by Gordon Pitts
The firing was exceptionally hard, and Day later learned the man’s marriage fell apart. It taught him the importance of making tough decisions, but not to be cold or unfeeling. Day used it as a test in hiring senior people. He would ask, “How many people have you personally fired?” If the applicant had dismissed people, he would ask how it felt. If the response was a hard-hearted “piece of cake, I do what I have to do—not a problem for me,” Day would seldom be interested in hiring that person. One applicant confessed, however, that he had gone to the men’s room and thrown up after firing someone. “I thought, that’s the person I’d prefer to hire. You do what you have to do, but you can’t not care.”
At Cammell Laird, Day began to develop a reputation as someone who could make hard decisions. But the job cuts were almost entirely on the management side, and he changed about a third of the team. Mills noted that “there was a huge amount of talent there just looking for leadership, and Graham was that breath of fresh air. He got rid of a lot of senior deadwood, appointed a lot of really bright people who should have had the leadership jobs, and we also recruited from outside.”
Mills could see his old colleague changing during the five years at Cammell Laird, as he slowly brought the shipyard back to positive cash flow. He had been impressive at CP, but in Birkenhead, his confidence blossomed. “He was a mover and a comer at CP. At Cammell Laird, he was it. He was the leader, he was the guy; it was all on his shoulders. And he just responded to that challenge.”
Few Canadians knew about the miracle on the Mersey, unless they were part of the global shipping business. While Day was turning around Cammell Laird, a young Montreal businessman named Paul Martin was a rising executive at Power Corporation of Canada, the holding company controlled by master corporate builder Paul Desmarais. The son and namesake of a federal Liberal politician, Martin was taking a leap into the shipping business as the new president of Power-owned bulk carrier Canada Steamship Lines. His new focus took him to industry meetings in Britain, where he would learn about Graham Day, the shipyard turnaround star. Day was not a big name in Canadian business circles, but in the marine world he was golden, and that lustre would only grow. Martin remembers, “You cannot exaggerate the reputation of Graham Day as a Canadian who had made it in the biggest play of all.”
That name would stay etched in Martin’s mind as he led a buyout of Canada Steamship Lines and later stepped back from the company to pursue a political career, rising to become the Liberal finance minister and prime minister. His sons took control of the company, and two of them were directors. They told him later that they had recruited a strong board member, name of Graham Day. “I was delighted,” Martin says.
Chapter 8
Best of Times, Worst of Times
Brian has worked in the Cammell Laird shipyards for half a century. This morning, a sunny Sunday in March 2016, he is manning the security gate, and he takes time to chat with a journalist from Canada. Yes, he remembers Graham Day and the time, forty years ago, when Nellie Smith was chosen to launch a ship—a role unheard of for a cleaning lady. Nellie’s family had worked at Cammell Laird for generations, and she was as much a fixture as the Mersey itself.
The shipyard is busy this morning as men in hard hats come and go past Brian’s security station. In the background there is a glimpse of the wet basin where the container ship was liberated in the nighttime coup that made Graham Day’s career. Brian smiles as he remembers that incident, too. There were always strikes at Cammell Laird. They were a fact of life, he shrugs.
It is a much smaller yard now—the main building of Day’s era is gone—and yet it survives and even thrives, and that is part of Day’s legacy. But what Brian remembers best is the style of the brash young Canadian, compared with previous managers: “He was more open.”
That comment would please Graham Day, who regards the Cammell Laird tenure as his best job ever. He was able to put into practice the things he had learned at Canadian Pacific. He liked and respected the people, some of whom became lifelong friends. He was able to blend his own knowledge of commercial shipping with Cammell Laird’s technical expertise in building commercial ships. The company reaped the benefits by amassing the largest order book in the world for petroleum tankers. Graham Day was lauded as the great turnaround manager who changed an insolvent business into one with a positive cash flow.
His performance stood out because the world shipbuilding industry was in woeful shape, and it got worse through the 1970s as the Arab oil embargo, the OPEC supply squeeze, and rising oil prices undercut the demand for shipping. Entire shipyards were wiped off the map and national industries eliminated. In the mid-1970s, for example, Sweden had the second-largest shipbuilding industry in the world; a decade later, the entire industry was gone. The British industry, too, was badly affected, and the country was sharply divided on how to respond. The opposing views were summed up in a 1966 task force on the prospects for the industry: “On the one side were those people who, aware of the geography, history and pride of craft, believe it unthinkable to be without a strong shipbuilding industry. Preserve at any cost. Others, viewed as more realistic, see ships as a product that developing countries could make more economically. They see shipbuilding as a relic of the first industrial age, now due to decline.”
It was a natural breeding ground for partisan politics. The opposition Labour Party was on the side of preserving, and nationalizing, the industry, which would be heavily concentrated in working-class Labour-dominated areas such as Liverpool, Newcastle, and Glasgow. The Conservative government, meanwhile, was sharply divided. When Day arrived at Cammell Laird, Ted Heath was prime minister. Faced with deteriorating economic prospects, Heath flirted with free market economics, but in his heart was a one-nation Tory in favour of governing by consensus. His cabinet was polarized between Heathites who inclined to the status quo and an impatient cacophony of radicals led by Keith Joseph, the intellectual force behind a free market U-turn. Joseph was a mentor for Tory insurgents such as Norman Tebbit, Nicholas Ridley, and a rising star, Margaret Thatcher, who was sympathetic to the new ideas but far from a raging radical at that time. They were champing at the bit to enact structural reforms, reduce the power of the trade unions, and, in their view, liberate business from the chains of government.
This was Day’s introduction to the politics of industrial policy, and it would be a major factor in his life. He always worked at the confluence of public and private enterprise. He was a conservative—both small and large c—but he was pragmatic and sensitive to political nuance, never letting ideology get in the way of his primary purpose, which was to restore companies to health. He believed nationalization should be avoided, if at all possible, but in the event he could live with it for a while.
During his Cammell Laird period, Day actually had a very brief flirtation with becoming a partisan, big c Conservative. The party had an opening in a constituency in nearby Chester, and a party official brought the message that there was interest in having Day offer his candidacy. Day said he would think about it, but concluded he wanted to finish the Cammell Laird job. Besides, he was seen as a Canadian. Instead, Peter Morrison stood for the seat, winning in 1974 and becoming an early Thatcher backer, a minister of state, and parliamentary undersecretary for the prime minister.
The Heath government of the early 1970s was reeling from the economic pressures of skyrocketing inflation and a currency under pressure. In fact, its only major success was finally getting Britain into the European Community in 1973, after years of being blocked by France’s former president Charles de Gaulle. Even then the party was divided on Europe. Other combustible issues took centre stage, including the demands of the powerful miners’ unions to exact higher pay raises in the face of savage increases in the cost of living. It was an issue that would roil British politics for the next decade and more.
Heath called an election in 1974, and was edged out of power, allowing the return of Labou
r leader Harold Wilson to the prime minister’s job. In a leadership challenge to Heath, the Tories rebuked their long-time leader. Keith Joseph was considered a leading candidate to replace Heath, but he stepped aside, opening a window for his protegée, Margaret Thatcher.
Day didn’t really know her—they had met briefly when she was education minister. She had taken a terrible beating in the controversy over eliminating free milk in state schools. “Thatcher, Thatcher, school milk snatcher,” a Labour member had chanted, and the phrase caught on. But she survived to join the leadership challenge, and won the leadership on the second ballot, humbling Ted Heath. The Tories knew they were getting a right-leaning leader, but they were not expecting a revolution. They might have taken their cue from her first press conference. As she posed for a picture, she said: “I am now going to take a turn to the right, which is very appropriate.”
Labour, too, was in the throes of change. Wilson resigned abruptly, officially because of ill health, although the motivation remains a bit of a mystery. As his successor, he endorsed sixty-four-year-old Jim Callaghan, a Welsh union man but a pragmatist who, in early April 1976, suddenly found himself thrust into power as prime minister. Callaghan, with his stellar war record as a chief petty officer in the navy and a charming style, was someone Day could like. In the darkest of hours, he would be Sunny Jim.
Callaghan and his Labour cabinet certainly noticed Graham Day. They had commissioned a consultant’s study of the shipbuilding industry, and the report showed Cammell Laird as the only yard with a serious strategic plan that it was actually implementing. Cammell Laird had become the role model of the industry, and so Graham Day, at forty-three, was invited to lead the nationalization organizing committee with the idea that, when legislation passed, he would ultimately serve as the CEO of the massive state company.
To work on the committee, Day plucked Peter Mills as his second in command. “Neither of us wanted to do [the nationalization],” Day says, but after the OPEC energy crisis, shipbuilding was cratering. “We rationalized that at least we would get an industrial organization that was sustainable.” Forty years later, Day could see the irony: the man later charged with privatizing big parts of British industry was originally tapped to be the nationalizer. He had beliefs that were strongly free market, but he was also a pragmatist who knew that you worked with the hand you were dealt. He had just come off what he later viewed as his best job ever. Now he was going into what he later described as the worst year of his working life. He got a great education on the industry and its players, but he quickly despaired of the company that would emerge and of his role in it.
In 1975, he felt that nationalization would give the industry some breathing room to restructure. He found, however, that this was not the plan. The government’s real aim was to embed nationalization as a permanent solution. As the year progressed, he learned that the process was all about ideology, not about strategy and rebuilding. The government benches were dominated by people who wanted a passive administrator in charge, not someone who would direct change. “It was clear that we were not going to be permitted to actually do the job commercially,” he says. Instead, it would be a political solution. The government had a board in waiting, but he took it as a negative sign that at least three of the members could not even get security clearance. Like Groucho Marx, he didn’t really want to belong to this club.
As tension grew between Day and his Labour political masters, his personal stress level rose to the boiling point. It was exacerbated by long delays in getting the nationalization bill passed by the House of Commons, and there were challenges in the Tory-dominated House of Lords. If the industry was to be sustained, there must be action and soon, but all that happened was paralysis.
It got harder and harder to suffer fools. He and Peter Mills would spend their week in London and head back to Birkenhead on the weekend. One night they were in a London restaurant, when, two tables over, a diner said something entirely inappropriate to the waiter. Day swung around and harshly rebuked the man, ending with the warning: “Don’t you ever say that to these people again.” Here were two aspects of Day on display. He was always sympathetic to those in the low-level services jobs—from cleaning staff to labourers—who kept an enterprise going. And he was extraordinarily stressed at the time.
A decade later, he told Hazel Duffy of the Financial Times that he was proud that no minister of his had ever been bounced in public by something he did or failed to do. But relations were difficult in 1976 while the shipbuilding bill was dragging through Parliament. The relationship between Day and the junior industry minister, Gerald Kaufman, was exceptionally strained. Later, Day would say he disliked the man for his rudeness, “his wilful ignorance of commercial realities,” and his constant undermining. Kaufman was the only cabinet minister in Day’s British tenure he could not abide.
“When I took the job on, I felt without a doubt that I could do the same for the industry as I had done at Cammell Laird,” Day told the Financial Times’s Duffy. It took him just two months to change his opinion, Duffy wrote, “and he now admits he should never have taken the job in the first place.”
Yet through it all, he retained a warm regard for Jim Callaghan, a man of integrity thrust into an impossible job. Day was willing to go the extra mile for him, whatever he thought of his politics. At Easter, the Day family had gone to Italy during one of Britain’s periodic economic crises. He got called back to London because there was an export opportunity the government wanted to explore.
Callaghan had received a message through the British ambassador in Kuwait saying the Kuwaitis, who previously had ships built in Britain, were interested in ordering four more cargo ships. The Kuwaiti ruler remembered earlier satisfactory discussions with Callaghan in a meeting in the desert. No one was supposed to know about this new opportunity. Day took one shipbuilder with him, the head of the Glasgow yard that had earlier built ships for Kuwait. The man was told he could tell only his wife about the trip and that he should bring his passport and the outline drawings for the earlier ships.
The two went off to see the Kuwaitis, who had hired a Palestinian businessman as a go-between. It was a strange meeting. There were uncomfortable moments as the Kuwaiti delegation tried to pigeonhole Day. They asked about his religion, and he said Church of England. But when did he change from the religion of his father?—for some reason, the Kuwaitis were convinced Day was Jewish. Then they shifted gears: “Why are you working for the British? You are not British.” Day said the ambassador could speak to his status as a British citizen, but as to why he was doing this, “I am a mercenary.” He worked for a living, just like the Palestinian who worked for them, he said. The Kuwaitis got the idea, and the deal moved ahead. Day and his Scottish shipyard companion returned to Britain with a draft for 25 percent down-payment for four ships. “That was the thing I did for Jim Callaghan,” Day says proudly.
Meanwhile, the privatization bill was a sprawling piece of legislation that covered not just shipbuilding, but also ship repair and engine building, as well as the big aerospace industry. It touched ideological nerves on both sides of the House, and conflict broke out.
The fate of nationalization and the career direction of Graham Day were largely determined on the night of May 27, 1976, when the House of Commons met to debate the bill and hold a vote. Day was not there, but Peter Mills was. As a policy advisor to the government, he was sitting in the “Strangers’” bench on the floor of the House and could see the dramatic tableau unfold. The scene comprised a number of people who would shape Day’s future, including Margaret Thatcher, the new leader of the opposition, and Michael Heseltine, an intensely charismatic Tory MP with a fabulous golden mane. Passions ran high, as the House prepared to hold the key vote. The Labour government was intent on adding to the number of state-owned industries to preserve jobs, many of them union jobs. The Conservatives under Thatcher were moving towards a denationalization strategy.
&nb
sp; The vote was expected to be a stalemate, but the government squeaked out a single-vote victory. The Tories cried foul, charging that a Labour MP had violated the pairing convention, whereby an absent member could balance his non-vote with an agreed abstention on the other side. This time, the Labour member broke the deal and voted. Welsh Labour MPs stood up and sang the socialist hymn, “The Red Flag,” which further inflamed the opposition. Some MPs began jostling, and one took a swing at another. Heseltine rushed over and seized the mace, the ceremonial symbol of authority in the House. “He started swinging it over his head and pointing at the other side,” Mills recalls. It was a serious breach of parliamentary decorum.
Heseltine’s action had parallels with the physical intervention of Prime Minister Justin Trudeau, when he made contact with opposition MPs during the assisted-dying debate in the Canadian Parliament. Trudeau’s actions were much less menacing, but the circumstances were similar: a bill in trouble, a heated issue, an obdurate opposition, and tired and angry MPs. Heseltine apologized, as Trudeau did, but the British MP would never lose the nickname “Tarzan”—someone who would swing from the trees.