Another struggle for ICI
In 1991, Margaret Thatcher鈥檚 favourite conglomerate, , bought a 2.8% stake in and hinted it might like to buy the whole thing.
The reaction of the media and fustier elements of the City was one of outrage. It was as though the Tower of London was about to be sacked and the crown jewels sold off to Ratners.
ICI was viewed as a national treasure, a nurturer of scientists, a school of management. The British establishment viewed it as little short of scandalous that a bunch of takeover artists at Hanson 鈥 whose primary concern was the Hanson share price 鈥 should suggest that ICI could put a bit more emphasis on rewarding its shareholders.
In some ways it was the totemic struggle of age. ICI fought vigorously to undermine Hanson鈥檚 reputation and credibility.
But although it saw off that particular aggressor, it lost the battle 鈥 because ICI鈥檚 executives were forced to recognise, in a way that they never really had before, that their primary responsibility was to the company鈥檚 owners, the shareholders.
In other words, ICI became just another British company. And it became the amazing shrinking business, because that鈥檚 what it thought shareholders wanted.
It de-merged its pharmaceuticals side, Zeneca, and pulled out of commodity chemicals. New owners became wealthy from the bits of ICI it didn鈥檛 want.
What鈥檚 left at ICI is a business that sells far more in Asia and the US than in the UK, that employs 26,000 people 鈥 fewer than when it was created by a four-way merger in 1926 鈥 and that still has a great name.
But such is the spirit of the times, today the British establishment will not get out of bed to preserve ICI鈥檚 independence.
This morning ICI that it had received an 鈥渋ndicative鈥 takeover offer of 600p a share from its Dutch rival, 鈥 which it rejected on the grounds that its board believes the business is worth a great deal more.
However, to use that ghastly City expression, ICI is now 鈥渋n play鈥. It is now prey, or quarry, a tempting asset for Akzo, or another chemicals giant, or private equity, or even a Middle Eastern plutocrat.
Barring a stock market meltdown, ICI will be swallowed whole and soon.
Does that matter? A bit. Over time, the consequence will probably be a reduction in the number of jobs available in the UK for chemists and technologists and ambitious managers.
So if your child is studying chemistry at school or university, he or she may well be forced to join the great march of British scientists into investment banks, hedge funds and private equity.
I'm 
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Must Britain, country which started the industrial revolution sell off its national pride and symbol in the name of globalisation? Jaguar,Austin, Rover, London Stock Exchange etc. I grew up with almost every household item stamped with or bearing the ICI logo; even the yellow malaria tablet they gave us at elementary school,if my memory is still correct,was ICI. Is there nothing like national pride left so that the UK economy keeps at bay all these mergers and acquisitions? These raiders who, in a blink of the eye, empty into the drains century-old establishments. Can the French let go their national symbol like the company SUEZ? If AKZO merges or buys ICI, where is the competitivity? And how many Brits would loose their livelihood??
I share Robert's eulogy on ICI as a National Treasure. To several generations of industrial chemists it was the employer of first choice. But I'm not sure that 'new owners were made wealthy from bits of the business that ICI didn't want'.
From the outside, it looked more as if today's ICI remained after other bits found suitable partners, including Astra Zeneca, that excellent Anglo-Swedish member of Big Pharma.
PS: There's another story about an employer that opened up prospects for technically trained graduates who had benefitted from a 'good Grammar School education'.
Why isn't ICI and other British conglomerates on the offensive and counter bidding and buying up Akzo and others? Britain will end up just a satellite country and it is our work force that will be disposed of when production is taken away. Short term gainism seems to rule in the UK now it is all very depressing.
Does it matter?
That Robert is such an utterly daft question that I'm surprised you had the temerity to ask it.
Of course it matters but then so did all the other sell offs of UK industry to overseas owners.
The question you should be asking is why this miserable Govt has essentially handed over economic and industrial policy decision making to the Square Mile.
Robert You say:
"Does that matter? A bit. Over time, the consequence will probably be a reduction in the number of jobs available in the UK for chemists and technologists and ambitious managers.
So if your child is studying chemistry at school or university, he or she may well be forced to join the great march of British scientists into investment banks, hedge funds and private equity."
What an insult this is to those foreign owned companies like Pfizer, GE, Merck, Monsanto, Sanofi, Bayer, BASF etc who employ vast numbers of scientists in the UK. Why should a takeover by a foreign owned company mean that British scientists have to move to financial services - the majority of which as you well know are also foreign owned?
Pathetic xenophobia masquerading as analysis.
Tomo
So, the big question of the day is about ICI?
Does it matter?
Well, frankly no.
What matters is why the board allowed themselves to be put in such a position. They have not really done much to boost the "brand", if anything, they have allowed the brand to become small enough (by selling off the best parts)to be swallowed whole.
Still, I bet they probaly earned their pay offs??
ps: Why don't the ICI board raise the money and buy AZKO NOBEL?
The Management of ICI post John Harvey-Jones has been appalling. They have destroyed a great company in pursuit of shareholder value, which they never achieved anyway.
As a former employee I saw it from the inside and one only needs to look at the success of the businesses they sold off, many for for peanuts, to understand the scale of the damage done.
We need a better system of corporate accountability in this country and what is left of ICI certainly needs to be run by a more competent board.
Perhaps Akzo will do it.
Seems to me that a large manufacturing conglomerate such as ICI acts as a wealth distributor. It employs individuals with a range of skills and talents each one bringing value to the company and wealth into the community - If the square mile has it's way ICI will be flogged off to the highest bidder and the wealth will be either exported or a few more supercars and megabonus parties in the heart of London - a tragedy and the making of a hollow economy driven by greed and a submissive withering acceptance that indigenous manufacturing is not for the UK any more.
I work in a traditional industry in Scotland - the feeling is almost one of despair as more and more cuts are required to keep our business afloat. Our trusted leaders must see that without the wealth distibuting manufacturing economy the UK is destined to become a manufacturing outppost for the majority of the population and a fantastically wealthy London based population of financiers - It doesn't look good.
How many large British companies have been taken over by foreign concerns over the last few years? BAA, Allied Domecq, Pilkington, P&O, Hanson, BOC, BPB is to name just a few. In the case of BAA, Allied Domecq, Pilkington and BOC their acquirers were actually smaller companies, but allowed to act more aggressively due to the short-term thinking of the City and the lack of political opposition that does exist in Spain, France, Japan and Germany. There are more to come as well - Cadbury Schweppes, Vodafone, Hammerson and many others are mentioned daily in the press as potential targets. The government stands idly by, ignoring as it usually does something potentially damaging to Britain. If we produced an Ebay or a Google every few years it might not be so bad, but that is not the case. Something should be done to make UK companies less an easy target, or at least to level the playing field (horrible cliche, sorry). Sign my petition -
I started work for ICI in 1968. The division I worked for was "sold" off for next to nothing in 2001. Like the proverbial dog with a bone looking at its reflection. The then chairman and directors decided that another bone looked far more attractive.
At the time I was very worried about what the future would hold. I now know that being taken over by someone else was the best thing that could ever have happened to myself and my co-workers. ICI has gone from being the "Bellwether" of the economy to a glue and paint maker. The thing that made the company previously so good was its workforce. As ICI got rid of the vast majority of them is it any wonder it has shrunk to its present small size. Bad decisions by poor managers, who bought dear and sold cheap, are allowing the door of opportunity to be knocked at. ICI will have to answer.
I would imagine the average Dutch punter feels equally upset about losing a large slice of their banking industry in the form of ABN Amro.
The fact of the matter is that ICI has been a spent force for years. Also unlike ABN a large proportion of its assets cannot be liquidated and sent to London, sans employees.
If 'British' investors want to sell shrinking, low RoE businesses for in excess of 27x forward earnings like ICI and reinvest into higher RoE business with better growth prospects (such as jamming Brazilians with credit cards), it is not only financially logical but also their business.
Who knows, perhaps those nasty evil people in the City own BOTH shares and think that a combined business with greater economies of scale makes sense: more money for R&D; better bargaining power with suppliers (often Brazilians needing higher prices for their labours so as to pay off their credit card bills), etc, etc.
Wow, this is getting complicated now and probably too much for a 主播大秀 Business site.
p.s. Mr Robinson, a course in elementary economics might be worthwhile before you next feel the urge to post. Alternatively, Eastern Europe is replete with old chemical firms full of underpaid industrial chemists 'creating value', I really have no idea with such propects why any of them would want to come here to work in coffee shops. Perhaps you should invest your pension there?
"So if your child is studying chemistry at school or university, he or she may well be forced to join the great march of British scientists into investment banks, hedge funds and private equity."
Perhaps if we'd deign to learn other languages we wouldn't be in this pickle. They can open up the European job market.
I studied chemistry many years ago but frankly there isn't and never has been much money in being a scientist, so I advise any learning a science to take advantage of the great analytical skills they will learn and use them in other fields. Banking is a great one.
So, does it matter? ICI who are they again?
The downfall (for it cannot possibly be called anything else) of ICI all stems back to the point at which the then chairman Ronnie ("Fancy a round at Augusta?") Hampel totally lost control of Charles Miller Smith who hadn't the first idea how to run a commodity chemical company and spent an absolute fortune buying Unilever's cast-offs that (co-incidentally) he used to run.
In order to pay for this massively over-priced jetsam, ICI had to sell off the cream of British manufacturing, cut all research and development to zero and make redundant all of the staff that might have worked the company out of this black hole of its own making.
Those people remaining in the company over the last decade or so have lived in constant fear of their jobs because of the huge cutbacks that this quite ridiculous debt has imposed upon them. There has been no room for internal growth, there has been no money for internal development and they have had to put up with the utterly misplaced arrogance of the newcomer companies like Quest and (especially) National Starch which has further eroded motivation.
The good old days of "The Pathfinders" and "Ideas in Action" have long since gone.
ICI dies years ago, and this entity has only its name. None of its ideals, none of its dynamism, and most certainly none of its confidence.
I know this for a fact. I have been on both sides of the coin, and very much know which I prefer. The death of this company will come as a welcome relief to many of us who still work within her.
I joined ICI as a scientist after completing my post-doc in 2000. I was told of the good old days when the business unit employed 80 PhD scientists (in the mid 80's). Unfortunately this had dropped to 1 by 2000 -- Me! Within 6 months I had been approached by a start up firm in Cambridge that offered more exciting opportunities. I accepted and haven't looked back since.
So, in response to Robert Preston's article, the sale of ICI does not represent doom and gloom for aspiring scientists. One has to look at the science parks around Cambridge to see where a lot of the scientific talent is headed.
ICI is a good company with good brands - but it is no longer the industrial destination of choice for PhD Chemists.
For those of us who worked for ICI, and loved it this is no surprise. I agree with a previous commenter that post Harvey-Jones we were continually let down by our directors and chairmen. I spent over 20 years (15 of which at a (formerly) large site near Blackpool) working for ICI. In those first 15 years I would have worked for less if it had done any good to remain part of the company. This was the kind of spirit working for a company like the 70s and 80s version of ICI embodied.
With the growth of world domination and the kind of elitism management that was fostered as a result we were shutdown, downsized and sold off eventually. Let this be a lesson to all those senior Managers who see decisions like those taken in the 90's as beneficial, for they werent and arent.
That this is happening to a British icon like ICI should be no surprise. As a nation we seem to be hell bent on running down anything British unless it's the English football team where mediocrity is perversely accepted as ongoing success.
Running a UK business is just not sexy, but selling it, rather like prostituting your own Granny, is somehow not only acceptable, but clearly what The City wants so they can claim even more fat bonuses for doing little more than a slight of hand on a balance sheet.
We only have to look at the fate of MG Rover to see what value we in the UK place on UK businesses. MG Rover couldn't borrow any money from any UK bank, and then later it's own suppliers repaid it for it's custom by demanding cash on delivery of parts. MG Rover's failure was then inevitable unless it could get foreign support, which sadly it did not.
The full name of Akzo, that Dutch giant is Akzo NOBEL. ICI was formed by the merger of four companies, NOBEL being one of those companies. The ICI roundel still today carries the wavy lines motif of the original NOBEL company. Looks to me like it will come full circle (or is that roundel !).
AKZO remember also bought Courtaulds
Hi! It is indeed sad to see the state of things, unfortunately or fortunately I am one of those who actually worked in this company and treat it with more respect than any alma mater. This is a place that bred innovation, invention, thought (much absent in today's corporate world) and ideas. It is the blue blood of scientific thinking and management. But alas, someone forgot to do business, someone forgot running shoes were meant to get dirty and to be run in, not kept shining. . . someone forgot the customer. Everybody forgot the present, dreamt about the past, and fantasised the future. What were all shareholders and well wishes doing when the management cannabilized the company, so painfully built and created? What were the shareholders doing when senior managers and directors walked away with fat salaries and perks and the business was floundering? What were everyone doing when "Other Income" was higher than "Operating Income". . .the issue is not about British Jobs and Birtish nationalism, it is about the loss of a jewel, irrespective of whether this is british or stolen from others or foreign, it is the loss that should be mourned and that is what I cry about. Is football more important or the fact that most english clubs have foreigners playing in them that needs lament. If the press is obsessed about Becks and Sven's affairs, what is the importance of football?
I was a kid of the 70's and saw felt and experienced ICI throughout my life;paints,petrol stations,plastics,chemicals and dozens and dozens and dozens of other innovative things(and those exciting Dulux TV ads featuring the hideous ICI Silthane/ICI Vinyl/ICI roundels rising out of the water etc!). It was a great brand capable of lots,BUT over the years it sold off and got rid of it's best assets,with nothing more than paints and least useful products left. ICI is basically dying on it's feet as far as the UK is concerned but has successes abroad. Is it World Class as it's 90's ads would say? Not really.
I know of several people that work at ICI in North America in the R&D department. These are the people that make it possible for there to even be a market in North America. These are the people that MAKE the products that get sold. Without R&D, there is no products, and no jobs for anyone in purchasing, marketing, supply chain, nothing. If you think UK has it bad, the N/A buisness for R&D doesn't compensate workers properly. I also heard that this year no one in that company got a raise. Even the employees that delivered in the millions got nothing. This was not the case in the UK. Over the last 3 years, the average worker at ICI has made less than a 4% total inrease in pay. Ontop of that, even workers that get promoted recieve 2%-3% raises, which is less than inflation. I heard that all the money goes into research at Asia and UK, and that all the inovation will be done there, so that N/A can be more of a cost savings type regional lab. If Azko buys ICI, hopefully they will put some money back into the R&D department....while they still have employees left. They have let 100 people go from the company to make it more attractive for Akzo to buy. I'm surprised anyone with a BS in chemistry still works there, when they can simply go to Sherwin Williams.
ICI a company of talented people infact the talent producer. A dream place to be worked in. Starting its life from 1926 and died out in 2007. But in bussiness there are no emotions no association its all that matter is profit/money in end. So It's a good deal for ICI share Holders by getting about 45% premium over their market share value. For Akzo it's economies of scale, reducing competition and offcourse cherry picking.
I worked for ICI for 13 years starting in the John Harvey Jones era and watched the company die piece by piece in the hands of faceless CEOs and associated cronies.
They destroyed businesses with world leading positions and wasted talented management all in the name of 'shareholder value'. Firstly by starving the businesses of investment at critical points then selling them off in a undignified car boot sale in the mid 90s.
It has been a painful and humilating death, not for those who destroyed it (who rode off into the sunset with knighthoods and huge pensions), but for the workforce who had invested so much in creating what it was in its heyday. ICI remains the 'bellweather'of British industry, insignificant, unloved and foreign owned.