British Steel executive chairman's clear targets for 2017 and beyond

By Scunthorpe Telegraph | Posted: 21 Feb 2017

A PROFITABLE end to 2016 has been rapidly followed by the appointment of a new chief executive at British Steel, with Peter Bernscher to start in early May. It means Roland Junck, executive chairman, is making great strides towards two distinct goals. David Laister reports.

Just like that which he has contributed towards setting for British Steel itself, the executive chairman of British Steel has a clearly defined target. One is a £200 million swing in earnings, and having overseen the steer away from losses, and into positive territory where investment has been possible, he feels the course is being set, if the obstacles have yet to be cleared.

Personally, he is looking to take himself out of the equation, and this past week's appointment of chief executive Peter Bernscher is a substantial step.

"I look at it from an organisation point of view; and my target is to make myself redundant, but only when this organisation is strong enough and can fly on its own," he said. 

"The first seven months have helped understand, while this next coming year, while still stressed, there is confidence in the management of the organisation."

Just prior to the announcement about Mr Bernscher, pictured right, Paul Martin was appointed managing director, and no doubt he and Mr Junck will play a key role in a planned out handover through 2017.

"Paul has become managing director, he is now fully focused, someone who can pay attention daily and hourly. I still play my role, and we have done well in our search for a CEO, to allow me to concentrate on the part of chairman.

"All over the place we are trying to strengthen the organisation."

He has vowed to continue in the current role until the end of the year, after which he will take up the position of non-executive chairman.

"I'm delighted to welcome Peter to our team," he said. "We haven't rushed the process of securing a CEO because we wanted to ensure we got the right person for the role and Peter is that person.

"He's highly experienced, with a strong commercial background and will bring another important external viewpoint to the company as we continue our evolution into an outward looking business.

"Peter will join the team later in the spring and be fundamental in ensuring tactical growth of our business and our British Steel brand as we continue to strengthen our long-term capability and build a sustainable future as an industry leader serving our employees, our customers and our local communities."

As reported late last month, British Steel ended the third quarter of 2016 in profit following its first seven month of independence, with substantial investments made and more than 350 new employees on board.

Of the journey, he said: "We started some months ago, we did the update at 100 days (showing it was back in the black in September). We still have to run uphill, there is volatility in the market, and it has been so very volatile with raw materials. It is very difficult to forecast the financial destination, but we know where we are.

"Last year we reached the change from loss-making to a situation where we can afford investment. That's not value creation, we are not there yet, but we have created £39 million of investment, and that shows what we can commit to if we continue forward.

"We need to reach £100 million, we will not reach it this year, but we have a plan to get to that and we are acting on it.

"From a minus £80 million to a plus £120 million, that is a £200 million swing. We have done the turnaround, now we need more than the turnaround plan, which had been started by Tata Steel. We have taken it over, redefined it and implemented different subjects. We are filling up the pipeline of potential action.

"If we want to make a £200 million swing then we probably need to identify £250 million of options as they don't all come in time at the right moment. I am very pleased with the creativity and with the work to fill the pipeline up."

MORE: British Steel provides Metro rail for £350m North East revamp

There are in fact two key pipelines, one of orders, and another of new products, innovation, while a third has also been welcomed, the transparency Government has given to upcoming projects.

"We always blame the Government that they didn't tell us about procurement. They are still moving behind the curve, but before they didn't even know there was a curve. We have now seen the gap and are trying to close the gap. We have a positive attitude and try and make that happen."

HS2, Heathrow expansion, and Hinckley Point are all going through, with work already won on the latter. "All these events are great for the sector, and they are priorities for us. It is important to take the opportunities they present."

He sees benefit from the recent Industrial Strategy launch, too. "It has started with 10 pillars, and they line up well with what we have, our vision for what we do, and we will contribute to every one of those. They are aligned to what we do in our sectors, and we are in further discussions on how alignment could be better and what it would mean for strong government and industry," he said.

While only taking up his role in July last year, the former ArcelorMittal chief executive has had a lot to deal with. He inherited a plummeting pound, strong domestic market and rapidly rising gate prices.

"We have increased our prices, and I am proud about that, as overall the trend has been that the raw materials basket is getting more and more expensive in dollar terms, and in pound terms even more expensive.

"We had to be proactive and change our prices. It is very difficult when you compete with people who do the same product, in construction, but we have been able to do that. We have not been buying market share, we have been regaining market share, and it is a positive dynamic. It has been slightly easier with the change of organisation, the construction market is closer to the raw materials cost base, and we have worked hard to create that."

Part of the outward looking philosophy is ensuring products are better placed, too. "There is an important role in distribution, and we are expanding our presence again in the UK, as well as outside the UK, to be present everywhere, to have British Steel products there, which is something very positive," he said. A total of 20 jobs were created in a focus on service and last mile advantage, building on a similar number recruited before Christmas.

"We have had more than 3,400 people applying for roles, with 350 new people in the business," Mr Junck said. "This is brand power, before this we had zero people interested.

"In terms of the brand the perception of British Steel is something that has significantly improved with suppliers, customers and government. It makes life easier when we have a good perception and we are adding a lot of importance to that. We feel it in the town, in London, in the West Midlands.

"There are things we still have to improve. Health and safety performance is part of the brand, and environmental issues are a major concern, but we have data we can take it forward. This is all still new for us."

For observers on the outside, it seems like the pace of change is incredible, aided by a run of positive announcements, contract wins and expansions. But not so for Mr Junck.

"Overall, for me, we are not there fast enough. We should be better. For our shareholders we should be better and better.

"The direction is the right one, I think that is clear, and skills and knowledge in the company are improving significantly.

"It is the might of the people; the spirit, too. There is positive momentum, a spiral. It goes up, and it is very difficult to stop, but it can go down too. I am happy to see more innovation. We are now doing things today we didn't dare think about a year ago. It has become a real business, not purely a production hub for steel. We have to recognise a spirit of entrepreneurship, and look at things differently, and that is crucial for the future.

"We have to learn to make deals, that nothing is taken for granted. This organisation has to do that, to understand the client, to be quick and more flexible. In a fast-changing world. This cannot be a tanker that takes two months to change direction.

"At some time it will all come together; the profit is improving, there is still a way to go, but that's the challenge.

"I like steel, I have been in steel all my life, and I think like steel. That has to be challenged by the others. When we discuss it, we have different opinions, and it is good because we make sure we are making a stronger business. We ask the question is that good, or is there something better? We have to let people fail, but not too much!"

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