by Tom Bower
During the 1950s, Britain's three major printers - Sun, Odhams and Bemrose - had individually expanded to capitalise on the boom in colour women's magazines. Flush with orders and money, the managements bowed to most trade union demands for higher wages and more restrictive practices. By the late 1960s the boom was history. Television had cut deeply into magazine circulations but the print unions refused to acknowledge the new reality and accept any redundancies. At BPC's Sun Printers in Watford, as in Fleet Street, the weak management recoiled from confronting their nightmare until 1969. The resulting strike cost
Sun Printers its most lucrative magazine contracts and cost BPC its total annual profits.
Throughout the 1970s, buffeted by postal strikes, power cuts and a gyrating economy, Robinson struggled to save the company although he was handicapped by his limited understanding of finance and by persistent industrial disputes. Although Robinson had reduced BPC's workforce by nearly 50 per cent, and restored the company to profitability until 1979 amid bitter confrontation with the union leaders, both Tom Dubbins and Joe Wade the obdurate leaders of the NGA - the print union concerned - say they were not intimidated by his personality or character. According to Robinson, neither man was willing to discuss the company's survival or agree productivity deals. As Robinson's stance alternated between politeness and desperation, the union leaders gained the impression that, despite his tough language, even accusing them to their faces of blackmail, he would often bow before their intransigence. Ironically, they blame Robinson for 'never moving into our century'.
To stem the losses, Robinson sold some printing plants and closed others, but lucrative customers, among them the Economist and Newsweek, were lost forever. The tilt towards bankruptcy was delivered in October 1978 at the Savoy Grill by Marmaduke Hussey, then the managing director of Thomson Newspapers. Robinson had been relieved that Thomson's contract to print the Sunday Times colour magazine had been renewed. But, during the meal, to his consternation, the 'Duke' briefed him that Thomson newspapers were going to 'discipline' the Fleet Street workers by closing down their newspapers. 'In one month,' the 'Duke' told the incredulous BPC chairman, 'We'll have them in retreat.' Hussey failed, but for Robinson the cancellation of the magazine's contract for one year caused a ruinous £2 million loss which was aggravated by more NGA strikes and the loss of more customers to foreign printers. As the abyss loomed, Robinson thought that he had snatched a lifeline by winning a seven-year contract to print the TV Times. Although BPC would lose £12 million that year and there was no money to pay for the new printing machinery which he had just ordered, Robinson was dreaming about deliverance by a miracle when Robert Maxwell telephoned.
The two came face to face on Monday morning, 21 July 1980, in Robinson's office. Maxwell's initial charm was offset by Robinson's frostiness. As Maxwell spoke about placing his talents at BPC's disposal to save the company from bankruptcy, Robinson reminded him of the DTI's conclusion that he could not be relied upon to be a steward of a publicly quoted company; an opinion which, over the weekend, all of BPC's bankers, brokers and major customers had repeated to each other.
‘I want a position on the board,' said Maxwell. 'I haven't decided,' replied Robinson as the acrimony intensified.
'I demand it,' hissed Maxwell as he left the room, 'and I will expect the appointment by the time I return from Moscow.'
Robinson was coldly non-committal, thinking that the origins of BPC's financial plight lay in Maxwell's own stewardship of ILSC twelve years earlier. After so many years struggling to manage BPC, he could barely perceive his own weaknesses but consoled himself with the reflection that his pleas about the very unsuitability of the predator would be heard sympathetically in the City and Whitehall. He ordered that BPC's defence should rest entirely on regurgitating Maxwell's record.
Compiling the indictment was assigned to a fellow director, Montague 'Monty' Alfred, who set about plundering the DTI reports and newspaper cuttings. The character of Maxwell which Alfred chose to draw for submission to the Office of Fair Trading was of an evil genius who had been so persuasive that decent men would do and say things which they knew were wrong. But after three weeks Alfred acknowledged that for the board to rely uniquely upon such a negative argument was demoralising and he decided as an afterthought to telephone a former colleague, Lord Kearton, with whom he had worked at Courtaulds, to seek his advice and help.
Kearton's career had won him prestige as a skilled and independent industrialist who was critical of what some called the City's traditions but which he condemned as incompetence. He had just retired as manager of the Labour government's agency which controlled North Sea oil but he was still a non-executive director of BPC's merchant bankers, Hill Samuel. To Alfred's relief, Kearton agreed to help the beleaguered board despite the company's tense relations with their bank who, it was inevitably but wrongly suspected, had 'failed' to anticipate the dawn raid because of the close relationship between Maxwell and Hill Samuel's director, Sir Robert Clark.
Acting as the honest broker, Kearton called first on Henry Benson, who had a special responsibility for Britain's 'sick industries' at the Bank of England. Kearton was surprised by his old friend's attitude. 'His view was simply that BPC should be liquidated as quickly and quietly as possible,' says Kearton, 'and without a public row about Maxwell.' At the DTI, Kearton found that Peter Carey, the permanent secretary, was similarly uninterested in BPC's fate. 'Peter believed that it was beyond redemption and he wasn't keen on Maxwell.' Kearton concluded that BPC, which was losing £1 million every month, was not only heading towards the rocks but was also friendless. By November, Robinson had discovered the same unpalatable truth but was desperate to deny Maxwell the prize he anxiously sought.
Robinson's relations with Hill Samuel had by then deteriorated and he sought the help of Hambros, who had enjoyed such a mixed relationship with Maxwell. Antony Beevor's brief was to produce any rescue package which was predicated first to exclude Maxwell and only secondly to save BPC. In the meantime, Robinson appealed to BPC's major creditor, the National Westminster Bank, with a formula which included the appointment of a new chairman. The response of Peter Dodds, the manager of NatWest's London District, was decidedly unsympathetic. He told Robinson that the only appointment he would consider was of a receiver and said further, 'We are not neutral and we don't want a battle.' The bank stood to lose £17 million if BPC collapsed and as far as Dodds was concerned, 'We'd looked at so many of Robinson's schemes and none of them were attractive. Mr Maxwell's ideas were the best to save our money and the company.' Dodds insisted that Maxwell be given a seat on the board because he was offering to invest £10 million in the company. When Robinson queried whether Maxwell had that sort of money, Dodds was surprisingly well informed. Unknown to Robinson, Dodds was also Maxwell's banker. In fact, Maxwell was a very special client who had opened an account in Fitzroy Square in the early 1950s: 'He had an excellent track record with us,' recalls Dodds, 'and had always fulfilled his undertakings. We never had any reason to doubt him. That counts for a lot with bankers.' In lengthy sessions after the July raid, Maxwell had persuaded Dodds that the bank could depend upon Maxwell to recover its money and it should therefore grant him exceptionally favourable terms for the huge loans which he still required. The DTI reports, says Dodds, were 'irrelevant'. 'A far-seeing man,' is Kearton's judgement about Dodds.
By Christmas, Kearton's role had changed: he became the mediator between Maxwell, BPC and the City. 'Maxwell had bombarded me with ideas on how to save the company,' recalls Kearton, 'and no one else was interested. I thought his survival plan might work, despite the unions and board saying it was "impossible".' Kearton had also shrugged off the many warnings from those who had been employed or had negotiated with Maxwell. Kearton could not understand their antagonism although he had never occupied either position. 'He's just a hard taskmaster,' says Kearton, later adding, 'I'll concede that the one way to cease having any influence over him is to work for him.' Kearton had also
no sympathy with Robinson's references to the DTI reports: 'I read them carefully and decided that Maxwell was the victim of his own exuberance, verbosity and optimism, but he wasn't wicked. I felt that his wrongdoings were small change compared to a lot of happenings in the City and the inspectors had been unfair on him.' Kearton's conclusion stunned Robinson and Alfred: *I told them that they had no choice but to let Maxwell see the accounts and decide if he wanted to invest his money.' Robinson resisted until Dodds issued a firm veto on a public battle with Maxwell, and Hambros' overly complicated rescue had to be jettisoned along with the bank. BPC's survival depended on Maxwell. In trepidation, Robinson returned to Hill Samuel and the unpalatable cure of Maxwell's 'survival plan'.
In Maxwell's life, it was a historic moment, similar to the award of the Military Cross, and on this occasion there could be no suggestion of reckless bravado. Deserted by all his bankers, Robinson had no choice by the end of January but to agree that Maxwell should effectively take over the company, which was on the verge of bankruptcy. ‘I feel pretty sick,' Robinson told a friend.
Formally, on 17 February 1981, Maxwell was voted on to the board as deputy chairman and chief executive. Kearton was appointed chairman with Robinson as managing director. The next stage was for Maxwell to convince the print unions to dismantle their restrictive work practices since his personal investment and the National Westminster Bank's funds were available to save BPC only if the unions made enormous concessions. Maxwell was now on public trial not only to save a major British company but also to prove that he was a reformed man. Kearton sat as the judge.
Under Kearton's scrutiny, for sixteen hours seven days a week, Maxwell negotiated with the unions about the details of his 'survival plan'. Although it would cause 2,500 redundancies (one-quarter of the workforce), the closure of five printing plants, the wholesale removal of restrictive practices and the effective reduction of wages, Maxwell called if a 'rebuilding exercise'. Five years before Rupert Murdoch sabotaged trade union power in his British empire by a midnight flight to Wapping, Maxwell sought to unclasp the union's stranglehold at BPC by releasing an irresistible series of demands.
Representatives from each BPC factory were brought daily to the Queen Street headquarters in London where Maxwell had installed a bed in an office. With a rigid deadline of six weeks, the trade unionists were 'locked' in a room to negotiate a survival plan. Fresh from their triumph over Thomson Newspapers, and after a decade of unparalleled union aggrandisement, they greeted Maxwell's unique brand of haggling with truculent disdain. ‘I watched with fascination', recalls Kearton,
'how, moving from room to room, he gradually played off the rivalries between the chapels, and then between the chapels and the national organisations. They abused him but he never lost his temper, he never gave the impression of being under pressure and he was always the master of his facts. Above all, he left no one in any doubt that, without him, they'd all be unemployed.' The recollections of the union representatives are less generous. Dumbfounded by the long hours and the unprecedented diktat of a deadline, they gradually retreated, deflated and perplexed to be dealing with a workaholic whose first offer had been the best. In one tense moment, as they argued to recover lost ground, Bill Miles, a SOGAT official, blurted out to the menacing publisher, 'You've got so many balls, in the air, Mr Maxwell, but don't forget, two of them are mine.' Maxwell roared with laughter, satisfied that his tactics were being rewarded.
But his growing success was also due to a consistent display of charm. For someone who is so notoriously impatient with lesser men, his performance over those six weeks was of a compassionate man anxious to understand the most mundane objection from the most inarticulate machine-minder. Forever darting in and out of those twenty rooms, Maxwell identified which local officials were presenting the obstacles. Either late that night or early the next morning, the intransigent union member would receive a phone call: 'Hello, Robert Maxwell here. I just want to say . . .', and then would follow a conversation which was 'a secret between the two of us. Not even the general secretary must know about this. But you and I can settle this because you are so important to our plans . . .' At their next meeting, Maxwell's giant arms were wrapped around the printer. 'My friend and F, Maxwell said to the bewilderment of the other negotiators, 'have settled this problem.' Bill Keyes was repeatedly amazed: 'The greatest wheeler-dealer we'd ever met. He wasn't out to destroy the unions, but just to promote Bob, and also to be loved.' Those very contradictions unnerved the blinkered union negotiators. The charisma, the complexity and the charm of a man who spoke their language so fluently was baffling. 'He always had to prove himself,' says Keyes, recalling how the 'nice-guy act' was selective and rarely genuine, especially towards the BPC board: 'They were treated with contempt.'
The apparent cause of that contempt was Maxwell's anger about the abuses and profligacy which had been cultivated under Robinson's regime. At the Park Royal plant, which printed the Radio Times, the average pay was £15,000 a year for four days' work per week, and the car park, says Kearton, 'was packed with Mercedes cars earned from second jobs'. Inside Park Royal, six men instead of one were 'minding' machines and if one of those six was absent through illness, the management were compelled to hire a temporary replacement with enormous penalty costs. Even seventy-year-olds were still on the payroll, although they were not working. Maxwell seized on these symbols to undermine the unions and humiliate Robinson's record. Although Robinson had inherited the anarchic conditions at Park Royal, he had deliberately not interfered to avoid endangering BPC's profitable contract with the BBC. That would change, Maxwell told Kearton. There would be no frills. Executives would follow his example and fly economy class. Expenses would be slashed. He had even noticed, he commented to Kearton, that excessive bottles of milk were ordered at several warehouses. Robinson was excluded from these sessions but Kearton was impressed. Any man who promised to eradicate the obesity and caprice of executive life appealed to Kearton, although there were not many who today would recognise the image of the self-denying millionaire which Maxwell portrayed for the Bookseller in August 1980: 'I come from a farm-labouring family,' he said, 'and I don't go in for owning yachts or going to big parties.'
Kearton had also paved the way in the City for Maxwell's return. 'I assured everyone that, having seen Maxwell at close quarters, he was a genius. I even insured him for £15 million because of his importance.' If in retrospect it seems that in BPC Maxwell had shrewdly chosen the firmest foundations for his latest relaunch, that was not the common opinion at the time. Maxwell, it was felt, was taking a major risk to buy his way back to respectability and his chances were slim. He would have agreed that his initial investment was a gamble, but it was of a different complexion from what others imagined. In all his years, other than the barter trade, he rarely invested in a business without anticipating or inventing a profitable exit. In BPC's case, his initial £2.9 million investment was certainly a risk, but it was also carefully calculated to lead to the next stage. For £10 million, Pergamon would own assets worth £70 million, a huge tax loss and a guaranteed income in the future because, even before committing his money to BPC, Maxwell had secured support and new orders from his future customers, among them the Thomson Organisation.
Despite their differences over the years, Roy's son Kenneth Thomson had sympathy for the irascible Maxwell. The impulsive, unpredictable salesman and trader possessed qualities which might destroy the same trade unions who had recently driven Thomson from Fleet Street. Like other customers for BPC's colour magazines, Thomson saw no advantage if the choice of possible suppliers diminished. In Thomson's view, Maxwell was BPC's only hope, but was being harmed by carping criticisms which suggested that BPC's customers, including Thomson, would refuse to deal with Maxwell. In an unusual gesture of support, Gordon Brunton, Thomson's managing director in Britain, therefore issued a letter for circulation to both the unions and the City which promised that his group would place as many orders as possible with BP
C if Maxwell were successful. The pledge would be honoured for one year but ended when Maxwell tried, slyly in Thomson's view, to renegotiate the contracts.
Maxwell's potential losses were accordingly less than those extracted from BPC's employees, since his money was committed only when every chapel had succumbed and signed a binding and publishable agreement. Bill Keyes was present when the last chapel signed the agreement and as Maxwell theatrically wrote out the cheque for £10 million. 'Do you want to come with me to the bank?' he asked the union leader. 'You must be joking,' Keyes replied, 'I've just lost a lot of members.' Among the assets which Pergamon now owned was ILSC and Caxton encyclopaedias. The wheel of fortune had turned full circle.
A special shareholders' meeting was summoned for 24 April to approve the reconstruction of the company. The alternative, spelt out in bold, dark type on the memorandum, was that BPC would be placed in liquidation. Overwhelmingly, the proposals were supported, and Maxwell was rehabilitated. Appropriately, the meeting (held in the Connaught Rooms, the venue of so many past humiliations) was followed by a champagne celebration at BPC's headquarters. The star was jubilant, applauded and feted by men who six months earlier would have looked askance at him. This was a perfect moment to judge his character for, as Kearton would write on Maxwell's sixtieth birthday, 'The best is still to come.' Until then, in Maxwell's business life, the trait most frequently perceived was his indomitable will to recover from defeat. Repeatedly, Maxwell could be heard appealing for fairness and justice. Without precedent for a businessman who had so often tumbled and fallen, he had miraculously won another chance.