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‘I’m not in this game to make waves...’

19 Mar 2019

‘I’m not in this game to make waves...’

Kevin Hobbs, CEO of CMAL, talks to Rob Beswick about leadership in the eye of a media storm, the importance of openness when running a team and how the IoD helps get him out of his bubble and expand his horizons

Any business leader who’s ever been caught up in a mediastorm will tell you it isn’t much fun, especially when controversy feels like it’s permanently circling your organisation.

It can be hard to focus on the day-today when decisions are publicly challenged by outsiders. And when the focus involves public cash, the intensity of the spotlight’s glare can be hard to take.

But that’s the environment Kevin Hobbs, CEO of Caledonian Maritime Assets Limited (CMAL), has been operating in for the past 18 months – and he admits that it’s been a bumpy, unforgiving and uncomfortable ride.

The media spotlight picked out CMAL amid an ongoing row with Ferguson Marine over a contract to design and build two new ferries – and it’s a row that’s showing no sign of going away anytime soon. However, there is no doubt that Kevin has a steely determination to ensure that the contract to build two dual-fuel ferries is fulfilled.

“It’s been very sad and distressing for the communities, CalMac and CMAL,” said Kevin, reflecting on the dispute, which was sparked after the ordered vessels failed to be delivered last summer as originally planned, amid questions over who is responsible for the delays and the project’s alleged spiralling costs. “This is a very large and prestigious order and should have helped showcase a Scottish shipyard. Sadly, it’s done anything but.” He’s rueful about the media attention. “I’ve not enjoyed it at all. Some people might like media exposure but it’s not why I come to work.”

Certainly, Kevin’s career thus far hasn’t steeled him for such public scrutiny. Indeed, it could be argued that CMAL as an organisation was a long way below the public’s radar before this storm brewed. For the uninitiated, it’s the organisation tasked by the Scottish Government to own and manage the assets – both vessels and ports or harbours – primarily on the west of Scotland ferry routes. 26 ports and harbours fall under its jurisdiction, as do 34 owned vessels, 31 of them operating on CalMac routes to the inner islands of Scotland, the other three trading to the Northern Isles.

As its CEO, Kevin Hobbs talks with justifiable pride about CMAL’s contribution to island life: “The vessels and harbours we manage are a vital asset to the communities they serve,” he said. “It’s hard not to overplay the ferry routes’ importance in the islands, whether it’s farmers getting their livestock to market, children going to school or people going to the mainland to work.”

Add to this the ferries’ role in tourism. “The tourist pound is a vital contributor to the islands’ economies and the increase in tourist traffic on our routes – by as much as 40 per cent – in recent years is welcomed, as it brings money into the islands, and jobs. But it creates its own problems, too, and we have to be careful not to overstrain our infrastructure. We are doing more with our current fleet than we’ve ever done before, but we run the risk of pushing it too hard.”

A victim of its own success, you could say, and a situation made all the more acute by the particular demands created by CMAL’s ‘curious’ position as a state-owned operator tasked with providing a vital community service while getting the best possible value for money for the public purse.

“It’s not a simple business model, is it,” Kevin admits. “First of all, we’re here to enhance island life and work with its communities. But our funding all comes from the state. It’s challenging. We have to work efficiently and get value for money – but in our DNA is an understanding that we’re here to serve the public, so routes that if they were run on a purely commercial basis may be vulnerable, are supported.”

No matter which business model was used to run the islands service, that would always be the case, he says, but CMAL’s reliance on state funds means that “we are very aware that we’re custodians of taxpayers’ money and they must be used as effectively as possible to ensure services continue.”

Kevin’s background has a strong engineering flavour but his initial qualifications were something of a long way from the fresh air and taste of the briney you get on a ferry: only about a mile away, in the strictest terms, but straight down, under your feet, where the air is somewhat mustier and stale tasting: he was a mining engineer.

“Well, I have a mining engineering degree,” he said. “But early on in my career I was working on sea-dredged aggregates for what was formerly known as Ready Mix Concrete – now Cemex. That brought me into the maritime sphere and by my mid-20s I felt that that was the area I wanted to specialise in.”

His first ‘port of call’ was Heysham, in Lancashire, where he worked on ferry routes from the north of England to Ireland. Experience gained saw him help set up Seatruck Ferries in 1996, where he remained until 2008.

Consultancy work on big projects on both sides of the Irish Sea – including Dublin Port’s masterplan – was followed by a move to the UK’s third biggest port, Milford Haven, where he was responsible for all operations at Pembroke Port and Milford Docks, before taking on his current role with CMAL.

What attracted him north to Scotland? “From the outset it was a fascinating role. I wanted to put something back into the pot, as it were, and I was immediately struck by CMAL’s role, alongside the ferry operators, in providing that lifeline link to island communities.”

As mentioned earlier, Kevin’s role sees him overseeing a considerable suite of assets. “We run 26 ports and have 34 ferries. It is a major portfolio and if replaced from new would cost around £2bn.”

The challenges in keeping these assets on the water are huge, particularly because “there’s been underinvestment in the ferries and ports for around 20 years. There’s simply not enough money to satisfy demand. It’s my job to get the best funding possible out of the state, and then spend it well to get the best possible return.”

This isn’t a public sector plea that ‘my sector isn’t appreciated’, however. “Everyone can make the same claim: we all need more money. Health, social care, education, you name it, there is only so much money to go round. I’ve got to make sure that when we get funding, it’s spent wisely.”

Which brings us back to the CMAL/ Ferguson Marine row. To put some more meat on the bones, the contract was to design and build two vehicle passenger ferries, with a dual-fuel capability that made them both efficient and environmentally friendly. Seven bids were considered and three came up with a similar proposition – but it was Ferguson Marine that landed the deal.

Kevin was not in post when the deal was signed but he’s quick to dispel any myths that price or yard proximity played a role in Ferguson Marine’s successful tender. “It was a wholly transparent process,” he says. He acknowledges that “there were some in the general public who wanted Ferguson Marine to get the contract from the outset,” as there were a number of perceived benefits.

“Here was a shipyard back from bankruptcy, with everything that entails: more shipbuilding on the Clyde, skilled jobs, opportunities for training and apprenticeships, boosts for the wider supply chain. But the tender was approached completely impartially; Ferguson Marine won it fair and square with a bid that delivered what was required by the tender.”

But what should have been a very positive story hasn’t turned out that way. The ships are still under construction, with delivery dates now set for summer 2019 and March 2020. Cost over-runs on the £97m project have been reported in the press as being near £40m and the owner of Ferguson Marine, Jim McColl, is looking for more cash from CMAL and the Scottish Government to offset eye-watering losses.

Kevin is quick to dismiss certain media claims that CMAL is responsible for the delays. “We have not changed the tender specification. We built in a contingency for changes to the vessels design and build of three per cent of the entire £97m budget – it works out at around £2.9m. So far we’ve spent around half that amount on minor changes.

A significant change was required when Ferguson Marine’s model prototypes did not initially meet the specification requirements. The tank test in Vienna necessitated alterations to the design, though as Kevin points out, that was the design developed by the shipyard. “They knew the requirements and what we needed from the vessels, their speed, capacity, dimensions … none of those have changed.”

Despite the problems, Kevin is positive that when delivered, the communities and operator CalMac will be delighted with the new vessels. “I’m really confident they will be seen as a considerable asset. They will be excellent and the quality will be unaffected by the delay or row over money.

“But it’s just such a shame, so very sad and distressing, that the contract has ended up like this; it’s not to the benefit of Scotland or the shipyard.” Has handling the fall-out from the contract been his biggest challenge so far? “In many ways, yes. I’ve had more complex projects to manage but none of them have been played out in the public eye. It’s been interesting to be part of the government machine but managing the fall-out is challenging. These two ferries should have been in service last summer, allowing us to withdraw existing vessels which are getting old.

We’re putting considerable stress on two vessels that should have been retired off by now, or used as replacements elsewhere on less demanding routes.”

Has the row dented the workforce’s confidence? “Thankfully, no. For an organisation that handles over £100m of generated revenue, government grants and loans every year, we’ve a pretty small staff – just 31. All are professional but most are civil engineers and marine architects, and they’re very experienced and resilient. They know we deliver great projects all the time. While it can be worrying to read negative stories in the press, and we know that there are communities desperate for these boats to come into service, the CMAL team knows it does a good job.

“We’ve delivered so many great projects in recent months – on time and on budget. The Brodick ferry terminal, a new linkspan bridge at Oban, the Isle of Bute slipways at Colintraive and Rhubodach – all projects that have greatly enhanced the ferry service for islanders.

“I tell our people to hold their heads up high and remember the good we do.” Leadership in the face of challenges is never easy but Kevin follows a simple philosophy which has helped him keep his team motivated and focused: “Be honest, straightforward and open. Don’t hide. Keep the door open and if people have concerns – particularly when they read about problems in the media – let

them talk the issue through. There’s no need to spin anything. “I remind them of the good things we’ve achieved together.” He also thinks it’s important to improve the workforce’s skills and experience. “Always look to educate and develop your team – add to their skills along the way.”

But does he follow his own advice? “I do. Indeed, one of the reasons why I joined the IoD was to access its training. I’ve taken a few courses since I joined and they’ve been excellent.

“I’ve held director-level roles since I was 32 and you can find yourself in a bit of a bubble if you’re not careful. It’s hard to keep up with modern trends – in technology, in management styles – if you don’t work at it. The way business operates is continually updating and you can easily become isolated from what’s happening outside your sphere of operation.

“The business world is changing at such a rate that it’s near-impossible to keep up unless you are prepared to get out there and learn.” And the best way to do that is to talk to other senior business leaders, says Kevin.

“The value of attending IoD training isn’t just what you learn from the trainer but from the conversations you have with other attendees,” said Kevin. “It’s rare I don’t come away from a meeting with IoD members without picking up good advice or knowledge I can use in our business.

“You meet such a broad range of people at IoD events and they always bring a different perspective on the best ways to run a business. They’ve always got something interesting to say. “I see the IoD as a safe space for business leaders. You can become so immersed in the day-to-day running of your business that you don’t get your head up and see what’s going on in other parts of the world. It’s vital that you take a day out from time to time give yourself some thinking space and improve your skills.”

Is that something he’d tell aspiring directors to do? “Absolutely. I think it’s vital you get out of your bubble from time to time and see what else is going on.”

Any other leadership advice? “Leaders have to be prepared to stand up and fight for their organisation. That’s the best way you can take your people with you.”

He also thinks not over-stretching yourself is important. “Don’t chase the pounds. Don’t simply go for any role and hope you can handle it. Make sure you have enough experience and attributes to do a good job before you take it on. If you don’t, you may quickly find that you are beginning to struggle and could ultimately fail.”

“Too many people over-stretch themselves and take on jobs they just can’t deliver on. It’s just not worth it.” There’s a lesson there, somewhere... Looking at the broader picture, what’s his one wish – and that’s above and beyond seeing two new ferries plying their trade to Scotland’s beautiful islands this summer. “I know, with what’s going on at present, this is going to sound a bit obvious, but we need absolute economic stability.” Perhaps a forlorn hope, with Brexit… But while pundits and general public have lambasted the political class for the continuing economic uncertainty surrounding our ties to the EU, Kevin’s close proximity to the state as head of a public-funded body has given him an interesting – and refreshingly positive – take on our political leaders: “I don’t envy politicians at all. They have a very difficult job. There is simply not enough money to go round and they are being forced to make tough calls every day as to what is funded.

“The key to our success at CMAL is for me to get as much cash out of the state as I can, to build ships, improve our infrastructure. But I appreciate that my requests are mirrored by my peers, all of whom have equally pressing demands to fund other vital services. “Politicians are – to mix a couple of metaphors – spinning plates and juggling balls. And all in the public eye. “They know they can’t win. Every decision they make which pleases one group inevitably upsets another. It’s an impossible job.

“The key for me is to ask yourself a question: would I want to be a politician? For me… no way!”

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