The Lowdown: Unfashionable with youth, perhaps, but packaging is what turns this Swede on

Rolf Borjesson has finished the restructuring of Rexam, but Heather Tomlinson discovers that's just the start of his grand plan
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The Independent Online

When next in your local supermarket, if you spy a tall, blond Swede peering intently at the bottom of a margarine tub, it could well be Rolf Borjesson. "Every time I go to a shop I look at the packaging and try to find out if we manufacture it or not," the chief executive of Rexam says. "It's a disease you get when you've been in the industry for as many years as I have. So you shouldn't be surprised if you see me in a shop looking at the bottom of a package trying to find out who manufactured it."

The FTSE 100 company is one of the largest packaging companies in the world, making beer cans, bottles and lipstick containers, among other things.

Since arriving from his native Sweden seven years ago, Borjesson, now 60, is credited with turning the company from a bizarre conglomerate known as Bowater, with businesses that ranged from New Zealand stamp printing to plant nurseries, into a lean, mean packaging company. He has sold 75 per cent of the company's businesses, but sales have grown through the substantial acquisitions of can-and-bottle manufacturers PLM and American National Can. On Thursday, Rexam will report half-year, pre-tax profits of £124m, up £7m from the year before, and is set to increase its dividend by 4 per cent to 7.3p, according to Goldman Sachs. The share price has grown from around 300p when he took over in 1996 to around 430p.

A milestone was passed a few weeks ago when it sold off the last non-packaging business - TBS Engineering, a small maker of battery-manufacturing equipment, which went to the famous investor Warren Buffet. Rexam has made an astonishing 120 disposals in the past eight years, and Borjesson says that he is glad to see the back of most of them. "Some of them, thank heaven, are continuing to do very well," says Borjesson. "Most of them are not, so I'm pretty pleased that we have sold them."

The company has completed its restructuring, but Borjesson says plenty of work is left to be done. "Some analysts, they ask the question: Is the transformation the end of the story?" he says. "It is not; it is the beginning of the story. We had to build the platform before we could really start expanding the business. That is where we are now. We are looking at opportunities in all the segments we are in and you should expect that we will continue to acquire companies in the sectors we are in today.

"There is always something on the table, or on the desk, rather. We walk away from most of the proposals, because we are cautious when it comes to acquisitions."

He is not afraid to sell companies as well. Rexam announced last week that part of its healthcare packaging business would be sold to Amcor, an Australian packaging company, for £135m.

Although Rexam is based in the UK, only 10 per cent of its £3bn sales are in Britain. The rest is split between Europe and the US. The products are manufactured near to where they are used, so Rexam is a fairly significant UK manufacturer. Borjesson, who is also a non-executive director of Invensys, the struggling engineering firm, laments the decline of British manufacturing.

"In this country, manufacturing has a rather low status," he says, "which is a sad development. The service industry has a much higher status.

"If you look at the different countries in Europe, Germany is much more industry orientated. It is the same in France; industry has a much higher status than it has in the UK. Over time, many, many years, I'm sure that it is not good for this country that we focus so much on the service industry. If you talk to young people about their education, they go for law schools, finance, or whatever, because the status is much higher and they earn more money."

Aside from being a little unfashionable with youth, an industrial giant like Rexam attracts criticism from environmentalists. Not only do the large volumes of consumer packaging litter the streets, they fill up rubbish tips and take years, if not centuries, to degrade.

But Borjesson is defensive on the subject. "How do you distribute goods without packaging?" he says.

A refill programme in Germany has already caused chaos in that country's industry. He argues that refilling bottles uses more energy than melting down the materials and starting again.

"All the cans are reusable. [The] cans come back, they melt them. That is the most efficient way of recycling. You melt them and roll new can stock and you twist it into new cans. You don't refill the cans, because it is costly and it doesn't work.

"The problem is with the consumer; it is not with the packaging company. As long as you bring it back to the bottle banks and the can banks, we recycle it and reuse it. All of the products can be recycled, even plastics.

"To be able to do that, we need consumers who are interested in that. It's not the packaging company that is dropping it on the pavement. We can recycle it if you bring it back to us."

Borjesson says that Rexam actively promotes recycling, and that the company would rather use recycled products. "It is more cost effective to use recycled material. The energy used for manufacturing a can with recycled material is only 10 per cent of the energy cost of virgin material, when you start with bauxite and produce aluminium and twist it into cans. We want to have the material back and we want to reuse it as much as possible."

Green campaigners might also note that when Borjesson goes home to Sweden, one of his main hobbies is shooting. "We don't shoot for the sport as you say over here, we shoot for the meat," he says unashamedly. "Everything from moose down to ducks."

The tall Swede is also a fan of reusing and recycling office furniture, even when its former owner, Enron, is rather notorious. Rexam moved into its stately head office, a stone's throw from the Houses of Parliament in London, three years ago, when Enron was still buoyant and successful. Borjesson says he is not superstitious about using Enron's old chairs and tables. "We run the business differently," he says brusquely.

Compared to Enron, Rexam is a straightforward business, but Borjesson agrees that it is not on the cutting-edge of industry. "Over the last 50 years, there have been few breakthrough developments where we can talk about new products - really new products," he says. "Tetrapak is a good example of a breakthrough."

Borjesson should know Tetrapak well; a fellow Swede, Hans Rausing, made a £4.8bn fortune from the innocuous milk cartons.

"The plastic bottle is another one. There are a few others, but there are very few real breakthroughs. What you see is a continued development, applied engineering, to make it better or more attractive or more cost efficient.

"When it comes to cans, it is about manufacturing with high speed, high accuracy, high quality. The lines can manufacture 2,000 or more a minute. That is about 30 cans per second. I call that high speed. You use a thick material that you have to twist into a can, at high speed. You have to print it with six columns or more, and it has to be a photographic image. You have to do those with low scrap rates because otherwise the economy will not be as you want it. That's high technology in a way. That is manufacturing operational skill."

But Borjesson does not pine for a more technology-focused business. "This is the beauty of our industry in a way; it is a steady business. The growth is GDP plus a few percentage [points]. It is not a cyclical business. We eat and drink the same quantities in good times or bad times. You need the same medical care. Maybe you buy less cosmetics, I don't know, but at least you buy cheaper materials."

The organic growth might be steady but by buying up rival companies, Borjesson aims to up the pace. It is also looking to expand in Russia, where the aluminium can market is booming and the wealthier inhabitants are consuming more products.

Before he retires in five years, he has a lot to do, he says. "I would like to have all our customers saying, 'You are the leader in the packaging industry, Rexam.' We are almost there, but we need to strengthen our position in some areas. In a few years' time, we will be a much bigger company."

The rumours of a bid for the whole company from Amcor are "bullshit, to be absolutely honest". However, he still sounds deal-hungry. The company's stretched balance sheet rules out going to the bank manager for the funding, but the popularity of the stock with investors means that they could be tapped to raise money for a big deal.

But Borjesson is not hunting acquisitions for the sport, it's for the meat that will feed Rexam's global ambitions.