THESE are dark days for some of Britain’s flagship firms. Three of our corporate giants are floundering: British Petroleum, whose inability to stem the spill off the US coast is now in the realm of the preposterous; British Airways, which is being crippled by the actions of a minority of deluded and self-destructive strikers; and the Prudential, which is desperately trying to negotiate a cheaper price for AIA or face a humiliating rejection from its shareholders.
Barack Obama has been careful to spell out BP’s full name whenever criticising it, making sure that all Americans are well aware that they are dealing with a UK-based firm. This has hardly done the reputation of British business any good. It is also a PR disaster for the entire oil and gas industry, whose reputation has just been set back at least a decade. The fact that the spill has been going on unchecked for so long now, with BP powerlessly attempting to stem it using a series of bizarre, amateurish measures, will only confirm the worst prejudices of environmentalists, who wrongly believe that capitalism isn’t compatible with controlling pollution and that big firms couldn’t care less about accidents.
BP should be forced to fork out for the entire cost of the cleanup, even if this amounts to $3bn or more. It should be self-evident that all oil companies need to develop better ways of curtailing spills to avoid another catastrophe of this kind in the future. Shareholders need to make sure their management take real action.
The problem at BA is of a different nature. Its chief executive, Willie Walsh, is an eminently capable man who is doing all of the right things to save his airline at a time of drastically changing consumer tastes, ever-increasing competition and permanently higher fuel prices. Cost-cutting is vital: BA won’t be around in three years’ time if it doesn’t change drastically. Walsh deserves the City’s full support. As to the Pru, its problems are less endemic and its business sound; but the fact that such a high-profile, massive takeover remains on the brink is hardly good news for its management, which has massively misjudged the mood among institutional investors. Tidjane Thiam, its CEO, will soon be history unless he can slash the price at which AIG is willing to sell its Asian unit.
But while some of the UK’s old flagships are struggling, and we are suffering from more than our fair share of PR disasters at the moment, plenty of other FTSE 100 firms are powering ahead. At a time such as this, they deserve far more attention – one such success story is that of Compass, the catering giant. It has a market cap of £10bn, employs 386,000 people and has performed superbly under the tenure of Richard Cousins, an excellent operator. Reckitt Benckiser, now a £23.5bn market cap business led by chief executive Bart Becht and chief financial officer Colin Day, is another star. A smaller yet equally noteworthy value generator is Aggreko, the global leader in the rental of power generation and temperature control equipment, whose shares are worth £3.5bn. There are plenty of others.
So here is some goodish news on a Monday morning: Britain’s abysmal failure in the ever-dreadful Eurovision song contest does not mirror the performance of the whole of UK Plc. Beating ourselves up about our failings has long been a British pastime but we should also sing a little louder about our success stories.