John Neill, Unipart Chairman, on getting Britain working
PUBLISHED: 16:43 24 September 2012 | UPDATED: 21:55 20 February 2013
If something works - do more of it." sums up the business career of John Neill, CBE, Chairman and CEO of Unipart Group, the Cowley-based industrial company in Oxford
John Neill, Unipart Chairman, ongetting Britain working...and how the unions nearly lost this countrys manufacturing heritage
If something works do more of it. sums up the business career of John Neill, CBE, Chairman and CEO of Unipart Group, the Cowley-based industrial company in Oxford which has 10,000 employees globally, over 1,500 locally, and an annual turnover in excess of 1 billion.
It is now one of the largest, privately-owned companies in Britain and its operations include manufacturing, logistics and consulting.I bet you thought that Unipart made car parts? It does, but how it does works so well that it now helps other companies achieve greater efficiencies too. The company calls it The Unipart Way and many, such as ASOS, Sainsburys, a high street bank and even the National Health Service are taking advantage.
A quick history recap: Unipart was the parts division of British Leyland, formally Britains greatest car manufacturer of marques such as Triumph, Jaguar, Range Rover, Austin, Mini and Rover, latterly known for being a punch bag between Government and militant trade unions in the 1970s.
John Neill joined the business in 1974, leading a management buyout from British Leyland in 1987.Its successful diversification is down to John, born in South Africa educated in Scotland. Ambitious from the outset, John was lured from General Motors to Unipart by its then boss John Egan who went on to become chairman of Jaguar Cars. At General Motors, John was 16 levels of decision-making away from its president - the most senior non-American was eight levels away. With just 5% of their profits coming from outside North America, there was little chance of my becoming president of the company. I might not have been good enough but if I were it wasnt going to happen, he said.
John moved to Unipart in Oxford when the country was in the grip of militant unionism, and our conversation is peppered with references to the power of the unions, their stranglehold over British businesses and the devastation the situation made of the British economy.For Unipart at that time, things were a mess.
We had to figure out new ways of attracting customers and galvanising our supply chain to get out there and sell, says John. He persuaded his chief executive to increase the marketing budget from 200,000 to 1.2 million. Remember the Unipart advertisement: The answers yes now whats the question? That sentence cost 1 million, but according to John it was worth every penny.
We got a phenomenal return on our investment and sales went up Unipart was the first business to implement daily delivery. In 1986 businesses would get a monthly stock order, and it was considered almost revolutionary when weekly deliveries were introduced. We suggested daily deliveries order by 6pm for delivery next day. There was massive opposition, inside and outside the company. Its difficult to do, no one else is doing it, why do you want to be first, its going to cost a lot of money.We told everyone it cost a fortune because then they wouldnt copy us- and they didnt for ten years. Actually it cost less because if you put rhythm and predictability into the system then you can plan inventories and transportation better, trucks go at night, not during the day. Whether you send a full truck once a week or once a day - its still a full truck.
John remembers many milestones in the companys history that, if it hadnt made decisions which were at the time lonely and controversial, the business wouldnt be in the shape it is now.Such an approach allowed Unipart to diversify, and its logistics division is now a silent partner to a growing number of well-known brands, including ASOS, the worlds second biggest on-line fashion retailer.
We built a distribution centre for them in Barnsley, hired 1500 people in a matter of months, synchronized four distribution centres into one and now ship from there to anywhere in the world, free.Recently Unipart was measured against Amazon and came out above them. ASOS was delighted. In 2003, Johns success led him to be invited by Allan Leighton to join the Board of Royal Mail. I wrote down fifteen reasons why not not least because it was losing 1 million a day, but Alan phoned me at home one Sunday and persuaded me.
Royal Mails new Board, led by Allan, knew the business needed to participate in the future rather than defend the past. Over the first three years it turned Royal Mail around from losing to making money. The Board Allan put together was highly capable, everyone wanted to make it into a world class business, said John.It was certainly a good fit for Johns skills, with Royal Mails massive industrial relations and productivity problems, including 1600 restrictive practices. We had to take on the unions and sort them out, he said.
The Communications Union made it clear to the Board they would fight continuous improvement and team working because these were seen as capitalist constructs which had to be stopped at all costs.But it wasnt just the unions, the Government also made some bizarre decisions such as giving some of the Post Offices major revenue earning products to someone else, then realising it had to subsidise it some more. Economic illiteracy, said John.
They had every right to tell the Board to make the Post Office more efficient but not to take away the tools to make it so.When Royal Mail started to make money the Government decided to help, but that was the time to say either you run it or we will but we cant both. He stepped down from The Royal Mail after two terms, joining the board of Rolls Royce on which he continues to serve.When hes not running Unipart, John is an ambassador for Business in the Community. His extensive lean manufacturing knowledge led to his chairing a BITC committee to encourage partnership sourcing, now part of the DNA of British business, but which the Japanese understood years ago.
Find a supplier and work in partnership with them rather than doing everything on price. If we had stayed supply-only at Unipart wed be out of business. Because we worked with Honda they spent time teaching us and we were keen to learn. It is a vastly superior way of running a supply chain.John Neills biggest business beef is the pervading short-termist outlook of many looking for a quick profit. I want to grow a business that can provide wealth for our employees. Whats wrong with building and sustaining a world class business?
Hes been on this crusade for years. Its like the trade unions there were some absolutely dreadful people in them - but many more decent people trying to communicate on behalf of those who couldnt communicate for themselves. Good people who care, given a bad name by the militants.
Todays banks are the same, there are some deeply evil people in the banks and they should be spending time behind bars, but there are lots of very good, honourable, decent people there as well, all tarred with the same brush. People like Stephen Hester are doing a good job at RBS. Hes getting the backlash for things he wasnt part of. Hes doing his best. Such a culture takes time to change.Uniparts strongest legacy is its culture.
We have philosophies and training programmes to help us get where we want, but well never be happy and will always strive to be better.The key to Johns philosophy lies in how the company led its management buy out from British Leyland. He was determined that employees should have the opportunity to become shareholders in the business.
Our investment advisers told us we must do a prospectus but those who worked in our warehouses were never going to understand that (this was pre the Tell Sid Gas shares sell off), so I invited one of the best producers of business theatre to put the prospectus to music. He thought I was mad.We finally worked out a good business model. What do most people want out of their working life? To build enough working capital to give you control of your life along with health and a good education. So why dont we try and do these things for our employees?
The three and a half hour theatrical experience represented the risks and opportunities, and ran over five nights at Warwick University. My proudest moment was at the end when I said: Weve done the deal and its your choice whether you want to buy into it.There was 70% take up, 80% from one particularly militant distribution centre after John had visited them personally to invite them along. (He says this centre is now one of the most efficient distribution centres in the world and over the years theyve got 100 times their money back.)And John has 99% job satisfaction but hes still striving for an unreachable 100%.
John on the tragedy of lost manufacturing heritage and lessons for other areas of British life
The 1970s socialist Government destroyed huge swathes of British industry. The tragedy of British Leyland is that we could be making 12 million cars a year in this country. We had the heritage to be one of the worlds biggest manufacturers right here. British Leyland had Jaguar, Triumph, Range Rover, Mini all at the forefront of invention and innovation.
The products were great and the world wanted to buy them.The motor industry was used as a target for government policy. If you want to run a manufacturing plant you need stability and steady growth because thats how you build processes. We had amazing restrictive practices from the trade unions, but how can you give people the opportunity to practice and get good at what they do when youve got the unions fighting the class war and every process change on the factory floor? Some left wing shop stewards were saying we must destroy this and out of the ashes something good will come, we said describe it please but they couldnt.
Luckily the country has moved on a lot. Young people have forgotten about it and thats good. People are critical of Tony Blair but there are things he did brilliantly, such as getting rid of Clause 4. (The controversial commitment to nationalisation).Theres much we can draw from that story, indeed some parallels with our health service. We could do so much more with the NHS if it was organised properly and put into a depoliticized environment.
Look at what Circle is doing at Hinchingbrooke Hospital in Cambridge.(Hinchingbrookes accident and emergency department, previously ranked the worst in Cambridgeshire, is now top in health authority charts for the entire Midlands and East region. Cancer targets, unmet for nearly two years, have been achieved for five consecutive months, hospitals waiting lists have been cut, patient food satisfaction increased from 59 per cent to 94 per cent and car park fines scrapped.)
Unipart is also working with a number of NHS Trusts, including Sherwood Forest Hospitals Foundation Trust where it has helped the Trust achieve operational and cultural transformation at its Kings Mill and Newark hospitals.John approves of the original NHS ideals. The notion that regardless of who you are or where you come from you can, at times of need, get the best treatment available is worth fighting for. Thats about the state taxing the citizens to provide the funds for it. Then it became a state-run bureaucracy.
We need to separate free high quality health care for those who need it from actually running the system. I said to Tony Blair: You should put the health production system into the private sector, but Gordon Brown stopped it, with the left wing deliberately misinterpreted what we said. We can go into any hospital with the Unipart Way and transform levels of engagement. Employees love it; they contribute better and are more motivated.
On drawing best business practice from other cultures
When Toyota arrived in the UK, it was great for British industry as they have a very good management system and philosophy, but some were cynical about their work practices, not least their daily exercise routine in the factory.When we started working with Honda we asked them why they exercised and their answer was simple: Before working on equipment you need to stretch your muscles. If you dont, you can injure yourself.They also said Paint the floors green and clean the factory up, because its easier to find things in a clean environment. Distilled wisdom. I can remember endless discussions with business leaders, dismissing Japanese working practices and their long term philosophy, but its common sense.