Newspaper article The Evening Standard (London, England)

New Helmsmen Needed for Change of Direction

Newspaper article The Evening Standard (London, England)

New Helmsmen Needed for Change of Direction

Article excerpt


CRISIS-HIT Marconi announced last night it was going to fire 4000 people but the total ought to be 4002.

The two men who have guided the business in the past four years, Lord Simpson as chief executive and John Mayo as finance director, ought to be added. They have a lot to answer for, and they should answer for it with their heads.

Their alternative plan, that Simpson becomes chairman and the numbers man Mayo becomes chief executive - in other words both get promoted - is a very bad joke.

Their defenders might say that the loss of these two key people when the company is in such a parlous state is the one thing that might make matters worse. That is a tough one to call, but credibility and confidence are the key. If a captain and first officer have just steered a ship on to the rocks, do the passengers and crew really want the same pair organising the lifeboats? The two have been undone by a slump in telecoms they never saw coming and which they appear to believe couldn't happen to them.

The Simpson strategy involved ditching the traditional engineering businesses of the General Electric Company and betting the company's future as a supplier to the telecoms industry. To do this he bought heavily and at high prices, particularly in the United States, but he foolishly paid for most of what he bought in cash, not with his own highly-priced shares.

Spare a thought, therefore, for his predecessor Lord Weinstock, who was criticised for a decade because he refused to spend cash incautiously. He bequeathed GEC [pound]3 billion in the bank; after the Simpson spending spree the renamed Marconi has [pound]3 billion of debt. Wein-stock is said to be furious. One can just imagine. The fair charge against Simpson and Mayo is not the telecoms strategy, because no one complained at the time, but the fact that this disaster seems to have come as a surprise to them although their US competitors have been on the floor for months. …

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