by Gordon Pitts
There was much that Day liked about Davie. It had amassed a contingent of outstanding welders who did very good work. So, under the Canada-US military equipment agreement, Davie bid on a bunch of sonar domes. Then it contracted to build Newfoundland ferries. What’s more, it sorted out the Mexican imbroglio, and got paid.
Acker was now reporting directly to Day, and he thrived. He became one of those in Day’s life who could say, “Graham, if you want to do that, you know I’ll bust my ass to help you do it. But I do think we should sit down and talk about this again.” Acker could see the different sides of Graham Day. One side was the Graham Day who took pride in seeing the people he liked do well in life. He backed them to the hilt. At the same time, Acker says, he was not always easy to get along with. “He has an ego, he makes his mind up extremely quickly. He just happens to be, like most good gamblers, more often right than wrong. I’ve seen him offend people, I’ve seen him make decisions that I didn’t agree with, but I’ve only had two bosses in my life who, if they called me today and said they needed me to do something, I would do it.” Those two are Graham Day and Howard Macdonald, the last president of Dome, who cleaned up the mess and negotiated the sale of the former Canadian energy champion to the US giant Amoco in 1988.
By the fall of 1982, Day had fixed the Davie yard’s problems and restored it to positive cash flow. There was nothing left to do, and he did not want to stay. Davie was a shipyard, like Cammell Laird, but it was only about a twentieth the size of the Birkenhead operation. Meanwhile, the Dome dream was receding in the rearview mirror. Acker would be moving back to the Dome head office in Calgary, and Day told Dome he was pushing off. He did not worry about his future. He could go back to Dalhousie—he loved working with students—or something else would turn up. It always did—after all, he was fireproof. “It never ever occurred to me that I wouldn’t be employed. Now, you may say that’s arrogance, but I work hard and I generally produce the results that have to be produced, so I figure guys like me can get jobs.”
The Days had just returned to their flat in suburban Quebec City after spending Christmas in Hantsport when Day’s mother called from Halifax with a message: “ John Gardiner wants you to phone.”
It was a replay of 1971, but Day was older and had accumulated more scars and more seasoning. Much had happened since he had left the United Kingdom. In 1977, Parliament had finally passed the bill nationalizing the shipbuilding industry, and British Shipbuilders had emerged as the repository for most of it. But it was a troubled albatross right out of the chute, as the financial picture worsened—in the industry and in the British economy.
And there had been a tsunami of political change. After a winter of discontent, when labour troubles brought the country to its knees, a desperate electorate had turned to Margaret Thatcher’s Conservatives in the national election of 1979, defeating the Labour government of Jim Callaghan. It was, Thatcher believed, a mandate for change.
The Cammell Laird yard was part of the nationalized company, but John Gardiner was not involved. He was building the non-shipyard assets into a successful conglomerate under the umbrella of the Laird Group. One day, he was chatting with a senior public servant who had known Graham Day during the difficult year of the nationalization committee. The bureaucrat asked, “Where is Graham Day?” He added that he thought Day was a very good man. Gardiner, noting that British Shipbuilders was in dire straits, suggested he ring up Day that afternoon and ask him to fly to London.
Gardiner called his old friend’s number and urged Day to come and hear what the government had to say. The idea was that he would clean up British Shipbuilders, then privatize it—a project perhaps better suited to Day’s economic world view. Day proved receptive. He recalls saying to Gardiner, “It’s like chicken soup—it can’t hurt.” Graham Day was soon on a plane to London, primed for his next adventure.
Chapter 10
The Privatizer
Colette Bowe was a fast-rising young public servant entrusted with the care and feeding of Britain’s ailing shipbuilding industry. In the early 1980s, she led a team in Whitehall—the nerve centre of the British public service—working on a bill to privatize the sprawling, industry-encompassing octopus known as British Shipbuilders. One afternoon, suddenly appearing at her office without an appointment was a tall man with a North American accent, tinted glasses, and sporting what one journalist called “his misleadingly sinister Mephistophelian beard.”
“Hi, I’m Graham,” he said, pleasantly enough.
People were shocked. This kind of drop-in meeting was just not done in Whitehall, where formalities were the way of life. Here was this informal guy wanting to say hello to the team he would be joining as the newly minted CEO of British Shipbuilders. Bowe, still in her early thirties, already knew a little about Graham Day: that he was a prominent industrialist and a Canadian who had rescued the shipyard across the Mersey from her hometown, Liverpool. But that was about it. So there was this moment of shock, until they learned he had a particular style of working: unstuffy charm mixed with steely intelligence.
It was the beginning of a beautiful relationship. The bureaucrats of Whitehall learned to like the Canadian’s mien, which was midway between British and American—informal like the Americans, but respectful of how things were done in Britain. He admired the pomp and circumstance of British public life—as long as it didn’t get in the way of decision making. There were elements of British society he understood as a Canadian and a former lawyer with CP—a significant labour presence, a large and powerful public service, regional inequity, and with it a degree of condescension—but there was also the added obsession with status, schooling, and class. It never wore him down—rather, it constantly amused him and Ann.
Bowe became the point person in Day’s dealings with the government. She already had a reputation in the macho world of shipbuilding as a young woman of grit and elegance, impeccably coiffed and stylish, who would climb over ships in various stages of construction. She was irreverent, a Liverpudlian with a loyalty to the Beatles and a deep appreciation of Cammell Laird’s tradition. People like her gave Day his strong regard for British senior public servants: well educated, well briefed, well prepared, who ably served their political masters no matter of what political stripe. He also tended to like the cabinet ministers he worked with, save for one or two.
Another embodiment of the professional public servant was Peter Carey, permanent secretary of the Department of Trade and Industry, with whom Day had a history going back to the nationalization committee of 1975–76. It was Carey who set the ball rolling for Day’s return to Britain and who conducted his first interview. It went well.
Next up for Day to see was the secretary of state for industry—the minister, in Canadian parlance. Norman Lamont was a fervent Thatcherite and part of a clique of Cambridge whiz kids in cabinet. It was a bizarre discussion. Lamont kept pressing to know what classification of law degree Day had obtained at Dalhousie—1, 2.1, 2.2, or 3. It was terminology used at Oxford or Cambridge, but not in Canada—and besides, Day’s performance in his early years of university had been undistinguished, to say the least. Again, an attempt to pigeonhole him failed—as a Canadian, he defied categories.
It was a relief to get down to brass tacks with Colette Bowe, who negotiated the precise terms of engagement. Day asked, “Do I understand absolutely that Mrs. Thatcher, whom I only met once, wants me for this job? She doesn’t know me from a hole in the ground.” Bowe responded, “That’s true, but she thinks she does.”
Day and Gardiner had discussed the high risks involved with British Shipbuilders. It was not a long-term job, and failure was a definite possibility. The industry was in a mess. He had been a board member for a Canadian company, Misener, that had ships on order from a Scottish yard—which meant he had some knowledge of the problems.
So Day made demands that became central to his privatization dealings from that time onward. He t
old Bowe it would work only if he had dictatorial powers. He must be able to hire and fire everybody, with no exceptions, including the board. “I will decide who stays or who goes. The only remedy you have is you can fire me,” he said. Day would be happy to keep the government informed, but there would be no second guessing. He expected ministers to stand up in Parliament in the face of opposition criticism and say they had hired him to do the job, they had confidence in him, and they would let him do it. And he wanted those assurances in writing.
All that sounded reasonable to Bowe and her political masters. It became the Day formula: if he did not perform, his political masters could fire him, but they should not undermine him. The job of turning around and privatizing an industrial giant required political will. In Britain, under Thatcher, he had that political will behind him, from Day One, so to speak. Later in life, in Ontario, he did not have it, and it went very badly.
Bowe asked about timing, and Day responded that he would have the timetable the next day. “At Shipbuilders, the government was not spoiled for choice,” he acknowledges. “They had to get it done. This thing was hemorrhaging cash.” The job, he decided, would take three years, and some insiders thought that was wildly optimistic. But the government agreed with his terms, as outlined in a two-page contract he drafted.
Bowe had a favour herself: she wanted to lend him a young public servant named Peter Thompson, an energetic Whitehall operative whom Bowe trusted. Day would come to trust him, too. Thompson would become the next sweeper, the new Peter Mills.
Day needed all the help he could get, given the state of the company. Here he was, fifty years old, a former railway and shipping lawyer, recently boss of shipyards in Quebec City and Liverpool. He now found himself heading thirty shipyards, with sixty thousand workers—down by about twenty thousand from 1977. The overall business was losing close to $250 million a year. It was a tall order, but he felt he could do it. He had a continuing romance with shipbuilding; he knew the industry and its people. A shipbuilding job could lure him like no other assignment. Years later, retired and living in Nova Scotia, he drove by the Halifax shipyard and told Ann that he missed it. What was it that roused those feelings? The smell of the welding. This olfactory connection was like none other Day experienced.
Little did he know, but there would be more jobs to flow out of this one at British Shipbuilders. It would be the launching pad for the Decade of Graham Day. From March 1983 to July 1993, he would be a force in changing British corporate life. He wasn’t the only one, but he was instrumental. There are physical monuments to Day’s tenure—the Mini car, the recovery of British carmaking ability, and a number of operating shipyards—but he also left a new way of working. He loosened up British industry, fostering a style of management that was funny, irreverent, casual, yet professional—a lot like Les Smith would have wanted.
It was the most successful decade ever for a Canadian executive on the British stage—better even than the performance of Beaverbrook, who was prone to overreach. Day ran big companies, bigger than most in Canada, to positive reviews. Yet he operated largely below the radar in North America, except in his native Maritimes. He was probably the best Canadian crisis manager ever in his ability to put out fires, turn around moribund industries, and retain the confidence of shareholders. In this case, it was usually one shareholder, the UK government, personified by the prime minister.
Thatcher needed problem-solvers like Graham Day. “At that time, the government was in search of heroes,” says Graham’s shipyard ally, Roger Vaughan. She had risen to power after the so-called Winter of Discontent of 1978–79, which saw 29 million working days lost to labour strife, with bodies left unburied following a gravediggers’ strike and uncollected rubbish piled high in the frozen streets when garbage workers walked out. Sunny Jim Callaghan’s Labour government had bet that things would get better, and lost. It would pay the price.
Margaret Thatcher became prime minister, armed with a fierce enmity towards socialism, communism, and trade unions in general. For many, the monetarist ideas that seized the Thatcher government—high interest rates and a laissez-faire industrial policy—were not only disastrous but sadistic in their uncompromising application. But she was tossed a lifeline when Argentina invaded the faraway Falkland Islands in April 1982. The British responded with a counterpunch that recaptured the islands and set off a wave of patriotic good feeling. Day was hired to return to Britain just ahead of the election of June 1983. Canadian friends thought he was mad—Thatcher might not be re-elected. But in the wake of Falklands enthusiasm, she won a landslide victory, and Day looked very smart, even if he didn’t appreciate it at the time.
The victory gave Thatcher renewed confidence to pursue her radical agenda. By 1983, she was fully committed to returning publicly owned companies to private hands. Her memoirs indicated that privatization “was fundamental to improving Britain’s economic performance. But for me it was also far more than that: it was one of the central means of reversing the corrosive and corrupting effects of socialism.” Through privatization, she said, “particularly the kind of privatization which leads to the widest possible share ownership by members of the public—the state’s power is reduced and the power of the people enhanced.” She concluded, “Just as nationalization was at the heart of the collectivist programme by which Labour Governments sought to remodel British society, so privatization is at the centre of any programme of reclaiming territory for freedom.”
Thatcher’s sermonizing would be greeted with cheers in many quarters, but jeers as well. Privatization was one of the central polarizing issues in British public life for a half century, and the battles are still raging. Some of the best known state-held enterprises—British Telecom, British Airways, Jaguar—were removed from public ownership. And no one knew the history better than Graham Day, the would-be nationalizer under Jim Callaghan, now the arch-privatizer under Margaret Thatcher.
Day was hired about the same time as Ian MacGregor, a tough Scottish-born American executive who had come back to run British Steel. Day was told privately that the feeling in government was that at least these two outside appointees wouldn’t make things much worse. Andrew Fisher of the Financial Times noted in March 1983 that, “Mr. Graham Day, who takes over as chairman in September after returning from Canada, will have an awesome task in keeping the corporation afloat.”
By the time September rolled around, British Shipbuilders was in even worse shape. The company encompassed illustrious names: Govan on the Clydeside, Swan Hunter at Newcastle, Vickers, Scott Lithgow, and, of course, his beloved Cammell Laird, the company he once headed and now one of the healthier yards, thanks largely to his work. Not all yards were part of Shipbuilders—Belfast’s Harland & Wolff had been hived off separately—but they were all hurting. Merchant shipping was in free fall, and the yards tried to survive with military contracts. The global industry was in gaping overcapacity, and some countries continued to support their yards with massive subsidies.
Colette Bowe knew it was very challenging. The United Kingdom had once been enormously dominant in shipbuilding, and there was the feeling that it was still important. There were attempts to keep it alive through warship contracts, but there had been a failure to invest in new technology, and labour practices were out of date. Like coal, shipbuilding was a bastion of traditional working-class jobs. And, Bowe recounts, there was deep suspicion that privatization was part of a great plan to close down the industry. Her job was to get legislation in place and make sure the privatized company was properly led.
Day was central to that. The advantage was that he loved shipbuilding and he understood the challenges. He was going into an industry and a country that he knew and understood.
In Canada, Day’s new job was interesting, but hardly front-page news. One of the few who covered it, the Globe and Mail’s London correspondent Jeffrey Simpson, noted that Day was the only Canadian running a nationalized industry in Brita
in and perhaps the only one running any British company of significant size. He was also the best-paid chairman and chief executive officer of a nationalized industry, earning £80,000 ($152,000) a year. Simpson noted that three thousand more jobs had recently been cut, and Day predicted another six thousand would go soon. The new boss faced more grief ahead: “A rundown in capacity, further job losses in the industry, a desperate attempt to identify those parts of the company that can survive, the probability of strikes—with headaches ahead like these, no wonder there were few shrieks when Mr. Day’s salary was announced.”
Day’s predecessor, sixty-seven-year-old Sir Robert Atkinson, had been making only £52,000, but Sir Robert, although a great soldier in the Second World War and a patriot in his continuing service, was not a professional manager but more of a top-down martinet. He spent his years at British Shipbuilders bad-mouthing the industry, the unions, and specific troubled yards, perhaps hoping that approach would elicit more government money, but it only contributed to sinking morale and a sense of defeat.
Day had the right management resumé and some experience in British public life, but he was still a relative initiate to the corridors of power. Peter Thompson became indispensable. At an early stage of his career, Thompson had been private secretary to Tony Benn, the dynamic radical Labour politician who was industry minister in the Harold Wilson government. Thompson loved working with Benn, just as he would love working with Norman Tebbit, the Rottweiler of the right and a fervent Thatcherite.
Thompson found unlikely connections between the two politicians and Graham Day. All had people skills and that knack of remembering the last conversation they had with someone—that maybe their mother had been ill—and they would ask about her. “They were people people, simplifiers, communicators.”