The Last Canadian Knight

by Gordon Pitts

  Day’s success was built on a lack of public ego. He was always careful to credit his ministers for the success of a plan, even when they in fact had played a less significant role than they trumpeted. And he did not centralize decisions. Thompson had worked in a structure that was hierarchical; suddenly, the new CEO was saying, “Here, Pete, you do it.” (Day was the only one he permitted to call him Pete.) The company was constantly in crisis mode, and Day realized he could not put out all the fires at once.

  Day valued civil servants. A lot of industrialists—those raging bulls of finance—would demand direct contact with the top, the minister. Day, however, recognized the proper channels of communication; he understood he should talk first to the senior bureaucrats whose job was to advise the minister. For their part, Thatcher’s ministers wanted to see things happen in a hurry, and were impatient with the elongated deadlines of privatization. In winning over ministers, “it was not all sweetness and light,” Bowe admits. “It was not a case of ‘Oh, Graham Day is here and all is fine.’” Day understood that ministers sometimes would say no to his ideas, but he also talked to them in a way they had never heard: informal, direct, and funny.

  Once, Day was sitting with a minister and the two were locked in an intractable discussion. “Well, Graham,” the minister said, “there are a lot of balls in the air.” Day shot back, “Sure, and yours and mine are up there with them.” The comment defused the tension. Bowe recalls, “To this day, Graham is a revered memory for those young public servants he worked with in the trenches of privatization.”

  It helped to be an outsider, to be able to give this “aw-shucks, I’m just a Canadian” disclaimer, along with “you will have to explain this to me.” It was a fairly novel idea that a major industrial leader would be a foreigner—even a Commonwealth foreigner—and, for God’s sake, a Canadian with that infernal beard.

  Unlike blockbuster stock flotations such as British Gas and British Telecom, British Shipbuilders was a one-by-one selloff of a diverse bunch of yards. Thompson remembers Day setting a strategy that, in previous years, would have led to a fight with the government. Instead, it was managed quietly behind closed doors. The government’s preferred approach was to get early wins by selling off the best shipyards first. But Day insisted on keeping the best for last and packaging them up with the ones that wouldn’t sell as readily. The desirable yards would be a kind of lifeboat for the ones that didn’t float as easily.

  He pushed this plan through the proper channels. Says Thompson, “I got officials to see that that was the right strategy. Then the officials persuaded ministers that it was the right strategy.”

  The temptation might have been to try to fix everything at once, but Day developed a practical approach. He made a list of things to do, then focused first on the three most important of them. When one job was done, he would move another one up to the top three. Some things he could not defer were assigned to other people. “He didn’t abdicate decisions, but he empowered you to get on with it,” Thompson says.

  Another thing Thompson learned was to take time every day to reflect. “Are we going in the right direction? Are we focusing on the right things? If you were firefighting fifty things at once, you wouldn’t necessarily have time for reflection, so he would build it in.”

  The firefighting started early enough. In November 1983, the Financial Times outlined the challenges, pointing out: “It was shaping up as a tough week for Mr Graham Day, the blunt-spoken extrovert who runs British Shipbuilders.” Just two months after Day took over as chairman, the industry was threatened with a national strike over pay, and an oil rig order worth nearly £90 million also seemed set for cancellation. But after fourteen hours of talks, Day announced that the strike threat had been lifted by the promise of extra pay in return for improvements in productivity. It was a breakthrough, and it was followed by a couple of big ship orders. In gaining the deal, Day told the Financial Times, “confrontation is non-productive. I’ve never felt any need to make any macho gestures.” If the talks had broken down and a strike had been called, he would have had to respect the unions’ decision.

  Through these talks and others with unions, one of his strong supporters was his old colleague, Roger Vaughan, now a senior manager in charge of productivity for Shipbuilders. Vaughan was no great fan of Thatcher—he found her cruelly heedless of the value of industry in the nation’s fabric—but he hailed the return of Graham Day.

  “It was a question of getting [union leaders] on board because their heads were where the industry had been,” Vaughan says. The goal was more flexible, multidisciplinary work that broke down barriers between trades. One turning point was taking a group of labour leaders on a study trip to Japan to see the competitive challenges from the new flexible workplace. It was a case of adapt or die. “They fairly quickly saw the light, and we got a new deal with them,” Vaughan says. “The problem then was getting existing shipyard management to take advantage of what they could do.”

  Day also had to talk tough with some customers. Within the first week, he undid some of the decisions his predecessor had taken the week before. He told customers that they should tear up the agreements and sign new ones or he would walk away. The company simply could not avoid it. He knew his mandate—the government was the owner, but the government couldn’t afford shipbuilding anymore. It wanted to take some cash from privatization, but the essential task was to staunch the bleeding from high costs and heavy losses.

  The mechanisms of privatization were straightforward. Day’s team would develop offering memorandums, which provided the details of the shipyard or plant for sale. But he did not trust the usual suspects to prepare the documents. The auditing firm, for example, would be very defensive about the financial numbers it had signed off on. “I believed that they had taken a more generous view of outcomes than I would have taken,” Day says. Because they had too much credibility at stake, Day concluded that the auditors should not prepare the offering memorandums. Instead, Day reached back into his Canadian network. He remembered that, at Davie shipyard, he had been impressed by the Quebec accounting firm they had used, so he phoned its affiliate in London and set up a fast meeting. The firm was on the job the next day. “And so they tackled the privatization’s offering memorandums, yard by yard by yard.”

  Similarly, Day looked to hit the ground running with financial advisors. He retained Lazard Frères, whose chair was Sir John Nott, secretary of state for defence during the Falklands War. Day did not seek competitive proposals; he simply picked the firm he wanted, knowing it lacked conflicts and could do the job. The approach performed well.

  Meanwhile, Colette Bowe and her colleagues admired Day’s easy way with people. He was a storehouse of great quips, gleaned from a combination of an education in the classics and history, modern pop, and sports allusions, and an agile memory. John DeMont, a Halifax journalist and author, once wrote that Day in his conversation “peppers his words with the thoughts of English viscounts, Harvard psychologists, hard-eyed trade unionists and steel-spined generals.”

  Some of the Whitehall dialogue had the sense of being lifted from the scripts of the hilarious British TV series Yes, Minister. Bowe remembers a meeting she had with Day and Norman Lamont in which a difficult decision was being hashed out. Day wanted to keep the conversation on track, and commented, “You know, Norman, sometimes when you are up to your ass in alligators, you forget you are here to clean out the swamp.” A senior civil servant guffawed, leaned back in his chair, and fell back on the floor, splintering the chair beneath him. The aphorism became legendary in the halls of power.

  But Bowe also got a view of the self-discipline. On one trip to Clydeside in Scotland, Day’s perpetual dislike for clutter was on display. As he was looking around the Yarrow yard, he saw a pile of rubbish and asked why it was there. It turned out the guy who was supposed to clean it up was absent that day, and it wasn’t anyone else’s job. Day’s response: “Give m
e the goddamn broom.” He promptly swept up the mess.

  He made allies in unexpected places. Costas Grammenos is a Greek-born academic who grew up in a family of army officers but went to work for a bank in Athens. He became a specialist in shipping finance and, in the early 1980s, having shifted to academia, was pioneering a new program in maritime finance at City, University of London. Someone said he should meet Graham Day, the boss of British Shipbuilders. It was a fast friendship. Day could see the value of Grammenos’s fledgling program, and the young academic could count on Day’s support at fundraising gatherings and conferences. “He was good with implementation and action,” Grammenos says. “There was not a lot of discussion; once he said ‘yes,’ it happened. In my view he was one of the very influential people in creating this program.”

  Day was unfailingly polite most times, but he had a way of cutting through the underbrush. He was different from many of the Britons Grammenos had encountered. He was straightforward: in the middle of one public meeting full of posturing, the Canadian suddenly interjected with “horseshit.” The room went silent. He had made his point.

  The City, University of London program has attracted students from 155 nations, and its 3,700 graduates include many of the world’s top shipping people. One is a son of Paul Martin, the Canadian politician whose earlier business career was highlighted by his acquisition of Canada Steamship Lines.

  Not all Britons were impressed with the Day persona. Some union leaders found him cold-blooded, as reflected in Hazel Duffy’s profile in the Financial Times in February 1987. “Graham Day? He’s a dessicated calculating machine,” said one shipbuilding union leader, borrowing the words of the Labour Party’s firebrand Aneurin Bevan describing a more moderate colleague. The unionist said, “You can have a perfectly pleasant chat with him, but I think he looks at everything in purely arithmetical terms.”

  Despite, perhaps because of, the progress on labour-saving productivity changes, union leaders continued to take an adversarial stance—no surprise in an industry under attack and in which job numbers were declining. A BBC-TV documentary quoted Jim Murray, head of the union negotiating committee, describing Day as “secretive and aloof.” The unions, he charged, were kept in the dark about his plans for the industry. The BBC filmed the response from Day, looking rather severe with his heavy, grey-flecked black beard and shaded glasses. “Horseshit,” he retorted, once again using that epithet, but now on national TV. He said he had told the negotiating committee shortly after his arrival about his mandate for productivity and privatization.

  Day was never able to shake the perception, held by many unionists, that he was a cold fish whose only passion lay in bottom-line numbers. Some labour leaders also grasped, however, that a technocratic professional manager would be a considerable improvement over the incompetent amateurs who had made a mess of their industries. Day once told the Times: “I’ve always had difficulty saying ‘Here’s the line: we’re the good guys and you’re the bad guys.’ The trade unions were absolutely essential to this country.” He also felt that “there are no bad soldiers, only bad officers. When business is bad, always start weeding out at the top.”

  Day ended up touching a lot of people. He helped Peter Thompson make the leap from civil servant to businessman by backing Thompson’s attending the Harvard Business School executive program. After a sterling career in business, Thompson became a successful executive coach, building on his experience of leading under pressure. In 2016, he was approaching retirement and looking forward to his new role as expert garden composter.

  John Gardiner had a great career as one of the less heralded business heroes of the Thatcher era, one who did not get knighted but probably should have; Graham Day would join the board of Gardiner’s Laird Group. Costas Grammenos went on to be a thought leader in shipping and ship finance.

  Colette Bowe became an interesting footnote in the history of the Thatcher era. By 1985, she had become the information officer in the Department of Trade and Industry, headed by Thatcher favourite Leon Brittan. At the time, the government was embroiled in a crisis centring on a familiar topic, the country’s commitment to Europe. It involved a small military helicopter company called Westland, which was about to be acquired by US defence interests. Michael Heseltine, then defence secretary, was an ardent Europhile who wanted the deal squelched. The issue split the cabinet as Heseltine pursued his vision with messianic zeal, pitting him against Thatcher and Leon Brittan.

  The Thatcher team quietly commissioned a legal opinion on the role of the defence minister from the solicitor-general, whose status was somewhat above the fray of politics. The opinion was framed in the form of a letter from the solicitor-general highly critical of Heseltine, which was leaked to the press. The aim was to humiliate a government colleague. In the uproar that followed, Bowe took the fall, identified as the person who leaked it.

  More than thirty years later, Bowe—now Dame Colette Bowe—is still a disciple of Graham Day. She long ago shrugged off her moment as a sacrificial lamb and built an impressive resumé as a financial and commercial regulator. In 2014, she became the chair of Britain’s Banking Standards Board, which aims at improving the culture of banking to serve the public. She once told a newspaper that she did not believe in management gurus, but that she did have a management hero: Graham Day. That view never changed.

  The Thatcher government was impressed with Day’s progress at British Shipbuilders. He was far ahead of schedule in cleaning up and selling off the yards. The selloff had reduced the nationalized company to a shadow of its former self. Then Day embarked on a series of cryptic meetings with Minister of State for Industry Peter Morrison, the MP for Chester—the seat Day had once been approached to contest. Thatcher had two big problems in state-owned industries. One was coal—a nasty labour situation; the other was cars—also difficult, but not as bitterly contested. Day remembers Morrison saying, “She wants to move you.” Morrison asked, if Day were to leave Shipbuilders, would it be in good hands? Day said privatization was on target after two years, and he could be replaced with a capable executive who could finish the process. But Day warned that his wife would not live with him if he were to end up trying to sort out the unseemly coal mess.

  So cars it would be. Ian MacGregor moved from British Steel to British Coal, which, as Day expected, turned out to be a dark hole of pain and strife. Day left British Shipbuilders a year ahead of schedule and, on May 1, 1986, moved over to the state-controlled automaker British Leyland. Asked by a reporter why the government was always tapping him for controversial assignments, Day quipped, “I am not sure whether I attract them, they attract me, or we simply find each other in the dark.”

  This time, emotionally, politically, economically, the stakes would be even higher. But, as one public servant told him, he was now considered to be “safe hands.”

  Chapter 11

  Rover Unleashed

  Graham Day had scarcely arrived at British Leyland’s head office in May 1986 when his public relations manager remarked, “You have to go to Paris for a car show.”

  A what? “An automobile trade show.”

  So the newly installed CEO hustled off to Paris to show the flag, press some flesh, and get to know his French managers. Immediately, the head of Leyland’s French operations said he had a beef with him. “Why are you cancelling the production of the Mini?” he asked Day. “It’s the one thing we’re doing well with here.”

  Day was flabbergasted—he knew nothing about it. The Frenchman indicated it had been in the cards for a couple of months. “Didn’t Musgrove tell you?”

  “Musgrove” was the imperious Harold Musgrove, one of the legends of British carmaking, the hard-bitten chairman of the Austin Rover Group and a man who now supposedly reported to Graham Day. And the Mini was the little box-like car that, as Day knew, was a bestseller not only in France, but also in far-flung markets such as Japan, where its agility in small spaces wa
s desirable. (Day used to say that Parisiennes, who loved the Mini for the city’s congested streets, were particularly attached to it. In Paris’s overpopulated rues, people didn’t so much park the car as abandon it, he said.) The Mini was a British icon, one of the most popular cars the benighted national automaker Austin had ever produced. Day had a soft spot for small, odd, cult-inspiring cars, such as the Citroën deux chevaux and his beloved VW Beetles. And there was a special family connection with the Mini: Ann Day had owned a Mini estate wagon for knocking around Birkenhead.

  However, there were design headaches involving a new engine and challenges on the panel fit, and, apparently, unknown to the new CEO, the whole car was on the chopping block.

  Day returned to the Leyland head office and contacted Musgrove, who had started working at Leyland as a fifteen-year-old on the production line and now, in his mid-fifties, was head of Austin Rover and famously protective of his turf. Day recalls asking Musgrove what the big state secret was about the Mini. Musgrove dismissed it as an operational matter that the new CEO really didn’t need to know about. Day recalls saying, “Harold, the Mini is not being cancelled.” When Musgrove protested that Day didn’t know what he was doing, Day again insisted that the Mini was not to be cancelled, adding that the next move would be to go to the design studio and start on a new version of the car.

  The survival of the Mini is one of Day’s most visible accomplishments. BMW, the car’s current manufacturer, sells more than three hundred thousand Mini Coopers a year, up from forty thousand in Day’s era. Most of the cars are built in the Oxford-area factory where Austin Rover models were once built. The redesigned Mini is still that cube-like cult vehicle, now beloved of urban hipsters. Since Day saved the Mini, millions have been sold worldwide—not a mass market success, but a niche car aimed at an upscale market.