had gone the other way, then he wouldn't be chairman today. His reputation as an industrial heavyweight and fixer would be in tatters and Marconi would be remembered as a casualty of the dot-com boom and bust. But the toughest job in Britain has yet to defeat Devaney.