Features - News Feature

JULY 1, 1988

The words of the Chairman - John Cowen of March PLC


John Cowen is the Chairman of the March Group PLC. A year ago he had never heard of the company.

John Cowen is the Chairman of the March Group PLC. A year ago he had never heard of the company.

"I'm not interested in racing at all," he explain00s. "Well, I wasn't then. I'm getting more so now, but I'll never pretend to be a race fan."

Cowen is "an industrialist and an ex-merchant banker". He gets his kicks out of takeover bids and high finance and it was this which drew him into the world of the March Group PLC.

Last year things were not going well at March. Neither the Formula 3000 nor the Indycar programme was successful and the state of the dollar was not helping matters. The interim financial results were not optimistic and the auditors introduced Cowen to March co-founder Robin Herd in July last year. A month later he was appointed Chairman.

"From a commercial point of view, March was in a very serious situation. The size of the losses was not apparent but what was clear was that there were problems of a serious magnitude."

The Grand Prix team's sponsor, Akira Akagi of Leyton House, was also becoming increasingly involved in the financial dealings of the company, buying 20% of the shares and becoming a Director of the company in the autumn.

"In January Akagi made a bid of 50p per share for all the shares which either he or Robin Herd didn't own," explains Cowen. "In addition he was going to inject more cash into the company and reduce Robin's involvement from 43% to 20%. There was also an arrangement for him to get Robin's 20%, so effectively he would have owned 100% of March for #3.6million."

On February 10 that bid was called off. Cowen started looking for alternatives to keep March going. Three days later March shares on the Unlisted Securities Market in London were suspended, the normal practice when a company is about to make an important announcement.

On March 08 Akagi resigned his directorship and word began to filter out that he was going to buy the March F1 team, the F3000 programme and the company's wind tunnel.

"We were in a very severe financial crisis," says Cowen, "and having been on the board Akagi was intimate with the details of the company. It made negotiations extremely protracted.

"The alternative probably was receivership and it was important to avoid that. March has very loyal and highly skilled workers and it was not acceptable to let the company go down. It wasn't necessary as we have now proved.

"A Grand Prix team, in my judgement, is not a proper constituent for a public company. It is not a profit centre. That's not saying it isn't possible for a GP team to make a profit, but racing people believe sponsors are there to finance the teams, not put money in shareholders pockets.

"There is no real concept of cost control. The important thing is winning the race. If the night before a race you need to spend money to do something, you do it. In a racing environment that is what you need, in a commercial environment it just doesn't work.

"Thirdly, there is the volatility of balancing income against cost. You start designing next year's car in September, that's when you have to commit a lot of money, but it's not until March that the last sponsor commits itself.

"The wind tunnel was always intended to be financially viable, selling time to other teams or whoever. However, if you have an F1 designer, he wants the wind tunnel when he wants it, he doesn't want to ring up and be told he can use it in three week's time. He also doesn't want to share the advantages of that tunnel with competiing teams.

"As for the F3000, Akagi wanted to buy it, he's very keen on F3000 in Japan."

And buy it, he did, for #6.5million. Financially speaking Cowen has done a good deal for March, but where does the company go from here?

"March is back to where it was," he explains. "The plan is to build March Engineering up again, injecting the proceeds of the sale into capital expenditure and finishing up in profit in 1990.

"Dave Reeves has done a first rate job and the company is very much coming around already.

"We've got an eye on acquisition. We're going to buy businesses to diversify the activities and reduce the dependency on motor racing. I can't say which direction that will take, because we don't know. We've been so nose-to-the-grindstone, clawing along it hasn't been appropriate to sit down and think about it. Our eyes were on the short term. Now we're through that.

"The March Group's new Chief Executive Roger Young and I will sit down and discuss it some time. When we know we'll let the world know!

"We don't want to bite off more than we can chew, but we want to go back into the Indycar customer market in 1990, we want to look into Group C.

"March is a terrific company, with lots of experience. We're going to use it. Now we're in a strong financial situation. We have no inhibitions, if we want to go into F3000 we can. We couldn't use the March name but we could use Ralt. I'm not saying we will, but we could.

And what about Robin Herd, the co- founder of March? What is his role?

"Robin is still a major shareholder (33.3%) and a non-executive director. He has a tremendous amount of motor racing knowledge and contacts. Robin can get into the boardroom of any manufacturer in the world and we're interested in that because of Group C..."

March is looking ahead again after a precarious few months.