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Engineer on top

Water Profile

Bill Alexander joined Thames Water just before privatisation to manage the company's engineering. Thirteen years later he is chief executive of the world's third largest water company. Jackie Whitelaw reports.

It could be said that Bill Alexander has done very well out of the privatisation of the water industry. According to the financial papers the Thames Water chief executive's one off package this year should add up to £1.25M, and he has the sort of jet-set business diary that could make him the subject of much jealousy in the water industry and beyond.

But quite the contrary. Even his suppliers, who you might expect to be his biggest critics, say Alexander is 'one of the good guys'.

He is a tall man who cuts an imposing figure in a nicely styled suit, but he is no fat cat. The 55 year old's depth of knowledge and enthusiasm for the UK water industry and its potential for good worldwide are universally recognised.

Evidence of his peers' appreciation came earlier this year when he won the International Water Association's Award for outstanding contribution to water management and science at the organisation's congress in Melbourne, Australia. He regularly meets prime minister Tony Blair to advise on water issues and he is involved in the PM's partnering for water supply and sanitation project to assist the urban poor around the world. He helped deliver the UK government's bid to get firm commitments at the Johannesburg World Summit to halve the number of people without access to clean water and sanitation to 1.2bn by 2020.

Thames and Alexander are becoming the champions of the UK water industry on the global stage according to one industry expert.

But there is no bombast or self promotion from Alexander himself when you meet him. He is a quietly spoken man from the north east and his authority comes from knowing in depth what he is talking about. His special charm is the way he underlines how he could have done nothing without a good team around him.

'I never speak on a subject I know nothing about, ' he says, 'and I would not have made any progress without a good team.'

Alexander started building that team ethos when he joined Thames Water months before privatisation in 1989 from British Coal where he had started as a mining engineering graduate in 1970.

'My plan was to come here and get some experience of privatised industry and then go back and manage the British Coal privatisation, ' he reveals.

But instead he got caught up in the excitement of putting in place the engineering for an organisation that suddenly had four times the amount of capital and was at last moving forwards after 20 years in retreat.

His first job at Thames was as engineering director, and his first big responsibility was to build the £250M, 80km London Ring Main. 'It was a fascinating challenge. I didn't know anything about tunnelling but I knew about contractors and I set about engaging them in a way that would encourage them to work with us as a team and share responsibility for the project.'

Partnering was launched on an unsuspecting industry and the project came in years early and underbudget. 'We were the model for Egan, ' Alexander says, 'but Sir John has done a much better job of presenting the idea than I could have done.'

Over the last 13 years Alexander's enthusiasm for Thames has been maintained by regular promotions, on average every two years. He was appointed plc chief executive in 1997.

Thames, unusually for a plc, is not an organisation which dances to the tune of its accountants. Its vision/mission statements are not the usual dressed up business school ambitions that mean maximising profit at any price. Rather they are founded in solid, almost traditional engineering values you would expect an engineer like Alexander to espouse. There is 'commitment to the people we serve', 'growing our people with the business', 'benefiting wider society', and an ambition to be 'life enhancing'. The qualities the company aspires to are integrity, optimism, permanence and ingenuity.

'The values came from the grass roots, ' says Alexander.

'My predecessor invited us to a conference and producing a completely different list told us 'these are our values'. And we said 'no they are not, they are yours'. We then took 250 people to Thorpe Park and asked them what kind of values would engage them and our customers.

'The result is we have created a great environment where people can develop and succeed, I believe. People have to work towards an achievable and balanced business plan. It can't just be about money - that doesn't excite people. The money comes as a consequence of success in other things.'

The life enhancing culture seems to be having a positive effect. Thames claims to have few problems recruiting and retaining staff even in the current skills crisis. And a clear vision of how the company thinks and behaves is also proving very useful in the latest, very expansive phase of Thames' and Alexander's careers.

Thames was taken over in 2000 by German conglomerate RWE and since then has been expanding as an international business.

'Our values are our corporate glue, ' Alexander says. 'And they are easy for people everywhere to understand.'

The arrival of RWE has opened any number of doors for Thames Water. Since the purchase the £62bn turnover RWE utility group has decided to trim down its vast spread of activities and focus on only four areas - energy, gas, water and waste management.

Thames was the first building block in the international water strategy and is now the water division of RWE, managing expansion from Reading. The regulated UK Thames Water Utilities business turned over £1,086.3M in 2002 and produced a pre-tax profit of £251.4M. But Thames plc is a much bigger fish, with recent acquisitions of international water businesses - notably E'town in New Jersey, US, and Essbio in Chile; the integration of RWE's water business RWE Aqua into the Thames group; and concession operations like a 30 year contract to build own and operate water and sewerage in West Bangkok, Thailand.

It serves 51M customers around the world and employs 14,000 people. Alexander is chief executive of it all and his responsibilities are about to get even larger.

The company is just finalising the £4.9bn purchase of American Water Works, which is the biggest publicly traded US corporation devoted exclusively to the business of water, and is a business as big as the existing Thames operation.

'The purchase will change the shape of the RWE water division forever, ' Alexander says. 'And it will make us the number one water business in Germany, the US and the UK. We are buying a good company with good management. We'll add some value, but my challenge is to grow the people.'

A typical week

Monday

AM: Attend the twice yearly Open Leadership programme for Thames middle managers with potential, run in Oxford.

PM: Fly to Philadelphia.

Dinner with chief executive of American Water Works (AWW).

Tuesday

AM: Meeting with AWW chief executive and finance director - talking about the programme of US state approvals to complete purchase of the company and integration of AWW into the business.

PM: Fly back to UK.

Wednesday

AM: Attend board meeting of concrete giant RMC in role as nonexecutive director; then to RMC directors' remuneration meeting.

PM: Hosting the Turkish-British Business Council meeting, then on to the Confederation of British Industry International Development Council Thursday AM: Fly to Berlin for briefing by Europe MD on board meeting of Berlin Wasser.

PM: Fly home.

Friday

AM: In Reading office for board meeting of UK business.

PM: Business meeting, then home.

Points for the price review As chairman of the UK business Alexander is starting to produce the strategy for what Thames wants out of the next periodic review, for discussion with regulator Ofwat.

'I have to persuade people to invest in the business and if I disagree with the outcome I will go to the Competition Commission.

'We are all starting out in the right way, ' he says. 'There is general agreement that everyone would like to avoid the boom and bust of five year plans.

'The key is to get the balance right in terms of environmental improvements and investment in replacing old infrastructure.

'The mains in London are not getting any younger - 25% of them were built before 1830.'

Leakage is a big issue in the Thames region for the water company and for Ofwat (see page 33). 'But Ofwat's criticism does not take into account the scale and complexity of the region we serve. The above ground structures are constantly changing and London has a particular problem with heave. Cast iron pipes don't bend.

'We can't spend more if the regulator gives us less. If priority is given to environment rather than infrastructure year after year then it shows in leaks. We need to change the emphasis.'

In terms of extra investment over and above that agreed in the price review, Alexander says: 'Our owners will put their money where they get the best return and if that is better in the US they will spend it there.

We will strive to work even more efficiently in the UK but we need a better return than last time. And if we get that that it will enable us to invest in extra improvements rather than having to wait for each periodic review.'

His attitude to Ofwat is: 'Whatever the programme, tell us early, make sure the returns are enough to attract capital and give us time to condition our customers as to what to expect.'

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