New Rolls-Royce CEO says focus will be on opportunities and strategic clarity

Three years ago, Tufan Erginbilgic lost in the race for the top job at BP. After 23 years with the oil company, most recently heading its refining and marketing operations, he left in March 2020.

This week Erginbilgic was back in the corporate spotlight after being chosen to lead fellow British industrial giant, Rolls-Royce. The 62-year-old, a dual Turkish and British citizen, will replace Warren East as chief executive in January.

The appointment intrigued some industry experts, who expected a heavy hitter with connections in the City of London and Whitehall. “What makes him think he’s qualified to run Rolls-Royce?” we asked.

Erginbilgic cites his experience at BP, where he spent “a lot of time” on energy transition, as relevant. Like Rolls-Royce, he told the Financial Times this week, the energy group had a very successful cash-generating business but needed to invest for a low-carbon world.

“I’m going to Rolls-Royce focusing on how we can create a great opportunity for all stakeholders,” he said. “I focus on strategic clarity.”

Those who have worked closely with him say he is a good operator. Tony Hayward, a former BP chief executive who made Erginbilgic his chief of staff, said the new CEO “is tough and his style is quite tough, but he builds great teams and has a strong delivery record. C It’s a good appointment for Rolls-Royce at this point.

Erginbilgic, whose primary role since leaving BP has been as a partner in private equity group Global Infrastructure Partners, will take on one of the toughest jobs in British industry.

One of Britain’s oldest industrial names, Rolls-Royce brings with it a level of political and public scrutiny that the new leader will have to navigate with caution. The British government still holds a “golden share”, which allows it to block any takeover. Erginbilgic will need to develop relationships in Whitehall, as well as with key customers Airbus and Boeing.

Samuel Johar, chairman of the Buchanan Harvey board advisory group, said that while Erginbilgic was “clearly a successful divisional CEO”, the move to group CEO “is always important because strategy, external stakeholders and public scrutiny play a much bigger role.”

The engineering champion, world leader in the manufacture of engines for large passenger aircraft, is still recovering from one of the worst crises in its 116-year history. The pandemic has seen much of the global fleet grounded, forcing Rolls-Royce to shore up its balance sheet with £7.3bn of new equity and debt. A restructuring and asset disposal program launched by East is nearing completion but the company is only just beginning to generate cash again.

An engineer by training, Erginbilgic began his career in the oil industry at Mobil in 1990 before joining BP in 1997. He held several positions in the “downstream” division of lubricants, refining and marketing of the company, passing time in Turkey and all over Europe.

After two years at the helm of the general manager’s office – a stepping stone for those seen as future leaders and where he worked closely with Hayward – Erginbilgic was promoted to chief operating officer of the downline division. He became its leader in 2014 after Iain Conn left to join Centrica.

Before appointing Erginbilgic, Rolls-Royce chairman Anita Frew had already made it clear that the board was looking for a seasoned executive with a record of operational excellence on all continents.

It must be someone “who is used to a large, complex global industrial enterprise”, she told the Financial Times last month.

On this front, Erginbilgic ticks the box. People familiar with his time at BP credit him with solid industrial expertise with a constant focus on performance and cost reduction.

He’s “more of a technocrat,” one person said. “During his time, he really tore the company apart and put it back together. He turned it around in terms of profit.

For Rolls-Royce investors, whose recent history is marked by a series of transformation plans that never quite came to fruition, Erginbilgic’s focus on the bottom line could be a breath of fresh air. .

But he will have to balance that with tough economic conditions. Worries over high inflation and supply chain constraints are high, while company employee morale has taken a hit after thousands of job cuts during the pandemic. The challenge of decarbonization is also important and will require investments as well as partnerships.

“It’s an interesting appointment — he’s older than the current CEO,” said a person close to BP. “He’s the exact opposite of Bernard Looney [BP’s current CEO]: he doesn’t like to be awake, to be charming, to be a social media star. He’s not a social person. He is quite severe in his attitude.

“The performance is what he does, but the performance without an equalizer could be a challenge. The relationship he has with the president, Anita Frew, will be important because it will be up to her to fill in some of those blanks,” added the person.

Despite the challenges, Erginbilgic inherits a business emerging from extensive restructuring under the East and as international air travel has begun to recover. Airlines are back in the market for wide-body aircraft that fly with the group’s engines. If the recovery takes off, it could still provide a welcome tailwind for Rolls-Royce and its new CEO.

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