Obama meeting will be Svanberg's toughest test
James Savage · 14 Jun 2010, 18:57
Published: 14 Jun 2010 18:57 GMT+02:00
Carl-Henric Svanberg, 58, is chairman of a company presiding over an environmental catastrophe. President Barack Obama said he has his ‘foot on the throat’ of BP. Yet last week, as the oil continued to flow, the Financial Times described the chairman as “lower-profile than an agoraphobic prairie dog.” He is even being spoken of as BP shareholders’ preferred sacrificial lamb.
One anonymous BP source was quoted last week as saying: "Svanberg should have been there, along with chief executive Tony Hayward, and shown the world that BP is doing everything in its power to clean up this mess, offering to pay the necessary compensation and be BP's public face. He has failed them."
Now, though, the time for lingering in the background in over. Svanberg has been thrust into the limelight, with a summons to appear at the White House on Wednesday for a meeting with Obama.
Svanberg, who only formally took the reins at BP in January, remains a fairly anonymous figure in the US and the oil giant's home market, the UK.
But in Sweden, where he was CEO of telecom equipment maker Ericsson, Svanberg has been the country's most high-profile company leader of the past decade. For observers of his career, this makes his handling of the crisis puzzling. He is widely viewed as one of the Sweden’s most able business leaders and best communicators. His reputation in the US and the UK for being media-shy and unforthcoming is lightyears away from how he is perceived at home:
“He is very communicative, verbal and charismatic,” says Torbjörn Carlbom, telecoms reporter at Swedish business weekly Veckans Affärer.
“This is why the Swedish media are very puzzled by the way he is coming across in the current crisis at BP.”
It could even be said that Svanberg has been something of a hero in the Swedish media, both for his success in turning around Ericsson, Sweden's industrial crown jewel, and for his clubbable, easy manner.
A keen sailor and former amateur hockey player, he was brought up in Porjus, a village of 400 people in the extreme north of Sweden. He studied engineering at Linköping University, returning to university after his military service to study business administration and economics at Uppsala.
In an interview in 2006 he told of how his sister’s diabetes, which caused her to lose her sight, undergo a kidney transplant and a double foot amputation, had spurred him to “work for us both.” Despite his hard work, he is generally viewed as “a competent and nice chap,” according to Carlbom.
“Lots of people in the media have tried to find something wrong with him, but they haven’t.”
Svanberg divorced wife Agneta Skoog Svanberg last year, after 26 years of marriage and 3 children.
In business, Svanberg has been unusually successful. His first big job was as CEO of lock company Assa Abloy, where he increased profits from 50 million to 2 billion kronor in ten years.
His enviable reputation meant he was seen as an obvious saviour for Ericsson. When he joined the company in 2003, it had been subjected to a period of severe cutbacks. As the world’s largest telecoms equipment maker, it had been badly hit by the dotcom crash: mobile operators, stung by governments’ demands for billions of dollars in licence payments for 3G networks, had cut back drastically on their spending.
When Svanberg joined, the company had seen like-for-like sales fall by 31 percent in just one year and had made big losses in both 2001and 2002. The number of workers had been slashed: 107,000 people had worked for the company at the beginning of 2001; by the end of 2004 that number would be just 50,000. The ripple effects had been felt across the Swedish economy.
“He stepped in at a time when a lot had been done, but the company lacked self-belief. He worked hard to restore morale,” says Mats Bergström, telecoms analyst at Nordea.
Few CEOs or chairmen, including Svanberg, have had to go through a crisis of the magnitude of the disaster now facing BP. The most serious crisis for him at Ericsson was in 2007, when it issued a profit warning. The warning led shares in the company to fall by 25 percent:
“He handled that well, both internally and externally, although that was small beer compared to what he’s facing now - to say the least,” says Bergström.
Ericsson’s importance to Sweden means its CEO is always something of a political figure. In 2003, he wrote a newspaper article together with Foreign Minister Anna Lindh, calling on Swedes to vote in favour of euro membership in the upcoming referendum. The cosiness of the relationship between government and business was underlined when newspapers splashed snaps of Svanberg and Lindh air-kissing as they met to discuss the vote.
Svanberg also intervened in politics in 2006 to call for the then Social Democratic government to be voted out.
Torbjörn Carlbom points out that anyone working in a heavily-regulated sector like telecoms is used to close contact with government, where state companies often control telecom networks:
“He is very used to working with politicians, and to working with safety issues and corporate social responsibility.”
But Svanberg’s summons to the White House means he is now playing on unfamiliar political turf in the midst of a crisis - and the stakes could hardly be higher. For many this is his main chance to prove to the US administration that BP is capable of stopping the leak - and to prove to his own detractors that he is the right man at the top of BP.