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Will Voser close Shell Centre? Don’t bet against it!

New top men in Shell, at least in recent times, have wanted to “do something” to imprint their style and authority on the organisation. From Cor Herkstroter onwards successive CEOs have talked of change, usually with buzz words like “transformation”. In the 1990s and into the new millennium the argot at the top often talked about “New Shell” and “Old Shell” with those of us with thirty years or more service often being seen as prehistoric relics of the “Old Shell” era. New Shell was to be different. Lighter on its feet, more responsive to the world around and, above all, less burdened with unnecessary costs. When this type of imperative comes from the top then there can be only one result – ruthless cost-cutting measures in the middle and the lower tiers of the organisational hierarchy. It was this ideology which led inexorably, in the downstream, to the reduction of staffing in operating company offices around the world and the greater centralisation of decision-making. Death by a thousand cuts.

In the main a centralised management structure is right for the upstream where the issues are often global and strategic – but for marketing it is a disaster. The further away from the customer you take your decisions the less customer-focused and market-sensitive they will be – and these days Shell often takes its decisions a very long way from the customer indeed. But then in recent times Shell hasn’t really been that bothered about its consumer and retail businesses – large though they still are. The very strategic imperative of the company says it all in revealing shorthand “more upstream and profitable downstream.” In other words the real business of Shell is exploration and production – they’ll also do marketing, but only if it is profitable. Hardly a ringing endorsement of the downstream business.

This brings us to Peter Voser – the first non British and non Dutch Chief Executive in Shell’s long history. Voser is not a marketer but he has plenty of downstream experience – he was Chief Financial Officer of Shell Europe Oil Products from 1999 to 2001 and became Chief Financial Officer of Shell Oil Products in 2001. “Oil Products” is the strange descriptor used by Shell to designate its marketing business (I remember David Varney once saying that it showed the upstream bias of the company “Can you imagine MacDonald’s calling its business “Beef Products?”” Varney said). And Voser has been associated with this business at the time when the cost reduction and centralisation imperative has been driving change. We must expect more of the same from him when he takes over as head honcho.

So what can Voser do? He may, of course, decide that Shell should withdraw from oil products marketing completely. If the business is disposed of then there would be no need any more to have two central offices in The Hague and in London. Shell Centre is where Oil Products is located – take that business away and you could easily move the remaining London based businesses and services to The Hague. But even if Voser doesn’t take the big step of getting out of marketing completely he could still decide that one huge potential area for cost reduction is to close Shell Centre and move all of its activities to The Hague. There are no other oil majors with two head offices and very few companies in any category have this luxury. Voser might decide that the company has become far, far more Dutch and far less British in recent times anyway so to consolidate this by having all of its central office functions in one location makes sense – and that location would, of course, be in The Hague. Shell Centre’s future looks bleak in almost any scenario.

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