Monday Interview: Charles Hammond, Forth Ports

Charles Hammond joined Forth in 1989 and became chief executive of the firm in 1999. He was at the helm when Forth Ports turned private in 2011. Picture: Phil Wilkinson

The Forth Ports chief executive points to the re-opening of Kirkcaldy Port to cargo ships in 2011 as an example of how the “unsung” sector is now helping to drive investment in the wider economy.

“If you went back a century, you’d find a lot of goods went by coastal shipping, whereas now they go by truck or rail,” Hammond says as the wind howls outside Forth Ports’ head office in Leith.

“But gradually we’re starting to see good examples of coastal shipping coming back. We’ve reactivated the port at Kirkcaldy for Carr’s Milling and that is now doing more tonnage today than it’s done in my 25 years in the business.”

Hammond joined Forth in 1989 when the company was still a trust port – an independent statutory body governed by its own local legislation with all profits ploughed back into the facilities. Three years later, following a change in law that allowed trust ports to become limited companies, the firm floated on the London Stock Exchange with a market capitalisation of £33 million.

In 2011, Forth Ports was taken private in a £746m deal and is now 63 per cent owned by infrastructure fund Arcus, with the Canadian Public Sector Pensions Fund owning the remaining 37 per cent.

Today, Hammond says, the enterprise value of the business is more than £1 billion.

“Infrastructure funds tend to have long-term horizons, which is why they’re attracted to assets like our,” he explains, adding that having to deal with just two shareholders – rather than a raft of separate investors – has freed up more time to focus on the business and developing his top team.

Forth Ports announced earlier this month that Lord Smith of Kelvin, who chaired the commission tasked with recommending more devolved powers for Scotland, will become its new chairman on 1 January, and Hammond says Smith’s arrival on the board “can only help to drive the business forward”.

Smith is no stranger to the company, which runs ports at Burntisland, Dundee, Grangemouth, Kirkcaldy, Leith, Methil, Rosyth and London. He is currently chairman of SSE, which set up a renewable energy joint venture with Forth Ports and collaborated on the development of a four-turbine wind farm at the firm’s Tilbury site on the Thames.

The peer, who also chairs the Edinburgh-based Green Investment Bank, was at the helm of the organising committee for this year’s Glasgow Commonwealth Games, and Hammond stresses that his company also played its part in the event.

“When the goods and furniture for the London Olympic Games came back to our warehouse at Tilbury, we were able to put them into containers and then ship them up to Grangemouth, where they were stored before being reused for the Commonwealth Games.”

Running Forth Ports has not all been fun and games, however, and the company became embroiled in a dispute last year over plans by engineering group Babcock to build an £85m container terminal at Rosyth.

Babcock wants to build the project on derelict land reclaimed for refitting Trident nuclear submarines, but the proposals were criticised by the Royal Society for the Protection of Birds and Forth Ports, which argued the facility is not needed because of overcapacity in the industry.

Reflecting on the row, Hammond says: “The thing about our business is that it’s so varied, and there is an incredibly wide range of situations and challenges – some good, and some that are more difficult. The Babcock situation was a little frustrating, because it didn’t take account of the changing container market and I couldn’t get that debate going in the way I wanted it to.

“But there were many other issues we were dealing with at the same time, and when you’re running a group of ports you have to understand a lot about different industries and their supply chains. You have to be adaptable.”

Hammond, who became chief executive of the firm in 1999, argues that ports make an “underlying and unsung” contribution to the economy, with goods and services representing about half of Scotland’s GDP moving through its facilities.

“The key industries in Scotland that we need to be looking at are North Sea oil and gas and energy generally, as well as food and drink, petrochemicals and agriculture. That means we’re looking at a major export base up here, and people tend to underestimate the role that ports play in that.”

The keen hill walker and Munro Bagger studied law at Glasgow University but says a stint studying for his masters degree in Toronto after winning a Rotary scholarship opened his eyes to the wider world of business.

“I did a lot of talks to the Rotary clubs over there, particularly in Ontario, and that’s probably what stimulated my interest in business rather than law.”

Nevertheless, he returned to Scotland in 1984 and started his traineeship with McGrigor Donald, becoming a qualified solicitor and then joining Forth Ports in 1989 as company secretary.

Looking back on the past quarter of a century, Hammond laughs that his time with Forth Ports “has flown by” and he still relishes the challenge of steering the company through the occasional economic storm.

The group was behind the development of Leith’s Ocean Terminal shopping centre, which was sold in 2012, and although it still owns more than 2,000 acres of freehold land is no longer heavily involved in property development.

However, Hammond says Forth Ports recently signed an “interesting” development deal with the National Housing Trust to bring some affordable housing to the market at Western Harbour.

“There’s good co-operation between the public and private sectors, the funding is coming from the Scottish Futures Trust and the property then gets rented out to people at less than market value. So it gives them the capacity to save up and buy the house after five years.”

So where will Hammond himself be in five years’ time? He seems to have no desire to move on to a new berth any time soon, but admits: “I like to think I’d be honest enough to know when the time was right to hand over to someone else.”

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