Forging a better business future for Scotland

Forging a better business future for Scotland

Bothwell-born Les Hutchison is a veteran business figure who reached the top in a global engineering company. Now he wants to give something back to Scotland’s emerging leaders. He talks to BQ Editor Kenny Kemp

Our GlobalScots – that eclectic group of kinsmen and women who lead international business lives – have a unique ability to reflect back to those of us in the homeland.

Les Hutchison is an international business figure, based in Barbados, who is able to offer his considered ‘Home Thoughts From Abroad’ to help Scotland’s future leaders. Les trained as an electrical engineer in Scotland’s steel industry: a technical apprentice who immersed himself in learning. It held him in great stead as he went on to run significant international businesses.

After an early career shaping several Scottish engineering companies, Les joined ShawCor, one of Canada’s most successful global businesses. He rose to become general manager and vice president of the Shaw Pipeline Services Division, the Omsco drill pipe manufacturing division and senior vice president of Bredero Shaw, before becoming a ShawCor board director and vice chairman from 2008 until his retirement in May 2013.

Today he is Patron of the Saltire Foundation, dedicating his own involvement to a well-kent and admired entrepreneur. “For me, some things have come full circle. It was Donald Storrie who encouraged and inspired me. I benefited from people such as Donald taking the time to show me how to give back. Then I had the pleasure and opportunity to become a GlobalScot and give something back. What I’ve seen is that a successful business life is about strong leadership, application and hard work to develop skills. Perhaps I’m in a place to pass some of this to the emerging generation of Scots. That’s why I’m delighted to help the Saltire Foundation,” he says, sitting in his holiday country house in Perthshire.

Born in Bothwell, Lanarkshire, in 1954, his tenement home was surrounded by dairy farms, with woods and fields where an adventurous boy could explore. Les’s father drove the machine which ultrasonically checked the British Rail track, while his mother worked in the House of Johnston furniture shop in Hamilton. He has an older sister, Myra, while his brother Jim, five years older, was killed in a road accident when Les was 23.

At 10, Les was given a BSA Bantam motorbike and learned to ride off-road on the disused railway yards around his home. He enjoyed ‘tinkering’, stripping down the bike and fathoming how it worked, becoming adept with handling tools. He attended Uddingston Grammar where he was encouraged by inspirational Scottish teachers. “When I went to high school, I enjoyed maths and physics. Many of the teachers, such as Mr Wallace and Mr Prentice, were very encouraging. I was lucky that they instilled that passion. Also in physics, Mr Urquhart, was a great teacher who also coached the football team.”

Relaxing in the expansive drawing room, he can savour the many comforts his life has given him, but he was a typical working-class lad keen on football and golf. At 10, he joined Bothwell Castle Golf Club as a junior, remaining a life-long member and its first patron. On the football park, he played in the Under 18 Scottish Youth Tournament and, at 19, joined Larkhall Thistle as a junior professional, before signing for Albion Rovers, where he played in goal. Les recalls: “You learn a lot being a goalkeeper. It’s a lonely position. It comes in fits and starts. You have to learn to focus for the whole game and have some tremendous self-confidence. Seventy per cent of what you do is prevention. You have to control your defence – and be a good communicator.”

He left school at 16, and went on a British Steel technical apprenticeship at Bell College in Hamilton, now a part of the University of West of Scotland. [“This was a technical apprenticeship, which was academic with a fair bit of practical work. It was fantastic grounding.”] Les has established the annual Hutchison Prize for Engineering at the university.

In 1970, the British Steel Corporation was a major employer in Central Scotland, a remnant of our mighty heavy industrial past, but changes were afoot. As a qualified electrical engineer, Les covered four of the BSC’s steel-pipe plants in central Scotland, formerly known as Stewarts & Lloyds. A number of years later, ShawCor purchased a steel-pipe coating division taking Les back to his roots.

The sites were the Clydesdale Works in Mossend, where Les was based with its steel works, pipe manufacturing and quench-and-temper facility [a series of furnaces where metal is heated to a specific temperature depending on the quality of steel required] which he helped to install. The others were the Calder Works and the British Clyde Works, both in Coatbridge and the Imperial Tube Works, in Airdrie. It was a highly skilled division within the wider nationalised BSC.

In the quench-and-temper process, metal is reheated to get the correct metallurgical qualities, before a series of ultrasonic and electro-magnetic inspections ensure there are no flaws. Then it is tested under high-pressure water using the Bronx Hydrostatic Tester, which Les, an electrical design engineer, commissioned during his time at British Steel in 1974 and is still in use today.

“I was fortunate to go through the period of transition from the open-hearth to electric arc to concast [continuous casting]. I was an electrical engineer and I designed some of the high-voltage control and distribution systems. I was responsible for a large part of the Imperial Works, where we did a lot of pipe threading and the manufacture of large couplings. It was really very interesting.”

Scotland has the capacity and know-how to make steel of high quality and precision. So what does Les think happened? “When I talk about business today I say every big business begins and ends with the market. The burgeoning North Sea oil industry was the market in Scotland at the time. We had to work out whether we were the low-cost producer for that market. We clearly were not – and the foreign competitors became much more efficient and able to understand and replicate a lot of the technologies we were developing. The market changed with the supply chain undergoing a lot of mergers, rationalisation and the North Sea market declined.”

Japanese mills, making excellent pipes, closed in on European markets, while the Americans, the Argentinians and the Chinese all began producing at much lower costs.
“Most things from Asia improved through time. When I go back to my early motor cycles
I was a British bike guy with Triumphs, BSAs and Nortons, and I remember seeing the first C90 Honda, which sounded like a sewing machine. We thought it would never take off. But they managed to perfect their bikes and introduce volume production and get the cost down. And they didn’t leak oil. They put British manufacturers out of business. It was the same with pipe-making – their quality improved and the price was much less than we could produce.”

A younger Les was always on the go with a remarkable amount of youthful energy. “From the age of 19, I had three jobs on the go. I had a disco business, getting in at 4am and having to get up at 7am for my engineering job, I was at football training two nights a week and playing on a Saturday. Fortunately, I was really very fit at that point. It was what we all did to make ends meet. I’ve never found a substitution for hard work. I’ve never met anyone who has achieved anything without a lot of hard work.”

A serious motor cycle injury put paid to his fledgling professional football. Meanwhile he showed his entrepreneurial streak growing the mobile disco business, with former
school-mate Ron McCulloch, who went on to become a leading Glasgow nightclub owner, creator of the Rock Garden and Big Beat, then Les set up G&L Electrical, an electrical contracting business with colleague George Robertson.

“We did this for three years and I learned about profit, loss and cash flow and that it is often difficult to get paid. I learned about contract management and making sure you get staged payments, so you are always covering your materials and labour. The only thing you are risking is your profit. It is important to have some leverage on the customer to ensure payment”. Something which was very useful many years later when undertaking work in Nigeria.

Les could see the writing on the wall as new installation work dried up and he moved to Lambertons in Coatbridge as a control system engineer for material handling systems. He stayed a year before switching to Motherwell Bridge, where he became an electrical project manager. Here he broadened his skills with pricing, negotiating, designing and managing installations around the world. [“The whole gambit from beginning to end. It stood me
in good stead later in life.”]

He began totting up the miles, worked on the electrical instrumentation on installations on Das Island in the Persian Gulf, part of the Emirate of Abu Dhabi, then in London and Avonmoth in Bristol, and on a flare stack at Grangemouth, earning enough for a deposit on his first house in Motherwell.

Increasingly, Scotland was a dot on the globe, as Les’s career horizon opened up. “What was interesting was that you could see the demise of Scotland’s large industries, the mining, the shipbuilding and steel production. On the global scale, unless you had a unique technical advantage, there wasn’t a way that we could compete when you are making pipes or strips of steel.”

The trade unions were dominant in the lives of many working Scots and they did little to encourage anything more than was required. “I never asked for a promotion in my life when I was working for someone else. If you want to do something: do it. Unfortunately, a lot of people would say: ‘I don’t get paid for that, so I’m not doing that’. The can-do attitude has to be about doing a bit extra and learning a bit more about what you’re doing at work, and seeing whether you can do something or not,” he says.

He joined Anderson Strathclyde, a Motherwell-based company that crystallised Les’s thinking. “The company was making a material change. It was a business that designed and built Anderson Mavor, world-class long-wall mining equipment. There was a fantastic group of Scottish engineers, really good people, making brilliant products. But they knew they had to make the change from mechanical-driven equipment to electrically-driven machinery.”

He was brought in as assistant works manager to help with the changes to introduce new electrical control systems for the longwall cutters. “I started to build up a large team of electrical engineers and fitters building electrical control and monitoring systems for the mining equipment. For its time, it was clever-clever stuff.”

The Motherwell company was making 70% of its products for National Coal Board in the UK, but the world was changing here too. China was set to become a major coal producer. In 1985, a Chinese contract required Les to go to Fushun in North-east China as part of a  technology-transfer agreement where he was training engineers to manufacture engineering equipment.

“It was my first trip to China and it was fascinating. It was fundamentally different in so many ways. They sent engineers back to Scotland and they wrote up technical books and made hundreds of sketches of all of our equipment. It was question after question. They were all extremely competent, enthusiastic and they were acting as one.”

He learned basic Mandarin and worked alongside other engineers, where 20 Chinese would attend every meeting devouring every aspect of Anderson Strathclyde’s machines. He was astonished by the Chinese capacity to copy, design and build after their trips to Scotland – this was ‘hyper-technology transfer’.

In 1987, Les was sent to a world manufacturing conference on lean manufacturing at Gleneagles. By now, and deeply influenced by a book called The Goal, a piece of fiction by Eliyahu Goldratt and Jeff Cox, he was developing his own practices on quality control and manufacturing techniques in engineering processes. He was production manager with 1,000 people making domestic and export equipment for Australia, and South Africa. He penned a memo on optimal manufacturing strategy, which looked at how to reduce costs and lead-time to help repel the increasing competition from abroad.

“I was asked by managing director, Jim Mowat, to lead a team of managers and external engineering consultants from Rossmore Warwick to do a fundamental review of the company in the UK. This intensive study gave me an intimate handle on the financial state of our business. It was a powerful lesson in finance and investment and proved to be the basis for my future success, he recalls.

But there was a growing sense of alarm at Anderson Strathclyde HQ in Glasgow as the bitter miners’ strike, provoked by Margaret Thatcher, slashed demand for mining equipment in the UK while the Scottish firm was battered in a global market by strong sterling against its US competitor. “We were pound for dollar when it came to selling. The phrase Clyde Built still meant something. We were using solid and sturdy metal plates while our competitors were making lighter and cheaper equipment,” he remembers.

Les Hutchison faced up to the terrible task of beginning the process of laying off 700 people but it ripped his own heart out as he admired the people in Anderson Strathclyde and he decided to try his hand as a business consultant. He moved into business development with Lanarkshire Development Agency, a new enterprise body spawned to help a community devastated by the mass closures of the heavy industry and hoped his newly acquired skills could help local businesses. During this time he struck a friendship with Donald Storrie, a well-known entrepreneur and the first chairman of the Entrepreneurial Exchange, and worked on new ventures.

While consultancy had its merits in allowing Les to make recommendations, he missed the urgency of line management decision-making and the power to implement change. “It proved to be very frustrating for me. I was headhunted to take on Scottish Stampings,
a division of British Steel Forgings, based in Ayr. The guys were really good and made forgings for the truck industry in Europe and North America. The business had once employed 1,800 and now had 260. It had gone through death by a thousand cuts.”

Here was a chance to turn things around if he could bring the unions on side. Within a year, British Steel put the firm up for sale and Les approached Donald Storrie to get involved in a management buy-out bid for the Scottish division. However, a rival £92m management buyout bid resulted in United Engineering Forgings taking over. “We missed out and instead I went to work with Donald. He put me in charge of all of his businesses to try and rationalise them and expand the manufacturing division. We looked at over 100 small companies to acquire. However, people were overpaying and it was difficult to get the value but it was great fun.”

In 1998, he received a call from Shaw Industries, then a $350m turnover business with operations in Scotland. The Shaw family, proud of their Scottish heritage, have been exceptionally entrepreneurial with cinemas, restaurants and a civil contracting business, that became a successful pipe coating company. One of the family members, JR Shaw, started Shaw Communications in Western Canada, the equivalent of Sky Television, and its spin-out, Corus media and entertainment in Toronto, which owns radio stations and produces programmes for TV.

“By 1998, Shaw Industries were not operating any coating facilities, but had a joint venture with Dresser Industries, a US multinational with bases in Leith and Ellon. In 1996, Shaw became non-operational shareholders of Bredero Price, the largest pipe-coating business in the world,” explains Les.

Shaw had diversified into heat shrink sleeving and also had a drill pipe-making facility in Cumbernauld for the North Sea and they asked Les to be managing director. He turned it down, explaining he wanted to concentrate on current deal-making with Storrie. He suggested they phone back in three months. Twelve weeks later he got the call – just as Scottish acquisitions were drying up – and so he flew to Canada to meet the Geoff Hyland, the chief executive officer, and Bill Buckley, the chief operating officer. He took the Shaw Industries job in August 1998, parting from his friend Donald Storrie.

“It was fundamentally different in its business culture. If I compare it with Lambertons and Andersons, the biggest step up was with British Steel Holdings who were much more analytical and measurement-oriented. That went up another notch when I worked for Shaw. They were metric-orientated, quarter by quarter, and listed on the Toronto stock market.”

He believes it is about extracting the right information from the business. If the people in charge don’t ask for the information, then they will never get it. It was a rocky start in Cumbernauld. The day he arrived the management announced a round of redundancies, and Les was identified as the catalyst for the cuts, although he knew nothing about this. “On my first day I was in a meeting with the employee representatives about a 30% reduction in staff. It was a baptism of fire! We then worked hard to keep it going,” he recalls.

He became involved with the restructuring in a separate division in Peterhead and acquisitions, such as the DSG Group in Germany. There was plenty to keep Les occupied and he gained a reputation as Shaw Industries’ turnaround expert, sensitive to the human story behind each employee.

“The oil and gas industry started to come out of recession. The guys at Shaw invited me to go to Texas and run the main plant for the pipes for the drilling industry along with the operation in Scotland. This seemed like a great opportunity.”

Life in the United States was rewarding, although the Texans took time to understand his Scottish accent and implement his requests. He quickly learned to speak more slowly and use Texas grammar. “It’s true that we are too great nations separated by a common language,” he laughs. “Also, if you are not clear about an instruction, you should not be scared to stop the boss, and ask again until you’re sure.”

The Houston plant designed and manufactured 30ft sections of pipes, from 2.78in to 6.58in in diameter, plus different kinds of drill-string components, threading and attachments, for the rental companies and drilling contractors who worked with the major oil giants. “What was surprising to me in Texas was they had not adopted the principles of lean manufacturing. You might think that America leads the way, but not at this time. People didn’t see the need to change and I had to demonstrate that need. We were not the biggest: the market leader was four times bigger than us, so we had to find a way to compete.”

Les identified improving lead time from order to pipe delivery as critical. This was a competitive advantage that ensured premium pricing – and increased market share. Innovation was also fundamental, developing a patented high-torque threading – called  TorqueMaster or TM4 – which could withstand much higher torque needed for new directional drilling techniques.

In 2001, the parent company became ShawCor and the following year it took over full control of the pipe-coating business from Dresser, now part of Halliburton, to create Bredero Shaw, a world leader. Overnight, pipe coating represented 70% of the group revenue, and this changed the dynamics of the group. ShawCor won contracts to build the world’s longest subsea pipeline and broke the $1bn revenue barrier in 2005.

“ShawCor was very conservative about doing deals. Mr Leslie Shaw, the chairman, had a famous phrase: Be conservative with the balance sheet, but aggressive with the business. This was his philosophy. We worked hard on ‘value’ selling rather than just a commodity – we were selling business improvements to other people. Value-selling was a big part of it for us. To do this, you have to understand the market, its technical requirement and to be at the centre of that market.”

He says Scottish businesses must learn more about ‘value’ selling, rather than competing on price. “If there is one thing we are not doing well here in Scotland. We have some very creative people in Scotland with some great ideas, but we have continually had difficult commercialising opportunities and how you make money out of it. People don’t understand the concept of lateral thinking and value selling. It’s about understanding the customers’ costs and the market they are operating in to be able to get the maximum price and best terms. We worked hard at this in all of our businesses.”

Les ended up running several divisions, which included knocking the coating business into better shape, and then, after selling the drilling business in 2005 to a French firm, was invited to join the board. His global trouble-shooting continued in Europe and Africa.

However, he managed to find time for friendship then romance and went on to marry Virginia Shaw, the daughter of chairman Leslie Shaw, who passed away in January 2007. Between them, they have two daughters, one is fashion designer, Tanya Taylor –  a favourite of Michelle Obama – and the other, Leanne, who has given Les three special grandsons. “It’s been an enthralling career that has taken me all over the world. Towards the end I became, sick so the travelling had to stop.”

While he was fit and still playing golf, he was shocked when a bad cough turned out to be non-Hodgkin’s lymphoma. While he lives in gentle Barbados, he was treated in New York Memorial Sloan Kettering Cancer Centre and began spending some recuperative time back in Scotland with the family and buying his holiday home near Pitlochry.

The Shaw family and his wife Virginia in particular, has been very philanthropic, supporting wounded soldiers, the Clinton Foundation and other charitable causes. Les and Virginia have been particularly active with disabled children programmes in Barbados.

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“Donald taught me a lot about giving back and philanthropy. He was an inspiration for me. He could have taken his well-earned millions and gone to the beach. He did that for a while but, after eight weeks, he and his wife May said: ‘Now what?’ They came back to Scotland and embarked on major projects, including the new Marie Curie Hospice at Stobhill Hospital where he helped raise over £10m." [“I was happy to help with fund raising. He did many, many great things that people did not know about,” says Les.]

So Les is dedicating his Saltire Foundation patronage to his late friend Donald Storrie. “What I’ve learned is the world is a very small place and, as Scots, we need to be looking outwardly. In Houston, we were active as GlobalScots and the contact with Scottish Enterprise, led to the embryonic idea of the Saltire Foundation. We needed to expand the potential for young people. This led to a trial programme of two young people at Shaw Pipeline Services which we improved and expanded and now have over 600 young people building and growing companies. I am particularly pleased with the amalgamation of the Foundation with the Entrepreneurial Exchange this year, which brings everything full circle from my early days with Donald Storrie.”

He wants more Scottish companies to compete in the global market as world-class companies. “As Scots, we don’t have a strong enough ethos of taking ownership of our own life, which is what I had to do from 19. There are still some who have a dependency culture – and I don’t mean people on benefits, because some people have to be on benefits, but a culture that the state – or somebody else – will look after you.”

Les’s wife, who is Canadian, put her finger on this by saying that the Scots are ‘addicted to government support’. That we expect the government to do everything for us.

“Through the Foundation, I’ve been trying to begin the process of getting people to take responsibility for their own life and own country. As a GlobalScot, we have been encouraged to help promote Scotland and its people. But Scots have to realise they have to continue to change and adapt to maximise the benefits of this global economy, which I am sure they will,” he concludes.