Life in the fast lane for award-winning MD
May 20 2008 by jez Davison, Evening Gazette
First-time failure breeds future success according to Jon Gagg - and he should know. JEZ DAVISION talks to the Darchem MD about life, the love of fast cars and business philosophy
AFTER a hard day in the boardroom, most 60-something managing directors would gladly wind down with an aperitif before putting their feet up in front of the telly.
But for Jon Gagg, life in the fast lane begins once the working day finishes. The self-confessed gadget freak likes nothing more than to climb out of the pinstripes and into a pair of overalls to build his own sports car.
“Nought to 60 in 2.8 seconds”, he exclaims, unveiling an image of the finished article on his PC.
Even someone with only a passing interest in soft-tops couldn’t fail to be impressed. His Ultima Can-am project is a metaphor for Jon’s ability to fuse disparate parts into a unified, effective working whole - a strategy that has reaped huge dividends at Darchem Engineering.
Jon is responsible for the company’s four main business units - including insulation systems, a thermal protection business unit, turbine structures and aero-structures operations - which employ 720 staff across two sites at Stillington and Gloucester. He has managed to create a working equilibrium out of which has grown one of the Tees Valley’s most notable success stories; a £60m turnover business that has doubled in value since he joined as manufacturing director in 1997.
Jon, who became managing director in 2006, is too modest to attribute the firm’s growth to his own stewardship and says his best move has been “to hire people who are better than me”. But he admits his most telling asset is an ability to see through the fog of industry jargon and boardroom politics.
He says: “If you ask five different manufacturers to describe their product, they will go into intricate detail about what it does and how it works. At Darchem, our products do only one thing: they make money. That might be the aim of every company, but some people take three steps out of the boardroom and start talking a different language.”
Darchem has a blue-chip client base that includes Airbus, Boeing, BAE Systems and the Ministry of Defence. He believes the company can break through the £100m turnover barrier within the next five years by concentrating primarily on organic growth and the expansion of the company’s Teesside base in particular, although he has not ruled out further acquisitions, with potential buy-outs “on the radar”.
With large aerospace contracts accounting for about 60-70% of Darchem’s business, Jon believes the sector’s ability to offer a long-term order book is the key to its future success. So, too, is the ability to secure new applications for the company’s core products, which include lightweight insulation systems used in the aerospace, marine and energy sectors.
Many of the end customers for these products are based in growing, low-cost economies in Asia and the Middle East but although 40% of Darchem’s revenues are generated by exports, Jon sees little value in moving its manufacturing base overseas. He says that historically low-cost areas, such as Korea, now have labour rates comparable to the West.
Overall winner of last month’s North-east Business Awards, he attributes much of Darchem’s success to Teesside’s skills base. He acknowledges that the area still suffers from a skills shortage and that employees need fast-tracking when they arrive at Darchem because “they haven’t been trained to the required standard”.
But he’s not one to get hung up on failure, which includes the collapes of his own business venture in Cornwall while in his twenties.
Boylan Toys, which manufactured and sold garden toys, ran out of cash.
“We had a good quality product and it sold well,” recalls Jon, “but cashflow became an issue. I have no regrets over it. The experience taught me that to run a business you need to be a generalist, a good all-rounder.
“People should have the experience of running a business at an early age. They would learn a lot more, a lot quicker.”
Born in Worcester, Jon began in the engineering industry by completing an apprenticeship at specialist engineering group Hardy and Padmore.
After moving into engineering design at farm equipment manufacturer Eltex, he really made his mark at Senior Engineering where, responsible for 100 staff at the age of 23, he helped to form a £1m manufacturing plant into a £5m operation in three years.
After getting itchy feet and leaving to establish Boylan Toys, he ended up back at Senior - a specialist in metallic hose and expansion joints - as a production manager in 1974 and stayed for more than 20 years, first building up the company’s Flexonics (flexible components) division as managing director before spending four years in Los Angeles as president and chief executive officer of the £180m thermal division.
Working in LA gave him a telling insight into the psyche of the US entrepreneur. A senior figure in the US banking system once told him that banks were more inclined to give a loan to someone who had had their fingers burnt.
“The American culture encourages entrepreneurs to try again if they don’t succeed first time around,” he says.
“First-time failure breeds future success.”
