Engineering icon poised to join elite

IT MAY no longer make much in Scotland, but Weir Group remains an icon of the Scottish engineering sector and its long history is about to take another turn for the better this week.

If all goes to plan it should join the prestigious FTSE-100 index of leading shares for the first time, marking a remarkable renaissance for the 138-year-old firm.

Chief executive Keith Cochrane has seen a near doubling of its share price since he took over the helm from Mark Selway last November and the firm's promotion, if confirmed by the FTSE Group at its quarterly review meeting on Tuesday night, will underscore what has been a steady yet noteworthy recovery at Weir.

It will also undoubtedly come as a personal pleasure to Cochrane, though he remains publicly phlegmatic about joining the ranks of the UK's most valuable quoted companies. "It is not an end to itself," says the 45-year-old, who was promoted from finance director after Selway decided to return home to Australia.

"From my perspective, it doesn't change the focus or the fundamentals of the business. But, if it does happen, it will be a recognition of all the work done by the team over the last few years."

Having rejected a takeover offer from the US in 1999, Weir spent much of the early part of this millennium dogged by takeover speculation. Though the historic Glasgow firm was churning out respectable results, its share price remained stuck well south of 300p as the engineering sector remained out of favour with UK investors.

After the promotion of chief executive Sir Ron Garrick to the role of chairman, Weir brought in former ScottishPower executive Duncan Whyte to head up operations in 1999. His remit was to bring some focus to the sprawling group while also cutting costs to negate the effects of sluggish global demand.

Whyte was slow when it came to spending cutbacks, and that combined with concerns about his management style led to his departure in a boardroom coup after just 13 months in office. Garrick was forced to return as acting chief executive while Weir resumed its global search for a CEO.

The issue was finally settled with the appointment of Selway in 2001. He would go on to focus Weir on a clutch of high-growth markets. The Australian also cut Weir's working capital demands through the "lean manufacturing" techniques picked up at former employer Britax.

Cochrane, who joined the group as finance director in July 2006, freely concedes the ongoing benefits from his former boss's decisions. "The business has moved on considerably in that time, there is no question," Cochrane says. "If Weir does get into the FTSE 100, it will be reflective of the transformation undertaken by the team - and very much congratulations to Mark Selway for leading that transformation."

It has not, however, been all plain sailing. When Cochrane first arrived, Weir was in damage limitation mode amid claims that it had paid a multi-million pound bribe to Saddam Hussein's regime in Iraq under the United Nations oil for food programme.

Weir was plunged into local controversy a year later when it emerged that Selway was in talks to sell the group's Cathcart-based pumps business, putting hundreds of jobs at risk. The business eventually went instead to Jim McColl of Clyde Blowers, who was feted as a local hero for saving Glasgow jobs. The unapologetic Selway was cast as the villain.

The past decade has been an equally colourful one for Cochrane, who has now served as a senior director in three of Scotland's diminishing band of large quoted companies, including two former FTSE-100 members.

After joining transport operator Stagecoach in 1993, he was promoted to group chief executive in 2000 at the tender age of 35. However, he failed to turn around the disastrous acquisition by his predecessor, Mike Kinski, of Coach USA.

Following a plunge in Stagecoach's share price in the early part of 2002, Cochrane offered his resignation to the board, and it was accepted.

After taking some time out, he became director of group finance at ScottishPower, which at that time was struggling with its troubled Pacificorp business in the US. Though Cochrane survived an infamous executive cull in 2005, he was later passed over for the role of finance director, paving the way for his eventual defection to Weir.

He now plans to further build upon Selway's work, and has vowed to double profits from 2009 levels by the financial year ending in 2014. Cochrane says this will be achieved through underlying growth in Weir's markets, a push to sell a bigger range of products to existing customers, and by acquisition.

The latter was highlighted last week, when Weir announced the purchase of Indian valves business BDK for an estimated 40m.

Though Weir has access to as much as a further 500m or so to finance its growth plans, a FTSE 100 place would undoubtedly make fundraising a bit easier. Cochrane, however, is unconcerned.

"It may happen, and it may not, but it doesn't change what we are doing. Fundamentally, we will just get on with our day jobs."