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Engel out, Runevad in
Nobody enjoys their first day at school. So spare a thought for Anders Runevad.
He’s just left his post as a regional boss of telecoms giant Ericsson, to shortly take up the role of chief executive at Vestas, following the departure of Ditlev Engel.
Ditlev was replaced late last week at the Danish manufacturing giant, following revelations that net losses increased more than seven fold, to €62m.
Vestas of course, has been quick to position the departure as part of a long-term strategic plan, with Vestas Chairman, Bert Nordberg, keen to reiterate that the decision to seek a replacement was taken some time ago.
Either way, Nordberg is looking for stability. And with the losses continuing to widen, many believe that holding his nerve with Ditlev had finally run its course.
However, to what extent the introduction of Swedish-born Runevad will help to address this, is still very much open for debate.
Sure, the pair have previously worked together at Ericsson and sure, there’s no doubt that a new leader brings with him a new culture and a fresh approach.
Nevertheless, it would be foolhardy to think that under the new guard, there’d be an end to any future surprises. Since Vestas problems run deeper than that.
According to many, those problems began back in 2008, when Engel, buoyed by an expectant market and a growing order book, undertook an ambitious expansion strategy. It was a plan that saw the firm open up a factory in the US and grab a foothold in the Chinese market.
In pure numbers terms, that meant that in the space of just twelve months, the firm’s workforce jumped from 15,305 to 23,252 and that as a result, significant working capital was tied into the success of the developments.
Then, with the financial crisis running deep, coupled with the well-publicised tax credit challenges in North America, Vestas suddenly found itself overcommitted and – following a series of profit warnings and high profile board departures – the strategy of pursuing revenue growth was abandoned.
In its place came a focus on cash flow and a fresh, single-minded vision.
An approach that shrunk back the workforce once again and that saw Engel’s leadership time and time again brought into question – a situation not helped by the increasing influence of the recently installed chief operating and finance officers.
Perhaps then it was only ever a matter of time before the final switch – the departure of Engel – was made. A switch that was only possible once the firm had been sufficiently steadied to make the transition complete.
Whatever the case, despite a share price uptick following the news, it would be naïve to think that Vestas was finally out of the woods.
And the search for a lightning rod remains. That’s why it’s imperative that new boy Runevad quickly creates steady, upward commercial predictability, while continuing to tackle an already overflowing inbox.
No easy feat and it comes with no cast iron guarantees.
However, what is undeniable is that if Runevad succeeds, the Danes will be quick to overlook the fact that he’s a Swede.