Last year, Brian Harris thought his 32-year career at ICI was about to end. He had done the rounds of process engineer and plant manager jobs, and climbed the management structure to run ICI operations in the UK, Canada and the US. He had acquired a reputation among his bosses as a troubleshooter. Among unions, he had once been known as ‘Slasher Harris’ for his record of downsizing and restructuring.
But by the beginning of 1997, as vice-president of ICI Explosives based in Canada, it seemed to Harris, then aged 53, that the disposal of this part of the ICI empire would mean a switch to a new employer.
He was wrong. Instead of being part of the wave of disposals, he was, in a sense, given a reprieve. His mission now is to fatten up ICI’s Eutech consultancy arm for a stock market float in two years.
‘The prospect of a float is fantastic,’ Harris says. ‘We are talking about this among the staff as a new kind of freedom. It is not an unhappy event, leaving the mother company. We can thrive on being ourselves.’
Eutech was formed five years ago. It started out as a kind of repository for engineers who would otherwise have been made redundant during ICI’s restructuring.
The idea was to set them up to sell engineering services to ICI, and, if possible, to other companies too.
‘It was essentially made up of surplus engineers,’ says Harris. ‘They saw themselves as lepers. Those who were selected for transfer to Eutech were seen as the least employed. There was a feeling of nobody wants us, nobody loves us. But the surprise was that, when your backs are to the wall, it creates an incredible fighting spirit.’
In the five years since, the company has thrived, growing to almost 1,000 staff, about half of whom are contract engineers. Some of the growth in staff was out of the hands of Eutech’s management, being driven by the firm’s majority shareholder, ICI.
This enforced increase of manpower was not always popular. ‘There have been some interesting discussions challenging and questioning that transfer of resources,’ Harris admits.
These days, recruits are hand-picked by Eutech. The lucrative consultancy part of the business is being developed, and will eventually overtake the old core business of ‘cut and carve’ project engineering services.
Eutech’s customers are also likely to change, with the profile shifting from its heavy domination by ICI business.
Harris is trying to change the attitude of engineers within Eutech to make the mental leap from in-house consultancy for ICI which he says is driven by a cost environment to selling consultancy on the open market, in which price, rather than cost, is the key.
The goal for Eutech will be to provide not only the kind of low-margin engineering services that could be supplied by any local contractor, but to supply project and asset management and functional expertise to improve business and processes too.
All this is aimed at maximising the value ICI will be able to realise when Eutech is divested. Analysts have valued the company at between £30m and £80m, though Harris believes it will realise at least £50m.
The run-up to flotation could take up to two years. During this time Eutech will have to prove that it can generate and retain new business away from its ICI parent, and raise its turnover and operating margins. ICI buys 70% of Eutech’s £50m turnover. That figure will quickly fall to 20% as former ICI businesses are sold. ‘We’ve no God-given right to hold that business. We have to pitch for it,’ says Harris.
Harris’s goal is to achieve 25% year-on-year growth. Some of this will have to come through acquisition, almost certainly funded by ICI itself, which could justify putting up the cash in view of the return it could generate when the company goes public.
The other priority for Harris is to move Eutech’s home from the ugly and run-down 1960s red brick offices in Northwich, Cheshire. This may not be achieved before the flotation, but the details must be clear by then, as Eutech will need to inform potential shareholders how much a relocation is going to cost. Again, ICI looks set to provide funding for this. ‘They may even gift it, and look at the value they could realise from it,’ says Harris.
The move will take place within the next three years. The aim is to occupy a purpose-designed new set of offices on a site nearby, to minimise disruption to the workforce.
‘This site has connotations with ICI,’ says Harris. ‘And we need to break away from that.’