Time to step aside after an industrial revolution

THE MONDAY INTERVIEW; Sir David Lees; The chairman of GKN is satisfied that a crucial restructuring is complete as he prepares to hand over to a new man. He talked to Russell Hotten

Stepping across the threshold of GKN's headquarters in St James's, London, is like entering a private club. A doorman ushers visitors into a creaky old lift that slowly rises to the executive offices. A butler is on hand to serve tea while you wait in oak-panelled rooms lined with oil paintings. The Guest family, who 100 years ago established what became GKN, would not have felt out place lounging on the sofas in the drawing room. This outpost of bygone days gives no suggestion of the transformation that the old firm of Guest Keen & Nettlefolds has undergone in the 25 years that Sir David Lees has been there.

"I think that 1995 was something of a landmark for us," says the chairman. "Last year represented the end of a major phase in terms of our divestment programme." With the job of restructuring completed, Sir David, 60, is going part-time, becoming non-executive chairman when GKN recruits a new chief executive. It will be a tremendous wrench handing over to someone else, but at least he has the satisfaction of "quitting" while ahead. As the 61 per cent jump in profits last Thursday revealed, GKN is in good health and the company has never been higher in the FT-SE 100.

Now GKN has been streamlined into three core international businesses - automotive, defence, business services - the question in the City is whether the company is now fully focused. "Yes," maintains Sir David. "Though the business must continually evolve to stay ahead." There will be no fourth leg added to the company, but as GKN has pounds 464m in the bank most observers are expecting some acquisitions.

The company has long been talked of as a possible bidder for the tanks- to-cars group Vickers, though Sir David expresses mild weariness at being asked about subject again. "It is just the Friday night rumour mill doing the rounds. There is no logic in GKN owning Vickers' Rolls-Royce cars, for instance. We are not interested."

But he frankly admits there is scope for collaboration between their defence businesses, as part the necessary consolidation going on between arms companies throughout Europe. "If you agree that European defence companies need to restructure, I do not think that it requires a master strategist to see that the UK has got some rationalising that it can do itself. There is some logic to laying bits of GKN and Vickers together. But you can rationalise without companies taking over each other."

GKN, maker of the Warrior personnel carrier, and Vickers, which makes the Challenger 2 tank, are among four companies in the UK producing a range of armoured vehicles. Sir David says: "The domestic market is unlikely to be able to support four companies. It is not necessary to have full mergers, because project collaboration can happen outside the corporate shell. And to that end I think there will be further movement."

But any restructuring, at home or abroad, will not be easy. Arms firms, particularly in France, are suffering huge financial imbalances, he says. "It is difficult to put any sort of value on some of these companies. That does not make for an easy merger or collaboration at the equity level."

And the move towards joint government defence procurement is fine in principle, but difficult in practice. "The danger is that a product is made that the military does not really want because there have been so many compromises. Then you have got to sort out which country will make what. The whole issue is fraught with difficulties."

The motor industry, too, faces consolidation as component makers are forced to serve car makers on a global scale. Sir David expects the industry eventually to be dominated by a few international players. But he is not predicting a sudden revolution. "Like many things in the motor industry, rationalisation has been slow coming. Whether it will happen, I am not totally sure," he says. Nor does he expect GKN to be at the forefront of any changes. The company's drive-line business - making the components that link the wheels to the engine - is number one in the world with a 35 per cent market share. "It is not clear to me with whom GKN would rationalise," he says. "If we were a number three or a number four, then it might be a good idea."

After school at Charterhouse, Sir David trained as an accountant - though he never wanted to be one. His father, a Rear Admiral, did not wish to finance another of his sons through university and the young David Lees saw accountancy as a way into industry. He joined the accountancy firm of Binder Hamlyn in 1962, but grabbed the chance to move to GKN Sankey as chief accountant in 1970. His eventual elevation to the realms of the UK's business establishment remains something of a surprise to him, and colleagues testify to a lack of the naked ambition common to so many executives. "I never ever thought about becoming chief executive of a large company; never thought it could conceivably happen. I have always been someone who has taken steps one at a time, before thinking too much about the next job."

He recalls being summoned to the Bank of England, oblivious that the then Governor, Robin Leigh-Pemberton, was to ask him to join the Court. "I even rang up the Treasury to ask if I had done anything wrong. I really had no idea why I was going."

After eight years as the top man at GKN, Sir David is not stepping aside so he can spend more time with his hobbies: golf (handicap 15), opera, or walking in the hills around his Shropshire home. In July he becomes chairman of Courtaulds, where he is currently a non-executive. Other commitments include being a Fellow of the Royal Society of Arts, and being on the main committee of the CBI.

Sir David was also a member of last year's Greenbury committee on directors' pay, a bruising experience but one he does not regret. The whole question of directors' pay was, he says, "a boil that had to be lanced. There had been some quite celebrated cases where clearly pay and performance were not matched; cases which the corporate sector should not be proud of."

He regrets that Greenbury is only remembered for the row over share options. But the recommendations will have a lasting impact, he believes. "You will now see a lot more disclosure. The biggest single problem of this whole subject is the secrecy that surrounds pay and remuneration."

GKN's annual report, out in a few weeks, would be leading by example: "It will be more open, honest, and out on the table," he promises.

Start your day with The Independent, sign up for daily news emails
News
Sir David Attenborough
people
Life and Style
Young girl and bowl of cereal
food + drink
News
Comic miserablist Larry David in 'Curb Your Enthusiasm'
peopleDirector of new documentary Misery Loves Comedy reveals how he got them to open up
Arts and Entertainment
Henry VIII played by Damien Lewis
tvReview: Scheming queens-in-waiting, tangled lines of succession and men of lowly birth rising to power – sound familiar?
PROMOTED VIDEO
Sport
football
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
News
i100
Arts and Entertainment
Ready to open the Baftas, rockers Kasabian are also ‘great film fans’
musicExclusive: Rockers promise an explosive opening to the evening
Life and Style
David Bowie by Duffy
fashion
Arts and Entertainment
Hell, yeah: members of the 369th Infantry arrive back in New York
booksWorld War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
advertisingVideo: The company that brought you the 'Bud' 'Weis' 'Er' frogs and 'Wasssssup' ads, has something up its sleeve for Sunday's big match
Arts and Entertainment
tv
News
i100
Environment
Dame Vivienne Westwood speaking at a fracking protest outside Parliament on Monday (AP)
environment
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness