Corporate leaders series: In conversation with Lady Suzanne Heywood

Evan Davis

Well, hello, everybody. Welcome to this Corporate Leaders Series conversation. Our leader today is someone who has several roles and a lot of varied experience, Lady Heywood, Suzanne Heywood, the Chair of CNH Industrial, a company that makes big stuff that most of us don’t buy, tractors, buses, trucks, and the like, goes back nine or so years in its current form, but originates with companies Case and New Holland, more familiar brands, perhaps, employs tens of thousands and has tens of billions of dollars of revenue a year. Now, Suzanne is – and Managing Director also of Exor, which is the CNH Industrial holding company, the company – the largest shareholder, Exor being controlled by the Agnelli family from Italy.

Now, prior to joining Exor, Suzanne had a career in the UK Civil Service, worked at the Treasury, takes a keen interest in management, with experience in both the public and private sector, and I’m sure we’ll talk to her a little about that, and she’s written or co-written more than one book, including, most recently, “What Does Jeremy Think?” A biography – an informative biography on her late husband, Jeremy Heywood, who, before his untimely death in 2018, was Cabinet Secretary and Head of the Civil Service. Suzanne, also a Board Member of The Economist and a Non-Executive Director of Chanel.

Now, let me just talk us through what we’re going to be doing. The plan is for Suzanne and I to talk for half an hour or so, and then to open up to questions. Your – one great advantage of this format is you can put questions, without waiting for the questions session, but we’d ask you to put them in the ‘Q&A’ facility. When we come to them, I will try and ask you to say your question. I’ll pick them, call your names, and ask you to say your question, but if there’s any fuss or mute issues, microphone issues, I’ll just read your question myself, but do leave questions, and we’ve got plenty of time for questions. We’ve got an hour in all, this is on the record, as all the Corporate Leaders Series events are, and you are encouraged to tweet. You may tweet using #CHEvents, but I’m – you may well be watching this on recorded, you’re still welcome to tweet, but you won’t get to watch – you won’t get to ask a question.

Well, Suzanne, it’s lovely to have you here in this series. I want to start, actually, March the 23^rd last year, you’re Chair of CNH Industrial, March the 23^rd, a date etched on many of our memories as the date we entered the full lockdown in the UK, and the day in which you were appointed the Acting Chief Executive of the company of which you were Chair. Just tell us a little bit about taking over at that particular moment, talk us through the interesting times in which you were presiding.

Lady Suzanne Heywood

Thank you. Well, thank you very much, and I’m delighted to join you here today, but, yes, you’re right, I took over at a particularly tricky moment, and I’m sure, kind of, all corporate leaders, everyone listening to this, has their own story of what it was like to live through those, kind of, weeks and months. But for me, as you say, I went very suddenly from being the Chair of CNH, which I’ve been doing for a number of years, to having to step in as the Acting CEO when our CEO stepped down. And I have said that those first few weeks, to be quite honest, are a little bit of a blur. I think for, kind of, both myself and the leadership team, it felt like we were working pretty much every hour there was to make sure that we got the company through in the most effective way.

What I did when I first stepped in, and I am somebody – I like to take advice from people. I mean, there are a lot of wise heads around. Of course, we were all dealing with a situation that we’d never dealt with before, but one of my mentors, one of his advi – his advice to me, as I stepped in, was, “Focus on a few very critical things, the absolutely most critical things, to get this company through the pandemic.” And the three priorities that we set, that I set with the leadership team, were, first of all, keeping our people safe. As you say, we have tens of thousands of people across the globe, including many in South America, we have employees in India, across the globe, that was our number one priority.

Our number two priority was making sure that we got the company through in a robust way. So, you can imagine that included things like making sure that we had very strong liquidity, making sure that we got – tried to reduce the costs base, as much as we possibly could, both the short-term costs and the long-term costs, making sure that we, you know, kind of, really, really thought about where we were, for example, investing in our R&D. ‘Cause actually, part of the issue is making sure you do spend the money that you need to spend to get the company out the other side in a very resilient way, so it’s not just about cutting costs, it’s making sure you cut the right costs, as you go through.

And then the third priority was making sure that the network that we operate within also came through in a resilient way because it was very clear early on that we would only get through this pandemic in a strong way if we supported our suppliers, and the supply base became, and still is, actually, a very challenging thing for many big manufacturing companies. But also make sure all our dealers came through in a strong way because our products, and you mentioned Case and New Holland, but we also produce all of the Iveco trucks and various other – you know, we produce fire engines and various other things, as well, they’re all sold through dealers, or at least many of them are. And therefore, we needed our dealers, who are independent, to come through, they’re independent businesses, we needed them to come through in a resilient way, as well. But it was quite a – you know, a very, very tough time because you – coming in suddenly in that situation and trying to get the company to really focus on the absolutely, kind of, critical priorities.

Evan Davis

Did production stop in large part for any period? Did you have to, essentially, close up?

Lady Suzanne Heywood

Yes. Yes, no, absolutely. So, we closed all of our plants across the world for a period of time because we had to. So if we go back to the, kind of, first priority being to protect our people, we had to make sure that we made all of our facilities COVID-secure for all of our people. Now, so, job number one was to close them. What I very quickly discovered is opening them up is actually much tougher than closing them down, because, in order to open up a facility, and we have a, kind of, excellent Head of all of our Facilities, Tom, who masterminded this, but you have to – in order to open a facility, you have to, first of all, make sure that you have all of the supply chain lined up, so you can reopen a facility. You have to make sure the facility itself is COVID-secure, so you’ve got all of the new protocols and ways of working all in place, and then, of course, you need to make sure that the end market for that plant is also there. So we ended up with a very, kind of, complex grid, with every single plant in the world, where we tried to make sure that all of these things were in place, so we could gradually get all of the manufacturing facilities back up.

Evan Davis

CNH survived. How – you said you wanted to come through with resilience and strength, and how well did you do over the year, the worst year of it?

Lady Suzanne Heywood

Well, I think the company has come through incredibly resiliently, you know, as reflected, you know, if you look at this, kind of, externally, but also internally. CNH benefits from the fact that one of its largest markets is the agricultural equipment market. So you mentioned the Case and New Holland brands that we have, we also have the Steyr brand, and the agricultural market actually came back very quickly. So there was a relatively short period where people weren’t really buying agricultural equipment, and then, very quickly, that market came back because the world still needs food, and farmers still need equipment. So, that market came back, and it came back quite – it came back quickly.

Our other big markets, our truck market came back more slowly, but still faster than, say, for example, the domestic car market. We also have a big construction equipment market, and that also came back, not as fast again as agriculture, but came back, kind of, reasonably quickly. So, if you combine the markets coming back, and we also managed to get a lot of liquidity for the company, actually, the company’s come out of it very strongly.

Evan Davis

Yeah, well, we might talk a little more about management in a pandemic, but let’s just look beyond the pandemic a little bit, because it’s a company very committed to sustainability, it produces its Sustainable Year publication, it’s actually – this year’s is out very recently. Like quite a lot of progressive companies, I will quote you something it says, “CNH Industrial’s ambition is to become carbon neutral,” and I want to, sort of, kick the tyres a little bit on what we mean by carbon neutral for a company like yours. Tell me what you mean by carbon neutral.

Lady Suzanne Heywood

So, by carbon neutral, we mean that the net carbon that is involved with the entity of CNH and the products that we produce, that that net becomes zero. Now, there’s obviously many different ways in which we’re aiming to do this, and perhaps the most important part of the puzzle for us, because we are – as you can imagine, we’re reducing the carbon emissions within our production. So, we’re aiming to reduce that by 50% by 2024, and we’ve already made big strides.

But, actually, the most important part of this puzzle is the carbon emissions of the vehicles that we produce. So, you can imagine that if you, kind of, go back into the past, we were producing diesel-powered, kind of, tractors, combine harvesters, trucks, all, kind of, diesel-powered. What we’re really focusing on is moving those vehicles to be powered by much more environmentally sustainable fuels, and there’s, kind of, several different parts of this.

I mean, we are already one of the – you know, one of the world’s leading manufacturers of natural gas-powered trucks, which we produce and are, kind of, very widely used within Europe. Natural gas is a very nice transitional technology from diesel-powered trucks, through to where we all want to go, which is electric-powered vehicles, because, of course, they have no emissions, at least on the road. So we’re doing a lot in natural gas, and, actually, we’re using natural gas not just in trucks, but we’re aiming to do that across the whole of our portfolio. We want about a quarter of our portfolio all to be natural gas, as quickly as we can get there.

I’ll probably end up talking to you a bit about biomethane, which I’m very excited about, ‘cause biomethane, the great thing about that is, if you’re a farmer and you have cattle, in particular, they produce a lot of biomethane, and at this point, we have to get into the, kind of, rather smelly issue of, kind of, slurry pits, which I won’t go into, in too much detail, but suffice to say, if you have a slurry pit, you cover it over, you capture a lot of biomethane. You can then use that biomethane, with the right technology, to power all your agricultural equipment on the farm. So you end up with a double win, because, first of all, you’re stopping biomethane leaking up into the atmosphere from your slurry pits, and then, secondly, you’re using it to power your equipment. And, indeed, if you’re clever enough and you have enough cattle, you can actually produce electricity and put it back into the grid, so biomethane, we’re very excited about, and, kind of, from the second half of this year, we’re going to be getting vehicles out – in production that are running on biomethane.

And then, of course, the next step is, you know, let’s get electric vehicles, and, you know, I…

Evan Davis

Well, this is what I – this is really what I wanted to find out from you, is it possible to make an electric – a big electric lorry, big electric truck?

Lady Suzanne Heywood

Absolutely, absolutely. So, we are now – we have now prototype electric trucks that are in test, they are being tested. We’ve produced six of them in our plant in Ulm in Germany, and they’re being tested. The issue with them is – so, you can absolutely do it, the issue if you run them on – so these are battery trucks, and you can imagine the size of the batteries, but, still, they work, and they are very, kind of, environmental. The issue with them is that there’s a limit to how much distance you can do in a, kind of, battery-powered electric truck, so they will be very effective for short emissions.

What we want to do, and we’re going to be doing this next year, we’re going to be getting the prototypes out next year, is we want fuel cell trucks, fuel cell driven trucks. So, effectively, what you do there is you use hydrogen to power a fuel cell on the truck, and the fuel cell drives the truck, but also, kind of, supplies the batteries.

Evan Davis

So, the fuel…

Lady Suzanne Heywood

I’m wondering…

Evan Davis

…makes it like a battery…

Lady Suzanne Heywood

…if we have a joint…

Lady Suzanne Heywood

Yeah.

Evan Davis

…but it’s running on hydrogen, a flow battery that’s actually using the hydrogen, so it uses…

Lady Suzanne Heywood

Exactly.

Evan Davis

…hydrogen at the…

Lady Suzanne Heywood

Exactly, exactly.

Evan Davis

Great.

Lady Suzanne Heywood

And we will have prototypes of those in the second half of next year, and that is absolutely possible. What is needed is to make sure that we have the right fuelling network. So we spend a lot of time, you know, kind of, talking to, kind of, governments and others about the importance of getting that network in place, because if you want these trucks to run, they’ve obviously got to get hold of the hydrogen. The happy thing, by the way, is the natural gas refuelling system, and you can use the same refuelling system for the hydrogen, so if we can, kind of, get that in place now, we can then start using it for the hydrogen and fuel cylinders.

Evan Davis

I suppose my concern, Suzanne, is that – I mean, I’m torn between two views, one is that technology is going to develop and we hopefully will actually get electric this, electric that, and all our electricity will be renewable. On the other hand, what I observe companies doing is adopting a lot of solutions that are not really as ambitious, that are the halfway house solutions like natural gas, which will look like we’re making a mega progress very quickly, but which really are leaving all the really hard work to the later phase, with no guarantee that we’re going to get it to be practical. I don’t know, am I being a bit too pessimistic there, do you think?

Lady Suzanne Heywood

Well, I mean, that’s certainly not the case for us because the thing is that with our sorts of equipment, you can’t just do one solution, and then when you finish that, you go, “Okay, now let’s think about the next solution.” The development time for these vehicles is years long, as you can imagine, so we are running full pelt, you know, in terms of getting the electric trucks, as I say, they’re in prototype now, you know, they will be being sold next year, the fuel cell ones are in prototype next year, will be sold the year after, but alongside that, we have our natural gas trucks, which we’ve already had in production for some time. You’ve got to do them in parallel, so it’s not that you do one beca – and then, you know, stop and think about what you might do next. They’re all being done at the same time, but it’s going to be easier, the natural gas is out at scale, and they will be operating for a while as fleets, as we transition over to electric, and natural gas is a big step forward from diesel, I mean, just in terms of, kind of, air pollutants.

Evan Davis

When you say you’d like CNH to be a carbon neutral company, in your head, how much offsetting are you building into that, and how much carbon capture are you imagining your company will have to do in order to be truly carbon neutral?

Lady Suzanne Heywood

So, I think we will have to do some offsetting around our production facilities, but our aim is to minimise that offsetting. So, you know, job number one is to get our own emissions down as low as we possibly can, so I mentioned before, we’re going to try and get – we’re going to try and halve the emissions per production unit by 2024, so we are going to get those down as low as we possibly can. You know, we are looking to – I think we’re going to get around – by 2024, we should be getting – around 80% of our energy that we use for production is going to come from renewable sources. So, we are going to do as much as we possibly can to reduce our own, kind of, energy use and reduce our own carbon emissions.

We will then do offsetting to, kind of, get to our commitments, and we will be thoughtful about how we do this because I personally get very suspicious about some offsetting. I think we’ve got to be very careful what you look at, and it needs to be genuine and it needs to be real. And then, as I say, in terms of the vehicles, we need to make sure that they are – you know, work as carbon neutral as they possibly can be, in terms of their ongoing usage, because for a company like us, as I was saying before, that’s more important, in a way, than just the production of them.

Evan Davis

Well…

Lady Suzanne Heywood

They’ll be on the road for years.

Evan Davis

And you’ve clarified the ambition isn’t just to reduce your emissions, but the – those are the products that you make, in other words, your customers’ emissions. Help us out, though, I mean, how can we, the public, investors, consumers, how can they distinguish between those companies who say they are going green and those who you think really mean it? ‘Cause I think this is a, kind of – a bit of an issue, really, particularly for the ethical investing sector where they can look at companies, read the sustainability report, and it’s incredibly difficult, really, to get right in there and see if this is real, particularly in the early stages, or whether this is what’s popularly called greenwashing.

Lady Suzanne Heywood

Yeah, I think it’s a very fair question. I mean, we’re in a really interesting phase at the moment, and I’ve been looking at this both with my, kind of, Exor role in mind, where we have a number of different companies, and with the CNH role. So, if I talk first in terms of CNH, I mean, CNH has been doing this for some time, it’s just become – I think for the tenth year in a row this year, we’ve been at the top of our index, in terms of sustainability, and there’s a huge amount underneath that. And I think, you know, one of the things investors can look at is where you have external bodies that are coming in and looking at all of the material and giving up a, kind of, external view, because, you know, as I know from the team that works incredibly hard on this within CNHI, you can’t get to the top of those indices unless you’ve got, you know, real meat within it.

But I know, when I, kind of, look at this across all of our companies, ‘cause at Exor we are thinking about this for all of our companies, at the moment, it’s a very confusing space. We have multiple different bodies looking at sustainability, and if you want to do something meaningful, and I think it’s important for all companies to do something meaningful, right now, it’s hard to do, it’s hard to, kind of, figure out which is the best set of metrics that you should be operating against. And one of the things I’m hoping is that over the next year or, kind of, maybe even, kind of, you know, year to kind of couple of years, this should become clearer. It will be much, much easier for companies if we can settle on a single set of things that everybody looks at, which are meaningful. Whereas at the moment, I think there’s so many that it’s very easy for people to, kind of, say things and for them not to have substance underneath it.

Evan Davis

Yeah, so you can read the sustainability report and they set their own metrics and appear to succeed by the standard…

Lady Suzanne Heywood

Yes.

Evan Davis

…that they set themselves. I’m terribly interested in your investors, the Agnellis, I mean, are they really up for this, are they – other companies will have more disparate shareholdings probably, but do they buy in?

Lady Suzanne Heywood

Well, so, CNH’s main shareholder is Exor, and Exor is partly owned by the Agnelli family, so we have a, kind of, two-step, kind of, chain here. But yes, no, absolutely, I mean, and speaking – you know, my other role is as Managing Director of Exor and I know that we are very committed to looking at this. And, in fact, we’ve been, you know, spending quite a lot of time looking at this over the – particularly over the last year, in, kind of, parallel with the pandemic, we’d started the work beforehand, but we’re continuing to look at this, and absolutely, kind of, Exor is committed, and I know all of our companies are committed, to working out what they can do, in terms of sustainability.

Evan Davis

I mentioned sustainability. When we move beyond the pandemic, it feels like the great global challenge that we need to address and, in some senses, the pandemic has perhaps reminded us that bad things that we love to shut away in a corner sometimes do come back and really do happen, and the warnings really do matter. So, quite possibly, that will spur people on to more action on climate change emissions, net zero target for 2050, and the like. I mean, do you feel that’s the big issue, coming out of the pandemic, the, kind of – what businesses’ next issue will be, as they come out?

Lady Suzanne Heywood

So, I do think sustainability is going to be a really important issue for all businesses, and it’s not just that investors are concerned about. So I actually think that companies have a degree of moral obligation to do something about this. I also know, and I know this from my experience at CNHI, it’s hugely motivating for people in the company. I mean, the pride that CNH has, in the measures that it’s taken on sustainability, is immense, despite the fact that, although it’s done incredibly well, it’s got a long way to go. You know, as you point out, it’s, kind of, operating in an industry where there’s a long way to go, and I do feel, as I, kind of, talk to people, coming out of the pandemic, that people – you know, this issue has not gone away, this issue, if anything, is getting more acute over time, and we all have an obligation to play our part in trying to figure out the right way to get through it.

Evan Davis

Hmmm, that’s very much my sense. Government surely has a role here. I mean, what we have seen, the most fascinating thing in this vaccine experience, the – particularly the success of the British vaccine experience is a – I suppose a somewhat new form of British industrial policy we haven’t been used to of government being a huge buyer, government orchestrating the links between science and business, and government playing a pretty big part in regulating it all, and setting the terms and conditions by which trade is done. But what – in sustainability terms, I want to move onto some other things, as well, but in sustainability terms, what can government do to nudge business along the road that you’re suggesting you want and think business needs to take? What can government do to, sort of, push that along, other than throw money at business? Obviously, government’s going to be under a lot of fiscal pressure, so it’s not going to want to do that.

Lady Suzanne Heywood

Well, I mean, so there are a number of things, and some of them do involve, kind of, money. So, I, kind of, mentioned before, for example, that if you’re going to put trucks on the road that are powered by hydrogen or powered by natural gas, you need a refuelling network, and governments either need to support that directly or support that through subsidies, or, kind of, work to help, kind of, collections of companies do that. But one way or another, we need those refuelling networks because, you know, with the best will in the world, nobody’s going to buy a, kind of, fuel cell truck if they can’t refuel it. So that is really important, making sure that the infrastructure exists for these solutions to happen.

Also, as we, kind of, move through transitional technologies, because those technologies are tougher to begin with, you know, it’s, kind of, hard to develop a fuel cell truck, it’s hard to develop a, kind of, battery-powered truck, and also because, at least to start with, those vehicles are not being produced at the same scale, they will, in – at least initially, be more expensive than the diesel-powered, the carbon-emitting versions. So governments need to find a way to help get more neutrality in that pricing.

Now, there’s a lot that companies can do. You know, we can drive those costs down as, kind of, quickly as we can, and the costs are coming down, as we know, with all new technologies that come in, costs start to come down as scale goes up, and as manufacturing, kind of, gets better. But there’s going to be a transitional period where the cost differential is going to be there, and governments need to work out how they’re going to, kind of, close that cost differential if you’re going to encourage people to do it, and they’ve done that on – you know, there’s been various measures around, kind of, cars.

I actually think we’ve got a huge opportunity coming out of the pandemic because many governments are putting money into infrastructure, they’re creating jobs by doing that, so this is an opportunity in doing that to make sure that they are funding things, which are also going to enable the sustainable technologies to go forward.

I also think, you know, I’m, kind of, conscious that, you know, some of our audience are asking about things like a just transition and how do we help people who can’t afford these sorts of technologies, and the same points really apply, I mean, ‘cause there is an issue that these technologies are more expensive. As I say, partly because they’re more complicated, more complicated to develop, you know, in some cases use some scarce materials like cobalt and so on, but also because of the scale of things. And that’s what I think governments need to do, they need to figure out how they’re going to help businesses.

Evan Davis

There’s a lot of stuff going on at the moment between governments and business. Do – as I said at the very beginning, do ask your questions, pop them up on the ‘Q&A’, we will come to some of those, the ‘Q&A’ facility. But let’s move on away from sustainability just briefly and go to tax because there’s quite a big corporate tax debate, and it does look like certainly the UK Government and the US Government, looking at the post-pandemic fiscal picture and asking, “Where is the money to go after?”, are thinking, “We overdid it on corporate tax cuts, let’s get some of that back.” Is that a good idea, do you think?

Lady Suzanne Heywood

Well, I mean, I think the, kind of, two questions are related. I mean, as you – you know, and I – as you referred to, I used to work in the Treasury, I started my career at the Treasury, actually. So I’m, kind of, very familiar with the debate on that side, and I have a, kind of – a lot of sympathy for the challenges that governments are now facing, in terms of their fiscal policy. But they do need to bear in mind that if you increase some of those taxes, particularly on companies, which are making the sorts of size of investments that we’re making, then you’re going to decrease their ability to do that. So – and that’s always the challenge. I mean, I remember that challenge when I sat on the other side of this debate, so you’ve got to be thoughtful about how you do it, so that what you don’t do is you don’t, kind of, create a ripple effect by damaging the company’s ability to invest in the sectors where you need those investments. But, you know, I know that those are, kind of, live events and, you know, live debates, it’s a, kind of, tricky time for all governments at the moment.

Evan Davis

It is indeed. Look, we would – I’d be failing in my journalistic duty if we didn’t talk a little bit about management in the pandemic. You’ve talked a bit about the immediate task you had at CNH when you came in as Acting Chief Executive and running the show, holding it together for nine or ten months, the most difficult months, while also incidentally having to find the next guy to come in and man the ship. So, we talked about that.

I guess I’m interested in, kind of, whether management changed. Did suddenly management in the private sector, did it become – as the pandemic struck, did it become a more human-focused activity? I suppose it’s did you stop thinking in the way that you might traditionally think about what the business problems are, the priorities, the bottom line, and did it then become more like, this is a community of human beings facing a virus, and we just think very differently about it? I mean, was there a – kind of, a real change in the way management thought about business at the time of the – the height of the pandemic, do you think?

Lady Suzanne Heywood

It’s a very interesting question, and, of course, it’s tricky for me ‘cause I’d stepped in at the moment where we – where the, kind of, pandemic was just accelerating. What I did find – and, of course, I’m very familiar with the company because I’d been Chair for some time, and I’ve, kind of, talked to many members of the management team about how they felt things changed as a result of the pandemic. Actually, interestingly, what they all said – and, of course, we managed the company largely by Zoom, or by Teams, actually, to be, kind of, technical, so we didn’t actually – none of us saw anybody during the pandemic. I mean, I basically sat pretty much here, you know, for ten months running the company, didn’t see any of my colleagues in person, as we ran the company, because that was the nature of what we were living through. But the odd thing was that as a team, we became very close, so that leadership team – and, in fact, I renamed it. Very early on, we were called the Global Executive Committee, I relabelled us the, kind of, Senior Leadership Team, because we came together as a team.

And to start off with, we were meeting every single day, and then gradually we dropped the frequency down a little bit as, kind of, time went on and we got all our plants back up and running and we were less in, kind of, immediate day-to-day decision-making mode and more in thinking about, kind of, slightly longer-term issues, but we absolutely came together as a team with a common goal and a common purpose. And I think, you know, there are – in those moments, you are actually able to challenge things within a company, and by the way, I think exactly the same thing happens in governments. I think in moments…

Evan Davis

I was coming to that.

Lady Suzanne Heywood

…of crisis, yeah, you can challenge things, which normally you couldn’t challenge at all, and, actually, this is something – you know, my husband, Jeremy, who was – yeah, as you mentioned, was in the Civil Service, would always say, you know, that in a crisis, terrible things happen, but one thing that does happen is you have an opportunity to make change happen.

So, for example, in CNHI, it was an opportunity for us to look fundamentally, you know, led by our very good head of R&D, Jay, to look, kind of – look at the whole of our R&D investment across the company, and actually ask some very challenging questions about where we should be focusing our R&D. Really focusing around sustainability, investments, and around, kind of, customer needs, and actually getting rid of a few things that people have been rather attached to over time, but really were, kind of, second order.

Evan Davis

Hmmm, and I do want to get your observations on government managements during the pandemic. I mean, we’ve had this very lurid description of how chaotic it all was from the Prime Minister’s former Chief Advisor, and, to be honest, not at all surprising to me, I’d just assumed it was chaos from the way it panned out and what we could see in the public, it looked chaotic. I’m loathe to ask any Senior Executive woman what would your husband have said about this, but as you did write the book, what would Jeremy think? I think I do have licence. Give me your view what Jeremy would have thought about the management of the pandemic and the way Downing Street was set up, ‘cause there’s, sort of – as a management case study of just how difficult it was, and particularly once COVID had let rip through Downing Street, making it obviously all the more difficult.

Lady Suzanne Heywood

Yes, well, it – I mean, as you say, it’s so hard to tell from the outside what was going on on the inside, and I suspect we’re going to hear multiple different accounts over time. I mean, I talked to Jeremy, obviously Jeremy sadly had – wasn’t around during all of this, so we don’t know. I talked to him very extensively when I was writing the book about previous crises, so we had everything from the, kind of, foot and mouth crisis to the financial crisis, and so on, and I think – and this is probably not a surprise to people, in the centre of government, where all of the different strands come together, and particularly in a situation where you’re facing an unprecedented crisis, and by the way, the financial crisis, although different, was also an unprecedented crisis, it’s very easy to see what’s happening in the centre as chaos.

But it isn’t necessarily as chaotic as it looks. I mean, there are a bunch of people in the middle who are trying to make decisions in a situation where nobody quite knows what’s going to happen next. And I think if – you know, if, kind of, people read the book about Jeremy, they will see – they will probably perceive previous crises to also look like chaos because in the middle, it does, I suspect, feel a bit like chaos, ‘cause you’ve got information coming in, you’re making decisions quite quickly, people are taking different positions, you’re arguing about things, and so on, so I’m reluctant to, kind of, throw stones from outside.

I think Jeremy would have been very pleased by the government’s use of outsiders for some elements, you know, like Kate Bingham’s work on the, kind of, vaccine taskforce. Jeremy was a huge proponent of bringing in external views, and, in fact, we tried to do that as well within CNHI. So, during the pandemic, when we were trying to work out how to get all of our plants back up and running, one of the things that we did was we brought in a leading Scientist to talk to the Senior Leadership Team, to talk us through the science as known then about the pandemic, so that we weren’t inward thinking about how we were doing this. And I think Number 10, by – you know, as far as I can work out, did a fair amount of that, and, in fact, the, kind of, whole taskforce who would have supported that, as well.

Evan Davis

I mean, there are obviously similarities between Boris Johnson and his team sitting in Downing Street, you and your team sitting dispersed on Teams talking about the company because you are trying – you’re all working in a, kind of, fog, and at that point, you don’t really even know what questions you have to ask, let alone what the answers are.

You interestingly mentioned Jeremy being always keen on bringing in outside talent, I do need to ask you, ‘cause, of course, he has taken some of the blame, if you like, that has been attached to the name Lex Greensill being brought in, in David Cameron’s period, not a crisis appointment, but very much attempt to get outsiders in and breathing fresh air in. No-one has suggested Jeremy had any kind of personal financial stake in that, there was no skin in the game. Where are you on that particular one, though, Suzanne? Do you feel he’s getting the blame ‘cause it’s easier to blame him than other people who’ll be better able to defend themselves, did – was he naïve? Do you think it was a good idea that just in that case didn’t work out? What’s your narrative on that now?

Lady Suzanne Heywood

Well, I mean, it was very interesting, when I, kind of, wrote the book, it was very clear, as I was saying before, that Jeremy liked to bring in outsiders and involve outsiders in government thinking, and I think, in general, that’s incredibly powerful. It’s very easy for Whitehall to sit there, kind of, contemplate its own navel, and, kind of, make up policies, and Jeremy, from very early on his career, went out and found people who knew about stuff and asked them about it, you know, right from very, very early on in his career.

And so, Lex, as far as I have always understood it, and obviously I haven’t been able to, kind of, talk to him about the stuff that happened much later with Lex, but Lex was one of many people who Jeremy brought in because he thought Lex had some interesting thinking around supply chain financing. And, of course, the pharmacy supply chain financing scheme that they put in place still exists today, you know, and the idea there is if you’re a small – if you’re a community pharmacy, which is an independent – you know, these are privately owned pharmacies, they can apply to get paid for their prescriptions pretty much immediately as they put their invoices in, whereas if they wait for the government to pay them, it’s going to be 60 to 90 days.

And that’s not just because the government is slow, and there is something about the government being slow, and you could say, “Well, just pay faster,” but anybody who’s worked in government work will know that that’s – you know, it’s not as easy as that, and, frankly, this was all being done just as the coalition came in and there were other things for the government to worry about. Also, you do have to, kind of, check these things, I mean, they submit all of their hundreds of pharmacy receipts, somebody has to go through them to work out what the right numbers are. So a scheme like that actually worked very well, still exists, you know, pharmacies sign up to it, they pay a very small interest rate so they can get their payments upfront, so they can pay their staff, and that’s what Jeremy was looking for, as I understood. He was looking for opportunities for government to work better with its suppliers by being able to pay them more quickly.

Now, you know, all of the – you know, most of the stuff that people have talked about, in fact, all the stuff that people talked about then happened later, after Lex left government. I mean, I do think there’s some kind of questions though, that the whole thing raises. I mean, as I say, he was very passionate about bringing outsiders into government, but whenever you bring an outsider in, you’re always going to create opportunities for them, so how do you manage that? And there were no direct conflicts, so, you know, Lex didn’t do any government work while he was in government, that all happened…

Evan Davis

The pharmacy schemes…

Lady Suzanne Heywood

…later.

Evan Davis

…didn’t go to his organisation, although it did later, it didn’t go to his…

Lady Suzanne Heywood

Later, so later, you know, kind of, years after he left government, it was retendered, and it was retendered as a public contest, and he won. He – and my understanding is, his firm bid the least, so he won it. But there’s always going to be a benefit to somebody coming into government ‘cause they’re going to meet people, they’re going to get more credibility, so, you know, how do you mend that?

Evan Davis

That’s where I want to ask my last question before going to some others, is whether – and you’ve worked in both these ecosystems, is whether you can mix them and whether the – whether it does work to bring them together, ‘cause – you know, or whether there is just – it is just a recipe for the conflicts of interest, or if there aren’t to be conflicts of interest, you have to so set up such bureaucratic, kind of, controls and checks and – that in a way, you’ll, kind of, make it more trouble than it’s actually going to be worth.

Lady Suzanne Heywood

So, I believe quite strongly, personally, that there are huge benefits of having a degree of movement between the public and the private sector. I think the – I think both sides benefit. I mean, when I was in government, there was always a beat of a suspicion that the private sector thought it was better than the public sector. Having now worked in both, I now realise that it’s incredibly tough on both – you know, that it’s tough in different ways, and both sides can learn from each other, and I think if we put a wall around Whitehall and stop expertise from outside coming in, we’re really going to, you know, make Whitehall a less effective place.

I mean, you know, one of the things that the coalition – that government did very effectively when they came in was they made government procurement much more effective. I mean, frankly, the private sector who put their best people on government contracts, you know, at that point in time, the government certainly wasn’t putting its best people on trying to negotiate with the private sector, and they often, frankly, weren’t getting a great deal. And the only way to right that was to, kind of, bring really good people in from the private sector, so they could face off and get the best possible deals for government. So, there’s real benefits, but we have to make sure the rules are, kind of, clear.

However, I think we’ve got to be careful not to make the rules go too far, ‘cause if we make the rules go too far, if we guard against every possible eventuality and every possibly misbehaviour, we’re going to make it impossible for that to happen. So, as ever, we need to, kind of, you know, wrap a cold towel around our heads, work out what we can do to make it better, without making it impossible to get that, kind of, transfer of knowledge.

Evan Davis

Okay, well, look, I have asked more than my share of questions, and we do have some in the ‘Q&A’, and I’ll tell you what, I’ll broaden the conversation by going to David Pagliaro. David, if you want to unmute, you’re very welcome to ask your question, otherwise I will ask it, but David, yours broadens it a little bit, so why don’t you put your question?

David Lyon

Okay, I don’t know if you can hear me, so I’m David Lyon and I work developing largescale inclusive microbusinesses in Africa, and my question is, how can you ensure you deliver a just transition, so that the less well-off or marginalised aren’t further disadvantaged by the move away from fossil fuels, or as a direct result of a changing climate? And I guess further from that is how does it affect CNH’s business models in regions particularly in Sub-Saharan Africa, where [audio cuts out – 44:32]…

Evan Davis

Okay, we’ve actually lost…

David Pagliaro

…growth and regenerative agriculture and other such trends? Yeah.

Evan Davis

Right, we lost a little bit of that, David. Actually, I meant Da – another David who had asked a question, but, no, we’ll take your question now, David Lyon, and then David Pagliaro, if you’re there, I’d be delighted to hear yours. But do you want to have a little go about – really about the, kind of, the burden on the poor of net zero and how far we can alleviate that?

Lady Suzanne Heywood

Yeah. No, well, I think it’s a great question, I think we’re – you know, this is a question that’s coming up in many, many different ways. I mean, the first thing I should say is, if we reduce carbon emissions, wherever we reduce them, that has a, kind of, benefit for the planet. The planet is obviously, kind of, a single entity, but I think the, kind of – what – the more difficult part of the question is, particularly during this phase where these technologies are inevitably more expensive because we’re not doing them at scale, how do we try to make them available in poorer countries?

I think it will absolutely, kind of, happen over time. You know, we have a very, kind of, good market, for example, in India, and one thing that happens is that, you know, we tend to, kind of, rollout the technologies in wealthier countries and then it does go through to other countries, but that technology becomes cheaper as it’s, kind of, done at scale, and then we can make it available at lower cost, as quicky as we can.

But I think this is a, kind of, real, kind of, question, which is, if we’re going to, kind of, push this change, how do the wealthier compa – countries try to make it easier for poorer countries to adopt this technology? And it may be one of the things that – you know, there may be some need for, kind of, subsidies, particularly around, as I say, the infrastructure for this sort of technology, because it’s not just about, you know, making available a methane tractor in a poorer country. If you’re going to use that methane tractor, you’ve got to have all the infrastructure around it, and I think that’s something that governments can look at providing some support around.

Evan Davis

I think we’re in the foothills on that issue.

Lady Suzanne Heywood

Yes, I think we are.

Evan Davis

A lot to do. Okay, David Pagliaro, you’ve got a question on geopolitics, now do you want to just – do you want to do it or shall I ask it? I don’t know, David may be on mute. Let me ask it, ‘cause this is one, Suzanne, that I think a lot of Chatham House’s core base are always interested in, which is really about geopolitics, and it’s just to say – to talk about how CNH navigates geopolitical tensions as a global business? And I would be interested, actually, also in the pandemic where you’ve got multiple jurisdictions with their own views and policies, economic and non-economic policies, but just talk a little bit about geopolitics and a large company like yours.

Lady Suzanne Heywood

So, I think the first thing is, we do watch geopolitics quite closely because, as you can imagine, you know, things like, you know, the relationship between China and the US has a big impact on our end markets. You know, if America has a poor relationship with China, then that affects – it affects the exports, and therefore it affects the, kind of, agricultural market, and indeed, what you see is you find that our markets move. So there was a, kind of, period where our South America markets became much stronger because of some of the geopolitical tension that was existing between the US and China.

So, first of all, we watch this very closely, and we do think about it, and it’s one of the things that we factor in when we’re trying to, kind of, predict where our markets are going to be, because we need to decide where we’re going to do our production, where we should be, kind of, putting the bulk of our machinery. We don’t try to get involved in geopolitics at all, that’s not our role. What we do do, though, is we do try to build very close relationships with the governments where we operate, so that they can understand the things that we need support on, things like infrastructure, which I’ve talked about, and we can understand their priorities.

So we spend a lot of time, for example, through the various industry bodies talking to the European Commission, so we understand their Green Deal, you know, we are members of two taskforces associated with the G20. In fact, I think we’re the only, kind of, capital goods supplier that’s in two – you know, in those taskforces. So, we are very, kind of, active, in terms of trying to understand what governments want, and trying to, kind of, get governments to understand what we need.

Evan Davis

Are you basically…

Lady Suzanne Heywood

But we…

Evan Davis

…describing lobbying here, Suzanne? I mean, that’s…

Lady Suzanne Heywood

Well, to some extent.

Evan Davis

…obviously, even public affairs.

Lady Suzanne Heywood

Yes, I mean, I think, kind of, lobbying is one of those words that has a very bad – a bad, kind of, tone to it, particularly in the UK. I mean, lobbying, at its base, is about business and government having a very open communication about what businesses need to be – to achieve things that governments would like businesses to achieve, you know. So, kind of, lobbying, if you like, or at least this version of lobbying, is literally saying, you know, you are interested in having a Green Deal, you know, you want to, kind of, achieve these sustainability targets, we can play a part in this, this is how we can do it, we’re committing capital to do that. In order for that capital to work, you need to help us figure out how we’re going to put in place charging networks for the – and at one level, that’s, kind of, lobbying. At another level, this is about open communication, and we do it in a very open and very transparent way, and we like to do it very much directly as a company, through open channels with government.

Evan Davis

Yeah, no, lobbying shouldn’t be seen as a – as negative necessarily, and do you feel the world’s in a particularly un – in a, sort of, unusually unstable point at the moment? Obviously, US-China, that is not a – in a stable place as a relationship at the moment. The – kind of, the – what one might call the autocrats, the other countries that are – Russia-US, that’s not a good relationship, Russia-Europe, it’s not a good relationship, but I don’t know, is it a dangerous world at the moment? Do countries like yours need to retreat to the Western base, they’re more comfortable among nations that are perhaps more shared values between them?

Lady Suzanne Heywood

Well, I mean, it’s interesting, isn’t it? I suspect if you asked anybody in most generations, they would say that their world that they live in is a pretty dangerous place. Of course, we can all think back in time at, kind of, very difficult periods. I mean, there are always geopolitical tensions of one sort or another, and I think if you’re going to lead a company and think about how that company – I mean, CNH’s objective is to, you know, feed – help feed power and build the world, really, through, you know, what we do, in terms of construction equipment and agriculture and trucks. If we’re going to achieve that and do that in a meaningful way, we have to be willing to engage with as much as possible of the world, and we certainly haven’t retreated in any way.

You know, I mentioned the fact, you know, we are – we sell our products all the way across Asia, South America is a very big market for us, Australia is a very big market, North America, we’re a very global company. Now, in each of those markets, we have to be very cognisant of what the local market needs are, and, indeed, what some of the, kind of, political tensions are and the government needs and everything else. But in no way are we, kind of, retreating from that, I mean, and I think we’re, kind of, out there engaging and trying to take the company out as broadly as we possibly can.

Evan Davis

Right. Now, let’s go to another couple of questions. I think we have quite an interesting one about COP26, where’s the COP26 one gone? Oh, yes, Maria Hanson. I’ll read this one out, Maria, you’ve asked me to. So, yes, “How important do you judge COP26 to be in the global” – actually I’m missing the end of the question here, but “in the global shift towards a more green and environmentally friendly industrial sector?” I mean, is business – is your business gearing up to COP26 in the way that the political community is, to some extent, partly because Britain, of course, is hosting it?

Lady Suzanne Heywood

No, absolutely. I think, kind of, COP26 has the potential to be really important, and we’re very – you know, we’re very supportive of it, and, kind of, hopeful that actually coming out of that, we’re going to have some clear commitments and – you know, kind of, globally agreed clear commitments with support for those changes to take place. And I think we feel, as a company, with all of the different technologies that we’ve been investing in and developing around, everything from, kind of, methane and natural gas, and electric trucks, and, you know, fuel cell electric trucks, we feel that we’re very well-positioned to – you know, to help support whatever comes out of that. And I just hope that, you know, kind of, commitments are made because we’ve all seen a number of these meetings where perhaps less has come out of them than we might have expected, but I think as a company, we’re – you know, we are very committed to moving forward on this, and, kind of, hoping that…

Evan Davis

I mean, the thing about…

Lady Suzanne Heywood

…that will be a step forward.

Evan Davis

The thing about is it’s another one of these ones where people are very good at setting the goals and the ambitions, and they’ll agree that, and then you tend to send them away and say, “Come back to COP26 with your actual plans,” and it just seems to be much harder to pin it down. And this is the, sort of – I would have thought the worry about the whole process, really, that, actually, when it comes to deliver – we’re looking at this little low – this six-foot wall or 12-foot wall in a very long way away, and it looks quite small, and we all say, “Yes, when we get there, we’ll jump over it,” and the closer and closer you get to it, the bigger and bigger the wall looks, and it’s just whether we are, when we get to it, going to have built a ladder in time to be able to hop over it or whether we’re just going to arrive at it and say, “Oh my goodness, it’s impossible.”

Lady Suzanne Heywood

Yeah, and I have to say, from a, kind of, business point of view, that is the most important thing. I mean, what businesses need is they need clarity around what the objectives are, and then they need a very open dialogue with government on the support that the governments can provide to help us get from here to there because, you know, it’s not an easy transition. It’s certainly not an easy transition in my industry to, kind of – you know, to move from a fleet, an operative fleet, which is still largely diesel, to an operative fleet that we want to be carbon neutral, is a massive transition.

Evan Davis

It is.

Lady Suzanne Heywood

And in order to get there, we’re going to have to get vehicles off the road that are currently, kind of, diesel vehicles, and we’re going to have to get those networks in place, those fuelling networks in place. We’re going to have to figure out how we make these new technologies affordable, so that people, kind of, switch, either by supporting the new technologies or, kind of – you know, kind of, penalising the old technologies in some sort of way, and we need to do it in a co-ordinated fashion. And this really is a topic where governments need to work hand-in-hand with companies, if we’re going to make the transition work.

Evan Davis

Right, now, we are coming towards the hour and we definitely want to finish within the hour, so I’m going to take a question from Maria Anderson on business tools. She asks, this is a good final question, thanks for this, Maria, “What tools or business skills learnt in lockdown, for example, virtual working, which of these do you see – foresee continuing to play a major role in business development and management, as we move into a post-pandemic world?”

So, this is – in so many areas, I think, the question is, how much are the lockdown habits going to persist? I mean, and we’re all talking about four-day weeks or working from home as a good example of that, but how much of that is going to persist and how much are we just going to jump straight back to life as it was ex-ante? Can you think of any, Suzanne, as business skills learnt in lockdown, which you think will play a major role going forward?

Lady Suzanne Heywood

Well, absolutely, I mean, I should say, you know, first of all, if you’re looking at a company like CNHI, you know, a lot of our employees, of course, worked in plants most of the way through the pandemic, and so their lives changed because we made those plants very COVID-secure, and some of those changes, I suspect, will stay around because, you know, there’s things that we learnt through that about making those plants even safer that we will maintain.

But their lives changed a lot less than the, kind of, office workers, and, you know – ‘cause when these questions are asked, people are always thinking about, you know, those of us who sat at home and spent a lot of time on Zoom, and, of course, there are many people who didn’t do that who had to get out there and work, and my colleagues who did that in CNHI, you know, did an incredible job of just keeping going. I mean, you couldn’t just sit at home and, you know – anyway, but for those of us who were able to do that, I think, you know, we now need to, kind of, pause and make sure we don’t just jump back to how we operated before, because I actually believe quite passionately that there were – we learnt some things.

We learnt that there’s quite a lot that we can do at home, very effectively, and if we can preserve some of that, so that we can have a bit more of a mixed work week, first of all, I think from a point of view of diversity, and by the way I’m very passionate about diversity, and we did a big push on that in CNHI, and will continue to do so, but I think it makes a lot of jobs a lot more attractive for, you know, different sorts of people, if we can make these jobs, you know, so you can do more of them at home, you can have more of a, kind of, working – you know, kind of, mixed working week.

I think we’ve all learnt that we might hate Zoom, but I’m not sure we will get rid of it altogether. I think we’ve found that it is an effective tool and it can replace some of what we do. Do I think more – some at home, some more, kind of, videoconferencing, but, you know, most of us, and I suspect some of the, kind of, people joining us here today, we’ve missed spending time with colleagues. I mean, I was able to get together with a number of members of the management team at CNHI a couple of weeks back, not all of them, sadly, but a few of them together in one place, and it was amazing just to see people that I had spent almost a year, kind of, interacting with on video. And in the time that we spent together, we spent about, kind of, half a day together, we got through so much other stuff that we just weren’t able to do on Zoom, so it is going to be a mixed answer, because I think we miss a lot through that lack of human interaction.

Evan Davis

Hmmm, and just in terms of the way you make decisions, the – kind of, the size of the team that can get things done, the – kind of, the willingness to make big changes quickly, I mean, maybe you do that in a crisis and then you go back to a more stodgy way of making decisions. But maybe we should be a little bit more imagining the unimaginable and just executing it much faster, and getting stuff done, because I think we’ve been off the scale, in many respects, at doing things that we just didn’t think could be done, basically.

Lady Suzanne Heywood

I agree, and I think to some extent, we all need to, you know, bottle a little bit of that mentality and make sure that we don’t go back to, kind of, bureaucratic organisations that take a long time to make decisions, and, you know, I think, you know, one of the things – you know, this is why diversity is so important, kind of, bringing different people into the conversation, and we did a lot of that during the, kind of, pandemic. We need to make sure that, as, kind of, companies and as governments, we speed up decision-making and we don’t go back to the way in which we made decisions beforehand. I think that’s very important, and I think that time that we spend together in the office, we need to spend a lot of time doing collaborative work, you know, work where we really get together, make decisions quickly, debate ideas, in a really, kind of, open way, and, you know, that’s incredibly productive, and I’ve certainly, kind of, missed doing that during the pandemic.

Evan Davis

Well, we have had, I think, a very successful Zoom encounter here today, for all the annoyances of not being in the same room. A very good Corporate Leader session there, Suzanne. We’ve ranged perhaps more widely off the narrow terrain of agricultural equipment, tractors, buses, and trucks, and fire engines than we normally would, but it’s been a fascinating discussion and I particularly appreciate you reflecting on both the public and the private sector and the way they handle these things. We’ll call it a day there. Thank you all for your questions. I hope you’ve found it an instructive session, and it just remains for me to say thank you to Lady Suzanne Heywood for this Corporate Leaders talk.

Lady Suzanne Heywood

Thank you so much, Evan.