Lord Weinstock was probably Britain’s foremost 20th Century industrialist. He was the son of Polish Jewish immigrants who built his father’s company from almost nothing to a mighty industrial powerhouse.
His company was GEC, which became by the 1980s one of Britain’s foremost companies. It was famous for being run extremely conservatively. It retained a substantial cash mountain, and was constantly criticised by the City for not doing more to invest that cash.
But Lord Weinstock ignored all that, and carried right on running the business the way he knew was best. The result was that the company grew steadily, through thick and thin. In spite of Britain’s post war problems with the economy, GEC was a world-beater and was respected everywhere. It is fair to say that GEC was Lord Weinstock’s main life’s work, although he did have many other interests as well.
Weinstock retired in 1996, able to look back with satisfaction on a successful life as an industrialist.
However, George Simpson was brought in to run the company. He was a former Managing Director of Rover Group. He was widely admired, apparently, for his success in turning that company around – although as events subsequently proved, the turnaround may have been more illusory than real. He had also been in charge of Lucas Industries.
Wikipedia quotes the Independent as saying at the time:
Some analysts believe that Mr Simpson’s inside knowledge of BAe, a long-rumoured GEC bid target, was a key to his appointment. GEC favours forging a national ‘champion’ defence group with BAe to compete with the giant US organisations.
Regardless of what GEC favoured, this was not the road down which Simpson took the company. Indeed, in 1999 he sold the company’s defence business to BAe for £7.7 billion.
This was the middle of the “dotcom bubble”. Simpson followed the fashion and took the company very heavily into telecommunications, renaming it Marconi Electronics. When the dotcom bubble burst, it took Marconi with it. Simpson was forced to resign in 2001. The company flirted with bankruptcy, and in August 2002 was forced into a debt-for-equity swap. The Marconi investors ended up with just one two-hundredth of the company.
Most of the company was eventually sold, and the remainder was renamed Telent.
The tragedy is that Lord Weinstock lived long enough to see most of this. Being still a major shareholder, he railed at the company’s general meetings against Simpson’s strategy. And he saw the strategy come unstuck – by the time of his death in 2002, the company’s fate was already clear.
Thus the lifetime achievement of one of Britain’s foremost industrialists ever, was destroyed in just a few short years, by the choice of the people Nigel Lawson called “City scribblers”.
We need more Weinstocks – and fewer Simpsons.