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11 April 2004
Sunday Herald
Feng Shui: the energy behind global moves at Clyde Blowers

Chi devotee Jim McColl has turned an ailing firm into a £500m dynamo and can make cement machinery sound like a DNA breakthrough. But, asks Valerie Darroch, what’s his next step?

In the sedate, wood-panelled boardroom of Clyde Blowers’s headquarters in East Kilbride, a solitary blue chair stands out around a polished table with neatly arranged rows of brown chairs. The blue one belongs to Jim McColl, chairman and chief executive of the company, who embraces the principles of Feng Shui.
The colour of his chair was chosen on advice from a Feng Shui specialist who played a major part in kitting out the headquarters from the placing of the furniture down to choosing colours from which McColl can draw strength for the daily task of leading a portfolio of businesses with 1000 staff and operations in more than 30 countries.

“We Feng Shui’d the whole office. My colours from which I draw strength are blue and black,” McColl says.

To some the notion of having a Feng Shui consultant might sound indulgent or eccentric but McColl, a Carmunnock-born multi-millionaire who left school at 16, is a hard-headed businessman who has become one of Scotland’s wealthiest men through a blend of hard work and calculated risk-taking.

Feng Shui (which means wind and water) originated some 4000 years ago in China when palaces were designed to blend with earth energies known as chi. For centuries Feng Shui devotees have sought to harness positive energies to bring harmony, health, wealth and wisdom, partly through the strategic placing of objects in the home and office. McColl’s love of Feng Shui gives a glimpse of the more contemplative side of his nature which keeps him focused on growing Clyde Blowers years after he could have retired to his luxury pad in Monaco.

McColl possesses a considerable life force of his own, as his leadership has transformed Clyde Blowers from a stock market laggard with a market value of just £10 million some five years ago to a privately-owned business which he estimates is now worth £500m.

His links with China have deepened in the eight years since he first established a base there. From a small start working with the coal-fired power industry, China is poised to become the biggest single revenue-earner for the group as it moves into sectors such as steel-making, the cement and minerals industries and non-ferrous metals.

Since McColl led the £24.5m deal to take Clyde Blowers private in 1999, he has completed two more significant deals. In 2001 he part-sold the core power-related activities under the name Clyde Bergemann in a £75m deal backed by his own investment vehicle Redwood Capital and US private equity partners Saw Mill Capital and in 2002 he sold CleanCut Technologies, an offshore waste-disposal specialist to M-I-Swaco for £250m.

Now he is grooming other parts of the group for high growth in global markets and says one in particular, inBulk Technologies, could be a bigger success than CleanCut.

Pointing to a hexagonal diagram which illustrates the shape of Clyde Blowers in future, it is clear that McColl’s ambition is undimmed. The main section of the group remains part-owned Clyde Bergemann, the power-related activities. The other businesses are CleanCut (no longer owned by the group but it retains a mutually beneficial relationship with the new owner); Clyde Materials Handling, which has expertise in handling bulk materials; inBulk Technologies which is pioneering new ways of transporting bulk materials, such as cement and chemicals; and Redwood Capital, the private equity firm headed by McColl.

“The Clyde Blowers model is a portfolio of companies with centrally managed services and our strategy is to have four to five parts growing at one time,” McColl says. He plans to add two more ventures and is prepared to pay £100m per deal. “Money is not the constraint, it’s opportunity,” he says.

A team of R&D experts in Doncaster is working on technical solutions for a range of industries and sometimes the answers they come up with spawn a new spinout, such as CleanCut which started as a request from Shell to come up with an environmentally friendly way of dealing with offshore waste.

“We’re problem-solvers. The first reaction from our R&D people is always that it can’t be done. We say – “Ah, but if it could how would you do it,” McColl says.

The patented technology they developed under the CleanCut brand became so critical to the industry that McColl was pressed into a sale long before he planned, fetching a handsome price as a result.

He believes inBulk Technologies has the potential to be the ‘must-have’ solution for the global cement industry and possibly other industries too, such as bulk chemicals if trials with Exxon between Southampton and continental Europe prove successful.

In simple terms, the inBulk team have designed a container which allows cement and other bulk materials to be transported efficiently by road or rail with minimal waste and pollution. The containers are being trialled in the UK by cement giant Rugby, which wanted a new method of transporting cement for the construction of Terminal Five at Heathrow airport, and now Mexican firm Cemex is considering using it to transport cement to rebuild the World Trade Centre.

McColl says it is early days, but the success of the system is “going round the cement industry like wildfire.” The key appeal of the system is that it improves logistics and allows users to make more money. “I have high hopes for this business,” McColl says.

Meantime the Clyde Materials Handling unit, which has developed specialist equipment for the ferrous and non-ferrous metals industries, is in the process of expanding into India, South Africa and Australia. Its technology boosts production capacity in copper smelters and is also used internationally in the nickel, aluminium and steel industries.

“We did a job (in the United States) which involved granulated coal injection to the steel-making process and we generated an additional $64m for the steelmaker in one year,” McColl says.

The group is currently negotiating a deal to set up a joint venture between Clyde Materials Handling and a large engineering company in Australia, which would be its first base in the country. “The demand is such that we have to do it. We could possibly have another spinout from that,” he says.

McColl’s remark when he took Clyde Blowers private five years ago, that he would build a business worth £300m, met with scepticism in some quarters. But by sticking to its expertise in industry sectors with global markets and by careful stewardship of the subsidiaries by hand-picked CEOs, McColl has delivered on his promise, quietly building value away from the glare of public markets.

He runs the business like a small specialist private equity fund, consolidating accounts centrally and helping spot acquisitions. Asked to put a current figure on the group he replies: “A reasonable guess at the gross value of the whole portfolio would be around £500m … It depends what someone is prepared to pay for it.”

McColl and his team use their expertise in growing a global company to accelerate the growth of smaller parts of the business. “If we took on a company which is only focused on the UK we could very quickly integrate it into our global network. That’s the value we bring,” he says.

He identifies China as one of the group’s top growth prospects, although there is also another exciting opening on the horizon. “Russia is possibly the next big market breakthrough for us,” he says.

McColl does not disclose turnover details, but sales currently split into one-third from the US, one-third from China and the Far East, and the remaining third from Europe and the Middle East. He travels constantly and acknowledges that there is no strategic reason to maintain a global headquarters in East Kilbride. But he adds: “We have people sitting here because of my emotional attachment to this area.”

He has no desire to lead a listed company again, although he says some subsidiaries might float under their own CEOs’ leadership. “No question there will come a time when we need other outside cash in and I wouldn’t rule out going back to the market with one or two (businesses). We could even go back to the market with just the power group. It would be a very big company,” he says.

Having strong cashflow to invest in R&D has been critical to Clyde Blowers’s success in growing new revenue streams. “No-one would have backed CleanCut from an outside VC [venture capital firm]. But we believed in it and we backed it with our own money,” he says.

McColl is infectiously enthusiastic about his work and is probably the only man who can make cement transportation breakthroughs sound as thrilling as breaking the DNA code. As he strolls to his Ferrari (a blue one, naturally, to match his company colours), he seems a man in harmony with this place. He is minutes from his childhood home, yet leagues from where he started.

11 April 2004

 



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