Andy Palmer was a successful senior executive at one of the biggest car companies in the world. He had no financial worries and was surrounded by the love of his family.
Life was good; but it wasn’t enough.
That was two years ago. Palmer had just turned 50 and even though he was among the top three executives at Nissan, where he had enjoyed a 23-year career, doubts gnawed away at him.
Since the age of 20, the ambitious Brit had wanted to run a car company.
“I just thought, what happened to that 20-something-year-old upstart who told everyone, including Nissan, that he was going to be the boss of the company?” said Palmer, who took over as chief executive at Aston Martin in October.
“I realised I hadn’t done what I wanted to do, and then I realised that there aren’t that many car companies that you can run because they are either huge corporations or belong to a family.
“Also, there’s a pretty big talent pool competing for about 10 top jobs in the industry.”
Palmer’s bout of soul searching was brought to a juddering halt last year when Aston Martin came calling for him.
The Midlands-based sports carmaker was crying out for some stability. It is the only manufacturer of luxury sports cars that isn’t owned by one of the industry giants and was in dire financial straits.
Aston is loved and revered in Britain; it is James Bond’s carmaker of choice. And yet, that groundswell of affection has consistently failed to translate into financial success.
For much of its 101-year history, Aston has teetered on the brink. Successive owners and chief executives have been hammered by heavy losses – £25m in 2013 and £36m the year before.
Palmer now has six years in which to make Aston profitable and self-financing. He has a £500m warchest for new products and the company has just raised a further £200m by issuing preference shares to City investors.
“I want to balance the portfolio so we don’t go through this feast and famine,” he said. “We need to generate enough cashflow so I don’t have to go out with the begging bowl. The plan is to bring the company to profitability within six years. So that, for the next 100 years, [Aston] won’t go bankrupt.”
Palmer is clear that Aston Martin must remain firmly rooted in the luxury segment, but it must also spread its wings further than its core sports car market.
He is planning a raft of new product launches. One of the first new models to roll off the line at Aston’s headquarters in Gaydon, Warwickshire, is likely to be a sporty 4x4 – the DBX.
Having the support of a settled group of shareholders is key, Palmer acknowledges.
For years, Aston has been passed around like some prized trophy asset. In 1987, Ford bought a majority stake but sold it in 2007 to a consortium including Kuwaiti investors. Then, two years ago, Investindustrial – an Italian private equity firm that turned around Ducati before selling it to Audi – snapped up a 37.5% stake.
Daimler, the German giant that owns Mercedes, took a 5% stake last year in return for a deal to supply the Midlands producer with engines and electronic technology.
Palmer believes this deal could prove crucial in securing Aston’s survival, but denies it is a precursor to a full takeover by the Germans.
“It could happen,” he admits. “But if I’ve done my job properly, it’s going to be more expensive. Daimler should have bought it now because it’s cheap.”
He also notes that Dieter Zetsche, chairman of Daimler, has repeatedly stated that he doesn’t want to buy Aston outright. However, it does not want this jewel of British auto engineering falling into anyone else’s hands.
“My personal opinion is that the most credible way for one of our shareholders to exit is to IPO,” says Palmer.
The Aston boss is affable, engaging and chatty. It is easy to see why Aston’s investors plucked this ambitious, likeable executive from the summit of the Nissan empire.
He may be running James Bond’s carmaker of choice, but Daniel Craig needn’t worry about his 007 role just yet. Palmer looks more like Blofeld than Bond.
The endless stream of lunches and sedentary lifestyle of a top executive have taken their toll. Palmer runs his fingers through his rapidly receding hairline and leans back in the chair, which puts extra strain on one shirt button at the apex of his round stomach.
“It seems odd now, looking at me, but I used to be quite sporty when I was younger,” he says. “I was into tennis, badminton and fencing. I’ve also always had bikes and cars.”
The 52-year-old still rides a BMW K1600 motorbike at weekends, and races an Aston Martin Vantage GT4.
Moving back to Britain has been more of a wrench for Palmer than his Japanese wife, who he met at Nissan in Britain, and youngest daughter, who is eight, and was born in Japan. He has three other children from a previous marriage.
“If I could import sushi, I would be in a perfect world,” he says.
In many ways, Palmer has come home. He was born in nearby Stratford Upon Avon and did his apprenticeship down the road at a car parts firm in Leamington Spa 35 years ago.
He and his brother, who is five years younger, had a humble upbringing just a few miles from Gaydon. His father was an engineer, his mother a secretary.
“I didn’t much like school,” he recalls. He failed his 11-plus exam and instead focused on his dream of becoming a car engineer.
Despite his early antipathy to academia, Palmer has since completed a masters degree in product engineering and a doctorate in management from Cranfield University.
So why does Palmer think he can succeed at Aston when so many others have failed?
Sitting in his first-floor office at Aston’s white-walled and glass-panelled head office, he recounts the tale of Chesley Sullenberger.
Sullenberger was the US Airways pilot who landed his plane in the Hudson river off Manhattan in January 2009 after it hit a flock of Canada geese. The veteran pilot’s splashdown saved all 155 passengers and crew.
‘Captain Cool’ retired not long after but remarked, memorably for Palmer, that every day of his 42-year career had been training for that one moment.
After the apprenticeship at the car parts company, Palmer joined Austin Rover, where he first encountered the jaw-dropping attention to detail that Honda brought to a joint venture.
“From that moment, I was hooked,” Palmer says of his encounter with Japanese industrial practice.
So off he went to Nissan, where he spent 24 years, including a 13-year stint in Japan. In that time, he became one of Nissan chief executive Carlos Ghosn’s closest confidants.
When he quit, Palmer was chief planning officer of Nissan, and was responsible for directing strategy. He also launched cars such as the electric Leaf, and was chairman of the Infiniti luxury brand.
It was a big risk to take, leaving behind such a powerful group that produces more than 8m cars a year, to head a much-loved but niche sports carmaker that sells around 4,000 a year.
Palmer chuckles: “I thought you guys [the media] would say I’d gone mad – going from the number 3 in Nissan to running this cottage industry.”
It may have seemed crazy, but Ghosn must have been pleased for him?
For the first time, the garrulous Palmer pauses and appears tense. “He hasn’t spoken to me since. I suppose he was disappointed.”
Palmer is clearly hurt by the snub, but tries to shrug it off: “At the top end of this industry, it’s a pretty ruthless place. I take more solace from the friends I made and still have at Nissan. I also look at the success of the Qashqai and that makes me quite happy.
“In 50 years’ time, nobody is going to remember who the number 2 or 3 at Nissan was.”
The British car industry and foreign ownership
- Aston Martin is the last British carmaker not owned by one of the powerful global giants of the auto industry.
- Volkswagen snapped up Bentley in 1998, while Rolls-Royce Motor Cars and Mini are a part of BMW’s burgeoning stable.
- Jaguar Land Rover has enjoyed a stunning rags-to-riches ride since Tata Group, the Indian conglomerate, bought it in 2008.
- JLR fell on hard times not long after it was bought, but continued investment in new products by Tata and a push into lucrative overseas markets such as China have made it one of Britain’s most powerful industry players.
- Foreign owners have been keen to cash in on the cachet of these historic British marques, while other overseas players have been queuing up to take advantage of the flexible working conditions and business-friendly climate in Britain.
- Nissan, Ford, Toyota, General Motors and Honda all have large car and engine-making operations in Britain – providing thousands of well-paid jobs in employment black spots.
- British auto manufacturing hit its peak in 1972, when 1.92m cars rolled off production lines. That figure fell to about 1.6m in the years preceding the collapse of Rover, Britain’s last homegrown volume carmaker. Production fell below 1m during the financial crash of 2008/09 as the credit crunch sapped buyers’ confidence.
- Since then, production has rebounded; it has overtaken the 1.5m mark, and Britain is the third-largest car manufacturer in Europe after Germany and Spain.
- Britain’s car industry is booming again. According to the Society of Motor Manufacturers and Traders (SMMT), Britain’s car industry generates annual turnover of £64bn; it directly employs 160,000 people and supports a total of 770,000 across the wider sector.
- Manufacturers including Honda and JLR announced more than £1bn of investment in the UK in March after 2014 proved to be the sector’s best year since the financial crisis.
- This week, the SMMT said new car sales rose to a record first-half high as buyers took advantage of cheap finance deals and low interest rates to grab the latest models.
- The data also showed that first-half sales of British-built cars were the strongest for five years, with one in six buyers driving off in such vehicles. The Vauxhall Astra, Nissan Qashqai and Mini were among the top 10 sellers.
guardian.co.uk © Guardian News and Media Limited 2010