Bilfinger CEO

The Man With a Plan

  • Why it matters

    Why it matters

    Tom Blades needs to convince investors he has the right strategy for Bilfinger in place after years of the one-time high-flying construction firm treading water.

  • Facts

    Facts

    • Tom Blades, a Hamburg-born British executive, took over Bilfinger in the middle of last year after a short-lived run by Norwegian CEO Per Utnegaard.
    • The company has been remaking itself from a construction firm into an industrial and energy services provider, shedding numerous businesses and cutting its revenues in half to €4 billion.
    • Mr. Blades plans to rearrange some 600 individual subsiaries into 160 by 2020, cutting about half of the 70,000-strong workforce in the process.
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    Audio

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Bilfinger
Will Tom Blades finally be the man to turn Bilfinger around? Source: Uwe Anspach/dpa

He may spend at least 12 hours a day dealing with the usual pressures of top level management, but Tom Blades looks the picture of calm. The Hamburg-born British chief executive of Bilfinger is on a mission to transform the fortunes of the ailing industrial company and clear up the mess left by his predecessors – summed up by six profit warnings in just two years before he took the helm in July 2016.

Setting out his strategy on Tuesday, Mr. Blades identified three key priorities: a sensible company structure, a solid business model and an operational plan to steer Bilfinger away from its well-publicized troubles. He calls it the 2-4-6 structure, in which 600 previous business units will be rearranged into 160 by 2020. The company’s employee base of 70,000 will be cut in half in the process.

“The new Bilfinger is an attractive prospect,” Mr. Blades said in an interview with the business weekly WirtschaftsWoche, a sister publication of Handelsblatt Global. “We’ll have two areas of business, four core regions and six industries. Combined with our engineering services, we’ll grow stronger than the markets. Both business areas will grow each other. It’s the logical approach.”

Strategies, though, can go as quickly as they come. Just ask Mr. Blades’ short-lived predecessor Per Utnegaard, whose own plans for Bilfinger went up in smoke when activist investor Cevian, a powerful 26-percent shareholder, pushed for the sale of the company’s lucrative real-estate operations last year.

“The board and Cevian’s representatives are with us for the journey. We’ve hired an engineer to improve Bilfinger’s operations at every step.”

Tom Blades, Bilfinger CEO

Once a leading light in the German construction industry, Bilfinger is now mainly geared towards providing services for the energy sector. Where it once set a target in 2013 of raising revenues to €11-12 billion by 2016, it managed about a third of that last year.

While Cevian has a reputation for encouraging divestments, Mr. Blades maintains he and his investors are on the same page. “We’ve been discussing this new strategy – which is due to run until 2021 – for the past half a year,” he said.

“The board and Cevian’s representatives are with us for the journey. We’ve hired an engineer to improve Bilfinger’s operations at every step. If it were different, they’d have hired an accountant.”

That is not to say other parts of the business won’t be sold if the right offer lands on the table. Mr. Blades pointed to the South African business as such a candidate.

North America, on the hand, is now back in focus after Bilfinger pulled back from operations there in 2015. “We obviously see good reasons why we should stay in this region,” the 60-year-old Blades said.

The new U.S. President Donald Trump, eschewing fears over global warming, has made clear his intentions to support domestic gas and oil production, which would help Bilfinger’s energy services operations. By contrast Mr. Trump’s protectionist stance won’t impact Bilfinger like it may other German companies, according to Mr. Blades, although the CEO says any future plans are “independent” of the election result.

“For us, North America is clearly a growth market,” he said. “I know it well. If President Trump wants to invest more in infrastructure, that can also be interesting for us. But we won’t be going after every single project there.”

Bilfinger has endured its problems in that part of the world, however. It remains under scrutiny from the U.S. Department of Justice after a series of corruption scandals over the past few years. The company agreed to a deferred prosecution deal in 2013, linked to bribery charges in Nigeria. That deal – extended to 2018 – mandates Bilfinger to implement worldwide compliance controls.

“We hadn’t made the desired progress quickly enough,” Mr. Blades said, explaining the extension. “We had far too many business units doing their own thing and there was no standardized corporate governance system. We’re putting one in place now. The progress is notable, we can see it clearly.”

Mr. Blades wants to look forward and not back, especially when it comes to the work of his predecessors. One can only wonder where the company might now be had he been in charge back in 2011.

“It would be presumptuous of me to talk about such things,” Mr. Blades said. “The circumstances were different back then.”

 

This article first appeared in the German business weekly WirtschaftsWoche, a sister publication of Handelsblatt Global. To contact the author: harald.schumacher@wiwo.de

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