By managing risk, the not-for-profit LR has become a very British success story, but its CEO has concerns over political inertia
It has offices in 78 countries, is a model of corporate responsibility and is, arguably, more British than the royal family. Lloyd's Register (LR) could be a cheerleader for foreign secretary William Hague's exhortations "to win our place in the world economy" – except that chief executive, Richard Sadler, is strongly critical of Westminster policies.
"The government needs a long-term plan to protect the supply chain, whether we are talking about food or energy. If [shipping and oil capacity] is all in the hands of foreign governments we should not be surprised if they protect their own first if the need arrives," he argues.
"We are not looking ahead and taking an integrated approach like in China and Germany and that is poor policy. And if a government is not here to protect British society then what on earth is it here for?" asks Sadler.
The LR business is involved in the power production and maritime fields, so it is not surprising Sadler is interested in how to secure Britain's strategic interests through a kind of national shipping fleet or energy provider. LR, a "classification society" that assesses the mechanical safety and management systems of everything from ships to nuclear plants to food supply chains, does not rule out the concept of state-owned businesses needing to be established, though Sadler says other options need to be looked at first.
"There needs to be a national strategy in these areas. I am not talking necessarily about re-establishing commercial shipbuilding here but governments have been short-termist and we have to think how we need to support society in 2030 or 2050. How is the population going to keep warm and feed itself?"
LR is certainly patriotic. It boasts of being 100% British – in the sense it is located here and has no foreign ownership of any kind – but is actually busier in China than the City. Of its 8,500 staff only 1,500 of them are working throughout Britain with around 750 now in China. And there is little doubt it could happily wave goodbye to its City headquarters if it had to and still thrive.
But LR is a very unusual beast to start with in that it is a not-for-profit organisation that ploughs all its excess cash back into its own operations or gives it to charity or academia. And it has no hesitation investing in new university-based technology centres, whether in Singapore or Southampton as well as handing out cash to run lifeboats through the RNLI. But there is little doubt where home is, given LR was a product of the same Lombard Street coffee shop as another famous maritime name, the Lloyd's insurance market.
The two organisations were once one, and continue to provide services for each other but they have no ownership ties any more. LR is also at least 20 times smaller in revenue terms. The company employs fewer than 10,000 staff but has a turnover of nearly £1bn and makes steady returns of 10% on that. About 40% of the revenues still come from roughly the same kind of maritime business that LR started in.
It was formed in 1760 to provide third-party safety checks on the fleet of merchant vessels that served the British empire from its base in London docks. But a current slump in shipping – following the 2008 credit crunch – and the growth of the energy sector has led to wind farms and oil refineries expanding to 30% of its business.
So when EDF of France comes up with a new reactor design for Britain, it goes to Lloyd's Register. And yet the company is also active in the transport business helping certify the safety of a new metro links in Beijing and Bangkok as well as Dubai
Many of its customers are governments or insurers but it has 50,000 current clients on the management systems side alone, mostly in the private business sector. One of the fastest growing sides of the business is assessing global food security so it provides advice to companies such as Coca-Cola, Cargill, and Mars.
Some of LR's rivals such as Bureau Veritas, the French classification society, have floated on the stock market but Sadler says LR has no such plan – or need. But does it not miss the discipline that goes with having outside investors?
"Well, clearly you have to have a self-motivated CEO and management team. But we drive performance because we have a passion for what the organisation stands for and its history," he says.
"But just as Steve Jobs [of Apple] was passionate about not just what he made but how he made it, so are we in a different way. And we have a lot of success recruiting 25- to 35-years-olds who are fascinated by working for a company that is designed to add value to society and not just make a profit."