Always another mountain

Always another mountain

John Reece, chairman of rapidly growing Reece Group, gives Brian Nicholls his table talk recipe for risk, be it on mountains or in management.

John Reece admits he’s a risk taker – correction, a calculated risk taker – and from a house he has in Chamonix he can see a prospect in the French Alps as tasty as the garlic prawns he’s tucking into now. It’s Aiguille Verte – the Green Needle – in the Mont Blanc massif that’s tempting him.

“It’s so impressive, an absolutely white tower - one of the Alps’ loveliest peaks. I’d like to climb up there. I hope I’ve got that in me still. Mont Blanc has a nice big dome you can walk up but this hasn’t.”

First climbed in 1865, it’s much lower than Mont Blanc at 4,122 metres (13,524ft). But it has taken lives for all that. “I don’t know. We’ll have to see,” says Reece Group’s chairman over lunch at Bonbar in Newcastle.

Last summer’s completion of the Munro, the 282 Scottish ascents of more than 910 metres (over 3,000ft) are even lower, but weren’t without risk. So has he had dangerous
moments in climbing?

“A few,” he confesses. “In the Alps you’re in a totally different world. Britons go there not realising what it’s going to be like. I did. I went to a few places with my brother and suddenly found myself thinking ‘I’m out of my depth here. I’m in a dangerous place far off the ground.’ So I’ve had a few little scrapes. But I’ve come through them all – that’s the main thing.”

Coming through unscathed is the main thing in his business life too. Already an MBE, John now also has a Fellowship of the Royal Academy of Engineering for his contribution to industry, joining names like jet engine developer Sir Frank Whittle, radar pioneer Sir George MacFarlane, bouncing bomb inventor Sir Barnes Wallace and Sir Maurice Wilkes, father of the UK computer industry.

But without taking calculated risks, a business can stagnate, he agrees. The secret is to try to avoid danger, especially in his case where it might jeopardise 400 jobs. He proved himself in 2001 when the ceiling fell in on the telecoms bubble which had been providing some 95% of the work for undersea vehicles being turned out by Soil Machine Dynamics (SMD), an initial enterprise leading to the Reece Group. In a year turnover plunged from £60m to £5m and 220 staff fell to 30.

John had taken over running of SMD, started in the early 1980s by his father, the late Dr Alan Reece as a spinout from Newcastle University where he’d been a reader in engineering. Amid forebodings John took a chance, committing SMD to a switch of sector – from telecoms to offshore energy – and risking family assets.

This calculated risk, oiled by innovation, paid off. It also reaped an eight-figure sum when John sold SMD on, and despite everything, it never suffered a loss. Today Reece Group umbrellas a range of innovative firms developed at home and abroad: defence, oil and gas, subsea, power generation, road construction, healthcare and food – all in an engineering context.

The group is on the front line of businesses showing the North East of England’s prowess in advancing its engineering tradition. John cites two calculated risks recently taken: the acquisition of a company – one of two in quick succession – and the other the bold relocation into the massive and historic Armstrong Works at Scotswood in Newcastle, representing a £20m investment to bring all activities under one roof.

This new business, seen as still something of a gamble, is Continuous Retorts (CRL) – only because its first machine promising revolution in food safety processing has yet to be built. A five strong team had been developing it for five years at Gosforth, and portents are good.

John explains: “It’s chicken and egg. Food firms are very conservative. They won’t buy machines until you’ve actually built one. We’re focused now on producing a prototype to demonstrate with real food its capabilities. I think once we’ve done that…well, there’s already a huge amount of interest. I think it’s a good prospect.

While machines already pasteurise or heat treat food for the shops, this machine should do it better and more evenly, improving the taste and reducing sugar content, which the Government and many of the public want. We’re eating more and more of the type of food under consideration, and if it’s not done right it doesn’t taste as good. The masses of sugar used to preserve it are also the exact opposite of what everybody in fact wants.”

Until now parts going into the prototypes have been outsourced; now Reece Group will provide both support and infrastructure necessary. “If you’re a tiny company of five trying to sell a multi-million pound machine to someone like Heinz they’ll probably say ‘you haven’t built a machine yet. You’re tiny and have no balance sheet. We’re not going to give you a £2m order’, whereas they might give us one – hopefully.

“We hope that by June a machine will be processing food and by the end of the year we’ll get a production order. Then I hope one of the big players like Heinz or Nestle and companies that make food for major brands like Marks & Spencer will follow.”

John Reece 02

Investing £20m to occupy Armstrong Works amid oil and gas recession is a calculated risk but it’s a fantastic facility and he’s optimistic good money will be made out of it. Its near.

Work once carried on there, by Lord Armstrong and latterly Vickers and BAE, ranged from cranes, hydraulic machines, ships, locomotives, cars and the first breech-loading gun to parts for Spitfire aircraft, the Dambusters’ ‘bouncing bombs’, tanks and armoured cars.   
Would the so called “workshop of the world” still be vacant but for Reece Group? “I don’t know for sure but the factory at Leeds, where Vickers also built tanks, has been demolished. We have room for ambition.”

The other big recent purchase, MineWolf AG, looks an odds-on winner. It perfectly complements Reece Group’s own product range defending soldiers and civilians in troubled parts of the world from perils of minefields and booby traps. MineWolf’s machines till, dig and smash suspicious ground. Pearson’s devices are fitted to the front of combat vehicles leading a convoy such as tanks and armoured personnel carriers. Any time now the new asset will be officially relocated to Tyneside from Germany and Switzerland, and first lives to be saved as a result may be in Sudan, through a demining action group.

Defence is still Reece Group’s best market in its £51m turnover, and MineWolf promises £7m more at least. The threat from booby traps (improvised explosive devices) will still be huge if there is need to enter Libya, Syria, Iraq or Afghanistan, and it exists also in areas less headlined, such as Korea and India near the Pakistani and Chinese borders.

Attention is also being given to suicide bombers. “Most trouble spots are not front line any more,” John reasons. “Make a road in Afghanistan safe one day and next day you don’t know whether it’s still safe. You have to do something all over again. The weapon of choice in Syria and Iraq is the truck suicide with masses of explosives aboard. You can’t put mines down for that because a civilian might drive over them.”

How many soldiers’ lives were saved in Afghanistan and Iraq with help from his group’s roller kit? “The military aren’t very good at imparting information from there, but I think in Afghanistan alone we’ve had hundreds of IED strikes (improvised explosive devices). Each would otherwise have gone off under a vehicle carrying at least two, probably four, people.

“Some would probably have been killed but the vehicles are good. More would have been wounded. The mine plough is more of a combat thing suited to conventional war. You need a tank for that - something heavy enough to push it.”

The group’s innovation business has around a dozen researchers and developers working towards technology that can be commercially exploited. “We thought oil and gas was where we’d get success. Meanwhile the offshore oil and gas market has imploded. Hopefully that sector will pick up but I think it will be quite a while before it sees investment return.”

Rising prices at the pumps don’t fool John. “A new offshore field’s breakeven is about US$60 a barrel. It’s nowhere near that,” he points out. “Marginal cost is about US$30 when it’s only just about worth keeping your platforms running, but not worth exploiting a new one. With a new offshore field development you would have to think that when it comes onstream in four or five years’ time the price will be back to about US$90. We’re looking for other markets.”

Nuclear? John has some background in atomic energy. Sponsored by the Atomic Energy Authority (AEE), he studied engineering for three years at Cambridge University, then worked for a year at the AEE research station in Harwell, Oxfordshire. He left in 1984 and joined his father in building SMD.

Now the group’s Responsive Engineering has been bidding for work at Sellafield in Cumbria.

“That’s very close so we are hopeful we’ll get work. We’re looking at nuclear, aerospace, and military opportunities. But so is everybody else.”

One certainty is Reece Group’s determination to maintain the region’s engineering talent. It’s taking on apprentices and has launched its first graduate programme. The Reece Foundation isn’t company owned but the company funds its encouragement of technical education, working with schools to encourage knowledge and interest in engineering.

In Newcastle alone the foundation, which John’s sister Anne Reece runs, and of which he’s a trustee, helped Dame Allan’s Schools to build a science block, and has funded a science building for St Cuthbert’s High School. It has paid for teaching initiatives and sponsors events such as Maker Faire at the International Centre for Life.

Now - that Alpine climb… “I’ve had three significant operations in the last two and a half years, two to my ankle, one on my neck. But I aim to get properly fit.” And off he goes to the gym…

Bonbar

Bonbar, Newcastle

The Assembly Rooms has received the Duke of Wellington and one of the Strausses in the past, and its spacious Bonbar restaurant is welcoming now. Georgian aspects there are genuine, and the shimmering island bar feature blends beautifully with history.

A reasonably priced menu offers 11 starters and 11 mains plus a choice of bites and sharing boards for up to nine. Booths give privacy and the background music that would have bemused Strauss will prevent eavesdropping on business talk. Service is attentive and unobtrusive. Vegetable and cream soup of the day can be recommended, so too green vegetable linguine with mint pesto and crumbled feta, and the garlic prawns on toasted focaccia and garlic and parsley butter. There’s a wide choice of wines and cocktails. John’s verdict: “Very nice - never thought to lunch here. Very convenient for a meeting.”