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The seeds of succession


After the promotion of John Patterson to JCB managing director, rumours are rife, despite denials from the company, that after taking over from his father 29 years ago Sir Anthony Bamford is going to hand over the reins.But will control stay in the family? Andrew Gaved reports

STATISTICIANS say the chances of a family business passing successfully to the second generation are only 30 per cent, while for the third generation the chances drop to just 10 per cent.

At Staffordshire plant giant JCB, the passing of the baton from founder Joe Bamford to his son Anthony back in 1975 has been successful by most business yardsticks.

In his 29 years as chairman and managing director, the company has grown from a turnover of £44 million to close to £1 billion and from one factory in Rocester to 13 around the globe. So it is only natural that as Sir Anthony approaches his sixtieth birthday, industry-watchers have started asking, what happens next?

Last week's announcement that Sir Anthony was stepping back from his current managing director's position - he will stay on as chairman - has been interpreted by many as the initial step in a long-term succession management plan.

Although played down by the company, the promotion of current chief executive John Patterson to the managing director's spot is being seen as a key development, in as much that the operational reins of the company are being passed to a non-family member for the first time since its foundation in 1945.

The manufacturer has stressed that the move comes out of recognition for Mr Patterson's abilities and not as part of any succession process and that there are no plans for Sir Anthony either to retire or sell up.As chairman, Sir Anthony will still have an active role, it is promised, and will still be leading JCB's recently formed Group Executive.

There is no doubt that Mr Patterson has been judged to have the mettle to preside over the global growth of the business at a critical time for the company.

One industry watcher said: 'The company has done a lot of growing in recent years and the next phase would be either to grow by acquisition, which they don't really look like doing, or to keep things progressing organically.

'But JCB's development of its own engine range is quite a risky undertaking - it has not yet gone into full production and it could yet all go wrong.

But, if it works, it will control a fair slice of its own products - from engines to transmissions - and for a manufacturer that is a very strong position.'

Still, Mr Patterson's appointment means that someone from outside the Bamford family has real significance strategically.

The source added: 'John Patterson is the ideal candidate for presiding over this phase, because at this time JCB needs to keep the business in the hands of a trusted deputy, rather than an unknown quantity. But they also have to give time for Sir Anthony's successor to prove himself, whether it be his son Joe, or someone else.'

Naturally all eyes are beginning to fall on 26-year-old Joe Bamford, the eldest son and the only one of the three Bamford children currently working in the business.

And there is no question that he is being given a full grounding in the ways of the JCB empire.He spent last year at the manufacturer's US operations and was recently spotted in Russia with the firm. But observers believe any appointment is still some way off, if at all.

For a start, although some pundits have seized on the fact that Joe has been made a director within JCB's world-wide brands division, it has been made clear by the company that it is only at one of the smaller subsidiary companies, JCB Groundcare, and that this is not a senior management appointment.

There is also the little matter that Joe has something of a reputation to shake off.A teenage hell-raiser in his time, many say he will have to knuckle down for quite a while to prove his mettle and to ensure the past is firmly buried.

One noted: 'It is not so much how he will be viewed by the industry - there are plenty of successful businessmen with colourful pasts - but more the fact that the tabloid press will have no trouble raking up the past if he makes a slip.'

Sir Anthony, it should be said, would be keen to keep the business in the family, provided they prove themselves first. He told Construction News last year: 'I would love to see the business passed down but I don't want them to be involved if they don't want to be, or aren't capable.'Which is why John Patterson is a key appointment.

One source said: 'It could be a 10-year plan.John Patterson himself is in his 50s so he is looking at five to 10 years, which will give time for a potential successor to prove themselves capable, or not.And if the prime candidate doesn't cut the mustard it will allow another candidate to be identified.'

Others contend that Joe is not in line to be the immediate successor to Mr Patterson, but is instead being groomed to take the reins further down the line.

They believe that other high-flyers within the global company have already been identified for the fast-track, ready to take over the running of the business as soon as they are deemed capable.

And the focus on Joe should not be at the expense of other potential candidates within the family.

Some say his 28-year-old sister Alice could be in the frame, currently not enamoured with heavy equipment but proving that entrepreneurship runs in the genes by running a burgeoning R&B record label.

But the loosening of the operational reins by Sir Anthony - albeit in its very early days - has raised another tantalising possibility for the rumourmongers. Could the Bamford family business be put up for sale?

Without doubt, there would be no shortage of suitors.This is a company that is written into the fabric of British industry after all, one of the last of the country's heavy industry firms and its brand is becoming ubiquitous, thanks to its presence on everything from bikes to lawnmowers.

But Sir Anthony has historically given the subject little truck. Indeed he has said that US super-investor Warren Buffet advised him to hold onto the business, since he couldn't match the average 30 per cent return on investment anywhere else. But, observers believe that were a member of the next Bamford generation not to prove willing or able, the impetus to cut the ties is bound to grow.

One said: 'Since the company is so identified with the family name, and the last quarter century's growth largely written in Sir Anthony's image, it would be hard to imagine him taking the risk of letting someone else screw it up while he was still the owner.'

And, as if this wasn't enough, hanging over the whole business is the matter of Joe Bamford senior's will, which is currently being contested in the Swiss courts, because it left half the income from shares in JCB in the hands of Joe's girlfriend, Jayne Ellis.

Although the nature of the contract means that, when Ms Ellis dies, the shares revert to the Bamford family, it has created a good deal of intrigue, not least the fact that, aged 57, she could draw income for a number of years yet.

One industry analyst said: 'What happens if Jayne Ellis keeps going for another 30 years? Even if the will allows Sir Anthony to sell the company, will he want her to benefit from the estate? It is a pretty good reason for keeping it in the family.'