2018-09-21 09:45
In our exclusive interview with Aston Martin President and CEO Andy Palmer he talks about the launch of the Palmer Foundation, the company’s upcoming IPO, the new Project 003 hypercar, Lagonda luxury models, Brexit and, of course, James Bond.
You’ve just announced a new charitable project dealing with a subject that’s very close to your heart – apprenticeships. What will the Palmer Foundation aim to achieve?
As the company IPOs, I do okay as a result of growing the company. I got there on the back of an apprenticeship.
I don’t know what would have happened to me if I didn’t get that opportunity of an apprenticeship at 16 – I didn’t like school, I was bored and I didn’t know what I wanted to do other than work in cars.
I’m not sure I would’ve got through the university system, but the apprenticeship system gave me a wonderful opportunity as a working class lad with no family money behind him. I’ve been able to do what I’ve been able to do and I’ve loved every minute of it.
It really hurts me that the British car industry, when I joined it, was the biggest in the world. But we don’t own anything anymore (bar, hopefully, Aston Martin). In losing that the intellectual property is largely done outside of the country – there are exceptions, like Jaguar Land Rover. So the idea that Aston can provide a route in for kids is great.
The problem is that normally to get on to an apprenticeship you’ve got to have your parents sitting behind and pushing you and helping you. You’re normally in a nice school with a careers teacher telling you how to present yourself nicely and giving you some coaching.
That doesn’t exist for some of the kids in deprived areas – they don’t know how to prepare themselves for interviews, and the unpolished way in which they present themselves means they don’t get the chances that I had.
The Foundation is all about helping under-privileged kids and giving them a bit of an advantage compared to their peer group, to get them onto the system.
Exactly how it ends up depends on how successful it is. The idea is for a technical apprenticeship for under-privileged kids – we’ll give them the first two years of training, and beyond that they can go into Aston or JLR or into the supply base.
If I can make that work, maybe mix with other companies, sponsoring and using the apprenticeship levy, I can find a way of capturing 14 year-olds before they become disillusioned with the school system. I reckon that’s 60 per cent of the population potentially, and there are going to be potential leaders among that group. I want to get these guys before they end up doing something below their capability.
We want to capture them when they’re choosing their subjects for their GCSEs, encourage them to take some of the sciences – even though it might not be popular. Then allowing them to see a pathway through that to a paid apprenticeship that would probably support them for two of the four years. I think that between 16 and 18 is where they’re losing out.
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It's compensating for the disadvantage these guys and girls had because of their background and because of their education.
We’ve got my donation and some of my management team and we’re up to half a million pounds in terms of primary donations and you can do a lot of good with half a million quid!
My wife is really keen too, she’s always been into homeless charities and that’s at the other end of the scale – what could happen if you don’t capture them early. It’s difficult to turn those guys, but if we can capture those kids earlier maybe we’ll have fewer homeless.
From my perspective, what a great legacy – even greater than the Aston legacy.
How’s the IPO process going?
We’re on a two-week roadshow [before a price for the stock is announced] talking to potential investors, and the interest is extraordinary. I’ve learnt a tremendous amount – good and bad – about how business functions at the treasury level, which you need to understand. The bankers and the investors, they control your destiny and you have to understand what makes them tick – you do that by spending time with them. It’s an awful long way from the 16-year old apprentice, but it’s incredibly stimulating. It’s a few weeks of very well invested time.
Has the process improved areas of the business?
Yes, it’s interesting to see what comes into focus and how an outside entity perceives you. What becomes important to them becomes important to us.
You see with our business that it's a business of the future – it has the potential to be Ferrari and more. It isn’t there today, but what makes the difference is things like our specials and DBX. Ferrari did a great job of their investor day – but what they did was essentially abdicate China and the SUV to us. They’ve delayed that, it’s much later in the market, so we’ve got two years to get market leadership in China and we can build on that with DBX.
You always reference Ferrari, is that who you look at?
They’re the only people we can look at – everybody else is part of a big group. Most of our customers have an Aston and Ferrari in their garage, so we compete perhaps for a share of their wallets, but we don’t directly compete.
In the future we might. If Portofino spawns a GT as it seemingly will, then yes we’ll compete. As we spawn a mid-engined series of cars then we will compete, but at the moment we don’t compete. It’s the closest competitor we’ve got.
How will the new ownership structure affect the business?
I must be the only CEO looking forward to going into public ownership.
One of the things that went wrong in the past is that we had billionaires buying us then selling us and we had no stability. If I’ve been trying to achieve one thing for the past four years and working for the next four or five years, I hope that my legacy is that the business will continue to grow after I retire.
That can’t happen in private ownership - you need the protective bubble of public ownership and the schematic governance of public ownership to ensure it becomes more about the company and less about the individual.
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I came here to create the only British car company – the only one on the FTSE index. So for me my vocation has always been to rebuild part of the British car industry and have the opportunity to train apprentices in the same way I was. Then you go forth and create an infrastructure for the whole country – it’s a big dream and my little part in it.
What public ownership means is that when I step away finally, that will continue.
How does heading up a public company change your role?
Penny, our non-executive Chairman is very much into the governance of the business, ensuring we comply. It's a part of the business that doesn’t turn me on much, it’s all about policies and procedures – she’s really good at it, I’m not so good at it, therefore we’re quite complementary.
For me the opportunity to concentrate on building the brand, thinking about the next generation of cars, looking at some pretty funky projects; I’ve got more time to do what I really, really love.
We knew about your seven in seven strategy, but Project OO3 is something outside that…
It falls into the category of a special, but I grant you it’s getting up there in terms of volume. It's the connector, it’s the dot between the Valkyrie and the 488 competitor and it’s basically about squirting the DNA down to the next version.
If you go from Valkyrie to a 488, from £2.5million to £200,000, probably that jump isn’t enough to give you the view of the mother and the father.
When you see the design language for 003, it’s really interesting. We’re designing 003 and what we call AM9 [488 competitor] side by side so you see that bloodline.
You’ve spoken before about a ‘carry over and carry across’ engineering strategy, what are the similarities here?
Yes there are similarities, starting with the engine - it’s a V6. In the Valkyrie it’s a naturally aspirated V12, and in the 003 it’s a turbocharged V6. There will be hybrid power in there, but very much tuned from a KERS perspective than a normal hybridisation perspective – think of it as race tuned.
Obviously it’s a new engine, designed by Aston Martin, so we’re demonstrating that in that V12 arena we have mastery, so V12 and V6 is obviously closely related.
Is it a £1million car?
Let’s put it as a LaFerrari competitor so it’s in that kind of realm – like the McLaren Senna and Porsche 918. As for power it would more than compete with those competitors.
Have Red Bull Racing and Adrian Newey been involved at all?
They will be involved, I think. To be frank, we’ve got them nose to the grindstone at the moment working on 001 and 002 [Valkyrie and Valkyrie AMR] but the technology and thinking process rolls through to 003 so I imagine that they will be involved.
How has the reaction been to Lagonda as a standalone brand since the unveil at Geneva?
I’ve never been more sure about something.
The consensuses was that you can’t break into the duopoly (Rolls-Royce and Bentley], but what I’m more and more convinced with is that we don’t want to break into the duopoly.
What you’ve got with Gen Y and Gen Z and tech start-up entrepreneurs is that they don’t want to be seen in a V12 Rolls-Royce. What they want to be seen in is a really, really cool limousine. We’re providing to an unmet need, which is a bunch of guys and girls that can’t be in anything more luxurious than a Tesla Model S – that’s where I think the future is.
Brexit – you haven’t been as vocal as others. Do you have less to worry about?
Yes, I’ve got less to worry about. I don’t commentate on big picture politics, so I can only talk about the impact of Brexit on Aston.
We’re pretty well insulated – 25% of our sales go to the EU, 30% go to the UK. If you put a tariff barrier in place, we lose a bit of market share, but Ferrari and Lamborghini do, too.
The effect of Brexit probably crashes the pound. And while I’m sure that a weak pound is bad for the economy, it’s good for exporters – it helps our profitability.
There are other issues like parts supply through the border, but net, net I think it’s about neutral for us. Not for the country, but for us.
With Cary Joji Fukunaga just announced as directing the next James Bond movie, will James Bond still be driving an Aston Martin?
Who knows? We have a great relationship with EON. We’ve just announced the DB5 Goldfinger, so the relationship with EON is very current. We don’t take for granted the James Bond connection – it’s something that’s important to us, but we don’t buy it. I personally think that the best James Bond movies have always included an Aston and long may it be so.
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