QinetiQ CEO Loss Is Balfour Beatty’s Gain

Leo Quinn’s departure from the multinational defence technology and research company QinetiQ will be felt deeply by the Farnborough and London based company. It is undoubtedly a great coup for the much troubled civil engineering and infrastructure company Balfour Beatty which has been searching for a new CEO for a great many months. That the latter’s long search for a new CEO is now over requires that QinetiQ begin the process of searching for a new leader to further develop the strong company that Leo Quinn leaves behind. I wish them the best of luck because people with Quinn’s vision and capabilities are very hard to find. I may sincerely hope that whoever they do eventually find has innovation, research and technology development blood running through the veins, not to mention the ability to develop and run agreed strategy, please investors and motivate staff.

Balfour Beatty shareholders meanwhile can be very satisfied that in Leo Quinn they have acquired a CEO of very many qualities, who is as personable as he is charming and whose experience happens to also include turning struggling companies around.

I would have to admit that the announcement of Quinn’s departure from QinetiQ this morning did come as something of a surprise but having been there since 2009 and completed the job that he was brought in to do perhaps I should not have been so surprised by the decision to move on. Neither is the move a case of jumping out of the frying pan into the fire. Although Balfour Beatty has severe problems to resolve, not least of which is a black profit hole, it is a sound international business and one that is very well respected as being one of the worlds’ leading infrastructure companies.

Leo Quinn can hardly be accused of leaving QinetiQ, where he has been CEO for the past five years, in anything other than very good heart. To get to that position has been a long and sometimes difficult haul and one that did not always receive the full support of a skilled workforce that, in terms of cost burden, was rather too heavy for the company to carry. The decision to rid itself of the US acquisitions made by previous management over the past couple of years, that not only had little if any synergy with the rest of the group but arguably had forced QinetiQ into the trap of attempting to both develop and sell technologies that it has designed was a shrewd one. Quinn can rightly claim to have brought QinetiQ back to its innovation and partnering roots with governments, individual departments such as the UK MOD and commercial entities, but also to have made the company far more efficient and competitive at what it does. Clearly it did not take that long for Quinn to realise that in an organisation steeped in research and technology development, bright people such as engineers and academics should stick to what they know and do best rather than attempt to be all things to all men.

Having recently confirmed full year guidance on the back of anticipated strong performance across Europe, Middle East and Africa business areas, and that these should override the potential of more subdued future activity anticipated from the US; the immediate picture for QinetiQ looks sound enough. Bid rumours have often surrounded QinetiQ over the years and who knows, with the company having many attractions and now being lean and mean, one day there might well be some real bid activity.

Having joined the company as its CEO in November 2009 replacing Graham Love who had through some very difficult times and sometimes facing up to problems that were self-made, Leo Quinn has seen the company through the transition from being the state owned Defence Research Agency to that of QinetiQ and becoming a public company in the process. Quinn wasted no time in setting about the task of cutting operating costs by 10%.

Having never previously met Quinn before his very timely arrival at QinetiQ, I was fortunate enough to privately lunch with him during his very first week at the company. I recall quickly understanding why QinetiQ had pinched Quinn from De La Rue, where he had also been CEO for several years following a previous career at Honeywell, Invensys and Balfour Beatty; and was the right man for this particular job.

It is useful to remember that until the point of Quinn’s arrival, QinetiQ had endured a troubled past, which fortunately had little to do with operation or activities had impacted on investor confidence. Quinn was quick to effectively erase the past and to rebuild trust with the ‘city’ and investment community. He will, as far as QinetiQ is concerned, be a very hard act to follow and it will be interesting to see in which direction the new CEO, when he is chosen and finally arrives, chooses to drive the group further forward.

In terms of the history of defence product innovation, QinetiQ’s record is littered with success. The future may not be as easy as the past but by stretching the boundaries, as QinetiQ has clearly done over the years, it is equally possible that further big potential successes will be found and developed. A recent example of this is OptaSense, a cable that can detect trespassers or threats to critical assets around the world by sending data back to the customer in seconds.

Another great military based example and one that is hugely interesting in terms of growth is the Zephyr remotely piloted air system, a solar powered high altitude long endurance (HALE) unmanned system which can keep flying for weeks and months. Potential applications for Zephyr include persistent surveillance such as earth observation and communication relay in support of a range of defence, security and commercial requirements. Launched by hand the aircraft flies by day on solar power delivered by amorphous silicon solar arrays no thicker than the sheets of paper that cover the aircraft’s wings. These are then used to recharge the lithium-sulphur batteries which power the system during the night. Now part of the Airbus High Altitude Pseudo-Satellite (HAPS) programme named Airbus Zephyr, this amazing flight vehicle achieved the record for the longest endurance flight for an unmanned aircraft of 336 hours, 22 minutes and 8 seconds. Zephyr also holds the record of the highest remotely powered unmanned aircraft altitude of 61,696 ft. (18,805 metres).

I wish Leo Quinn well and will watch his progress in Balfour Beatty, a company which a generation ago was named BICC and one that I then knew well, with great interest. While the UK defence industry has lost a very skilled friend and one who, as I wrote a few weeks ago, has stood firm in his belief in the need to build on our skills and ensure that all engineering and manufacturing companies play their respective part in developing and expanding apprentice schemes. Balfour Beatty is about to receive someone well able to rebuild the stability with the investor community that it needs to very quickly achieve.

CHW (London 15th October 2014)

Howard Wheeldon FRAeS

hwheeldon@wheeldonstrategic.com

Tel: 07710 779785

Comments are closed.