The art of the possible

Paul Clegg says he doesn’t get invited to many dinner parties these days. His enthusiasm for his company’s products is such that he says he can “bore the pants off people”.

However, that’s not to say that his evangelist approach to promoting Accsys Technologies’ modified timber products Accoya (solid timber) and Tricoya (panel products) falls on stony ground. The sound performance and sustainability credentials of both materials mean that everyone he speaks to “understands how valuable” the products are.

When speaking to Accsys Technologies’ chief executive officer – and Tricoya Technologies’ chairman – it’s easy to forget that he has only been directly involved with the timber industry for seven years. Prior to that his world was one of high finance, having followed his father, who is chairman of United Trust Bank, into investment banking.

Following a cosmopolitan early life, even that particular, steady career choice was by no means a foregone conclusion. “I didn’t actually live in England until I was six,” he said. “My father is English and my mother is Dutch and we lived in the Netherlands and Belgium (Brussels) before moving here.”

In common with his three siblings Mr Clegg spoke only Dutch until he started school in England and he is still bilingual – a fact, he says with some pleasure, is “supposed to be good for helping to prevent Alzheimer’s”. It’s also useful given that Accoya is manufactured at the company’s factory in Arnhem.

“I never used to use my Dutch for work purposes and everyone in Holland speaks very good English, but it does make a difference when you speak to someone in their own language,” said Mr Clegg. “It adds a dimension of understanding for both parties.”

He attended private school until ‘O’ Level exams and a college in London for ‘A’ Levels. University may have seemed the logical next step but it wasn’t for him. “I didn’t go to university,” he said. “I was a rather impatient teenager – and probably not very co-operative. I wanted to get out and do things so I worked as a ski instructor and tried to set up a retail company, importing jeans.”

By the early 80s, however, the world was emerging from the financial turbulence and uncertainty of the 70s and the lure of the City of London proved irresistible.

“The City was a completely different place then,” said Mr Clegg. “In 1981 I started work at investment bank The First Boston Corporation as a ‘coffee boy’, which involved doing office admin, answering phones and so on.”

From this relatively humble beginning Mr Clegg rose through the ranks and held senior positions at various investment banks, including James Capel and Schroder Wertheim, where he was a director from 1988-2000. He ran SG Cowen International, part of the Société Générale Group from 2000-2006 and then became CEO of Cowen International.

He found his career in investment banking immensely fulfilling. “The City has real and continuous natural selection and I think that was very good for me,” he said. “It instills a strong work ethic and also the art of the possible, where you always look for the solution. You are exposed to an enormous number of different ideas, industries and work practices and the interface between the finance world and the real economy means you see how different industries work. You gain real insight from working with these companies.”

It also, he added, taught him a very valuable lesson in how small, publicly quoted companies have to deal with the financial aspect of their businesses. “It’s not easy being a small company. You have to fight very hard, both as a public listed company but also on a commercial basis. Working in the City provides you with that melting pot of experience that helps you deal with that.”

After looking for a new challenge and deciding to leave the City Mr Clegg was approached by Accsys Technologies in 2008. He became a non-executive director in April 2009 and was appointed CEO in August the same year.

He had been aware of Accsys for some time, and counsel from a relative who worked in the timber industry convinced him the career move was a wise choice.

“Through him I found out more about what might be possible if Accsys had got what they said they had with Accoya.”

For the new CEO the baptism of fire wasn’t coming into the timber industry, it was the business environment of the day. “The world was close to financial catastrophe in October 2008 and the construction industry, which ultimately provides the demand for our product, was in meltdown.”

Accsys itself was not in good financial shape and it hadn’t really established its true identity but its strength lay in “the really winning proposition as far as the technology was concerned.

“We have to face our chemical counterparts – BP, Ineos and Solvay amongst others – very credibly but I quickly realised how important it was for Accsys to become a very timber-aware business,” said Mr Clegg. “It had lost the balance about what it was and had become a chemical company with financial engineering, when really it needed to be a chemical company with very strong timber awareness because all our customers were either in the timber industry or were very closely aligned to it.

“The customer-facing aspect of our business, from technical support to product development and supply chain to sales had to become very timber proficient. We had to become recognised and respected as a competent timber counterparty. “It became clear to me that sustainably sourced wood that could be turned into a very long lived, high performance material was a very interesting prospect. The timber industry was a very large sector that had suffered from low performance [materials] and that had lost market share, particularly in the joinery space. I knew that if Accoya could do what we said it could, it could take a small share from a very large market.”

Once he was convinced that the company’s raison d’être – the product – was sound, the second step of turning Accsys’s fortunes around was relatively straightforward – although not without pain, as slashing overheads meant that jobs were cut by a third. Being disciplined about costs and having a strong, clear business plan that was “understandable, realistic and backable” was crucial when it came to securing financial support from shareholders in 2010 and 2011. And, again, it was belief in the product and its potential market that provided the leverage.

“The product of acetylated wood is at the heart of it, whether it is Accoya or Tricoya or whatever else may come out in the future,” said Mr Clegg. “And every day its market potential is confirmed as architects’ protocols are being affected by BREEAM [Building Research Establishment Environmental Assessment Methodology], LEED [Leadership in Energy and Environmental Design], the EU Timber Regulation, the Lacey Act and the issue of sustainability. Just the other day I read another article about sea levels rising because of greenhouse gas emissions [from the production of alternative materials to wood] and we know that PVCu and aluminium windows are not necessary if you have an alternative in modified woods such as Accoya or Tricoya. These issues are becoming quite fundamental to our existence.”

He added that while the sustainability message is very important, so too is the need for people to “rediscover” the value of timber. The timber industry has suffered as a result of becoming extremely commoditised, he said, but it is now much more innovative. Any innovation that prolongs the durability and service life of timber “must have enormous value to society. I believe this is the beginning of the beginning”.

The general business landscape remains far from easy, however. “Our business has grown its revenue base very significantly and we are now EBITDA positive, which is a very good position for us to be in,” said Mr Clegg. “However, in general terms the business environment is quite challenging and for small public companies it is particularly tough. In fact, over the last five years it has been as tough as I can remember it being over an extended period.

“As always for both us and our counterparts finance can be challenging. Growth is not guaranteed and we are investing heavily, pricing flexibility is low and confidence, while ok, is not robust all of the time. And confidence is critical for the construction industry and for us as individuals to make decisions. As a public company, stock market vacillation adds another difficult dimension.

“On the other hand, if we manage to continue to thrive in this environment, when we’re being challenged at every point on whether our business strategy and our products are justified, then it should be good for the embedding of the technology and the challenging of the commercial realities for both us and our customers. I believe it is actually creating a very solid foundation which, again, gives me confidence that the business will continue to grow.”

Interviewed pre-Brexit, Mr Clegg was adamant in his business and personal view that the UK should remain part of the EU.

“A large single market is very positive and I’d rather be inside the world’s biggest trade block than outside it,” he said. “We are investing in the UK with BP [to build an acetylated wood chip facility to feed Medite’s Tricoya panel production] so it’s very important to make sure there are as few trade barriers as possible. The UK is currently the biggest market for Accoya and leaving the EU would create uncertainty in that market.

“Whatever happens next we’re in for a rocky period. Rocky periods affect business confidence and we’re still just in the early stages of fundamental recovery post the credit crunch. The country is incredibly indebted as a nation – as are other nations – and when you have issues of confidence at the margin they can have a very significant impact on trade.”

Mr Clegg has admiration for politicians, believing they are hard working and “often much-maligned” but unlike his younger brother, the former deputy prime minister Nick Clegg, he has never fostered any ambition to walk Westminster’s corridors of power.

“I don’t think I would be any good at it, so I’ve never considered it,” he said. If he had pursued any other career it might have been boat building or ski manufacturing – and, happily, Accoya is relevant to both. “I have a small boat which has an Accoya deck on it, which I just love,” said Paul. “And we are working on an R&D basis with a ski company that is looking at whether it can incorporate Accoya into the core of the skis.”

Other interests include non-executive directorships of London-based mid- and small-capital investment house Peel Hunt and Southampton-based biotechnology company Synairgen plc.

“I spend maybe a day a month with Peel Hunt and find it very interesting because it helps me keep my hand in something that is very relevant for us as a publicly-quoted company. I spend at most half a day a month at Synairgen, which is a respiratory drug development company local to where I live. It’s a small company doing really interesting work with some of the world’s leading respiratory specialists and I am often in awe of their expertise around the boardroom table.”

What spare time is left is very familycentric. His children range from 16 to 25 and are either at school or in further education; part of his passion for environmentally friendly building products is reinforced with conversations with his eldest daughter, who is a marine biologist, currently studying for a PhD. He has taken on board the fact that “ghastly dioxins”, possibly arising from “problematic” recycled building products, are still finding their way into the world’s oceans, he said.

Marine biology aside, there are no clear indications of career paths for the Clegg offspring just yet. “I started as a ski instructor and I’ve ended up in a wood company, so who knows? The great thing nowadays is that where you start isn’t necessarily where you end up. It certainly makes me want to live forever because I’d like to know what happens next.”