Thu, 22 Feb 2018 03:00:06 -0500
Jeffrey Hall: Taking Producers Group to new heightsBY MOSES JACKSON
Today the Jamaica Observer publishes the third of 12 stories on the nominees for this year's Business Leader Award being held under the theme “Business Leader: Executive Steward”. The nominees are among the top CEOs in Jamaica.
At first blush, Jeffrey Hall seems a bit of an industrial relations oddity.
His Ivy League credentials charted a pathway to the arcane world of high-finance and should have kept him tethered to that universe.
But Hall unmoored himself with aplomb, and for a decade the tangible business of juice and condiment production, wharfing operation, and shipping has had in him a special breed of advocate.
Hall is contextually fortunate. Over the past 10 years he has been the chief executive officer of Jamaica Producers Group (JP), but for all his adult life before that he had an unobstructed vantage point from which he gained an unfiltered view into the business.
Dr Marshall Hall's stewardship at Producers Group preceded that of his son, and Jeffrey would no doubt have borne witness to the seismic shifts in global trade arrangements and the existential threat they constantly posed to the company he would later come to lead.
It was the father who undertook the early heavy lifting as the former banana producer and marketing company lurched from one product and business line to the other in order to remain viable in a global marketplace that was as predictable and stable as quicksand.
The elder Hall weathered the storm, but by the time he handed over custody to Jeffrey, in 2007, they had all but yielded to Mother Nature and to the inexorable market forces which dictated that banana planting and marketing — the company's essential identity for all of its existence — would no longer be its core activity.
Producers Group now has a healthy balance sheet. At December 31, 2016 it boasted assets of $29.86 billion and $10.4 billion in shareholder equity. Gross revenue for the year-to-balance-sheet-date was $12.1 billion and profit $3.9 billion. The 2016 profit represents an astonishing 37.8 per cent return on equity, 32.5 per cent return on sales, and 13.2 per cent return on assets.
While it is true that last year's performance was heavily weighted by one-off gains, what is also undeniable is that those gains were ultimately undergirded by a series of judgement calls by Hall, the board, and his management team during prior years.
A good example is the Mavis Bank Coffee factory acquisition in 2011 under a 50/50 partnership with Pan Jamaican Investments. JP gained $650 million in 2016 from the sale of its shareholding, realising a five-year average annual return of 65 per cent.
JP's deep dive into Kingston Wharves, between 2012 and 2014, led to the eventual consolidation of the wharfing entity on its balance sheet in 2016 and a one-off booking in part to reflect the fact that the value that JP had on its books for the porting asset was way below its actual worth. The difference, treated as a one-off gain, was a reward for the earlier investment.
Indeed, the stage was set for the aforementioned investments and last year's gains when JP sold its UK-based JP Fruit Distributors Ltd in 2006 — a primary example of a holding that was rich in asset but inefficient in converting its underlying value and capital outlay into shareholder profit.
“We bring big decisions to our board with very quantitative and pretty rigorous financial appraisals and a definite recommendation from management,” says Hall in explaining how these momentous decisions are made at his organisation. The CEO leaves little doubt about his own centrality and that of his senior management team to this important process.
“JP has a great board that checks all the boxes for good governance,” he continues, “(and) also works with a strategic plan that is reviewed annually at a two-day retreat that involves both the board and the management team.”
Producers Group started shipping bananas to Great Britain in 1929. The original core business now accounts for only five per cent of sales, but Hall sees in its history a deep affinity with international business that he has vowed to exploit.
“JP has always been an international business,” he points out. “I have been able to use transactional skills, leadership and governance to rebuild the international components of the business for the current times... All of the businesses that we have acquired or developed under my leadership have an international component.”
As Hall himself observes, Kingston Wharves fits this model well because of its major trans-shipment business, its international partners and customers. The Mavis Bank Coffee Factory was already an exporter when it was acquired in 2011 and the partnership quickly moved to strengthen its export relationships in Japan and Europe.
Another case in point is the Tortuga rum cake business that JP acquired in 2012; 90 per cent of its sales is to leading travel retailers in the USA and the Caribbean, with production centres in Barbados, Cayman, and a distribution centre in USA.
Other key components of this orientation towards international trade:
• The snack business has developed a major share of its production and sales in the Spanish-language Caribbean.
• The UK-based RAM Shipping business now serves the entire English-speaking Caribbean.
• The acquisition of Hoogesteger BV has made JP the fresh juice supplier to leading supermarket chains and food services businesses in Holland, Belgium, Scandinavia, and Germany; and the overall leader in Northern Europe.
Producers Group is a complex organisation with six major business segments providing services from shipping and wharfing, to food and beverage manufacturing and distribution. Each has its own general manager who reports to Hall.
The net result is that this is one CEO in perpetual motion.
“I have a pretty intense monthly meeting with the general manager of each business as well as the financial controller and the key operations or commercial person,” he explains. “Our group finance director is also integral to these meetings. We try to meet at the site of the business when possible and this takes me to most of the seven countries in which we have operations at least once per year with an extended visit to the larger locations about three or four times per year.”
There is also the matter of the main board, with its four regularly scheduled annual meetings, its annual planning session, meeting to review shareholder issues and concerns in advance of the AGM, as well as the inescapable obligation of the CEO to interact with a wide range of other stakeholders.
“Between meetings I meet employees, customers, suppliers, directors, and other stakeholders, and generally try to solve problems and create business opportunities,” says the chief executive.
Then there is the added responsibility and governance-related commitments of chairing the board of Kingston Wharves — a listed company in which JP holds a major share and since 2016 has been incorporated in JP's financial statements. The fact that Hall is, by nature, a very active hands-on CEO who likes to participate in deals and often takes “a direct interest in the financial modelling and legal drafting along with our lawyers” only adds to the heavy workload he carries.
An important but often understated and under-recognised dimension of the CEO's role in a company as diversified and dynamic as JP is the relationship that Hall forges with the chairman outside of the boardroom — an unwritten duty that he seems to relish.
“I have a regular informal ongoing conversation — generally over lunch — with the board chair and audit committee chair,” he lets on. “Charlie Johnston is a seasoned board chair who knows the company extremely well, having served as a director for over 30 years. He is also highly vested in the success of the business. This makes for a very efficient, spirited, high trust and open working relationship between him and me, and between both of us and the board. This is extremely important to the success of the company. Discussions can be frank and informal and wide-ranging. I think that this culture of open, informal and direct engagement, in turn, also characterises my relationship with the JP management team and staff.”
If Hall comes across as ebullient and brimming with self-confidence that's in part because he has earned it and his skill set is arguably tailor-made to meet the demands of his organisation and to face off with his teams up and down the organisational chart with matching intellect and experience.
When he joined the organisation in 2002 he brought with him a degree from Harvard Law School, Harvard University, where he graduated with honours.
Hall also holds a Master of Public Policy degree (Public and International Finance) from Harvard University, where he was awarded the Woodrow Wilson Fellowship.
Prior to that, he earned his Bachelor of Arts degree in economics from a lesser-known, but nonetheless Ivy Leaguer — Washington University in St Louis, Missouri. He graduated summa cum laude from this programme. He is a member of the US-based Phi Beta Kappa Honour Society for overall academic excellence and the Omicron Delta Epsilon Honour Society for academic excellence in Economics.
Hall practised banking and securities law at David Polk & Wardwell in New York.
His Jamaican sojourn began at the Financial Sector Adjustment Company where he helped negotiate the restructuring of some of Jamaica's largest banking and life insurance groups.
He later partnered with two other Ivy League alumni — Dr David Panton, and Dr Nigel Clarke — in establishing the Caribbean Investment Fund, a US$30-million private equity fund focused on investing in the Caribbean region.
One would have thought that with such invaluable antecedents, and given his known familial connection to the Producers Group, that this organisation would have been chasing after the young Hall. But he shares a narrative of an improbable journey to the company.
“My appointment required a little bit of effort on my side,” he recalls. “I attended a think tank meeting of corporate leaders in Montego Bay. The host — Oliver Clarke — invited a few younger, 'up-and-coming' business people to sit at the table, and I was one of them. Charlie Johnston, who was then and still is chairman of JPG, was there and I managed to get an opportunity to pitch him on the need for a strategic review of the business. He agreed. I then, on my own time, wrote a 300-page top to bottom strategic review of the company and presented it to the board. That basically was my job interview. I was hired.”
Hall reckons that his appointment as director of corporate planning development in 2002 came at a pivotal time in JP's transition.
“The company was at a crossroads,” is how he puts it. “Its core banana business was facing a radically different trading environment as the European Union trade regime upon which it relied was obviously in its sunset years.”
Within 18 months he was named divisional director of bananas and fresh produce with the mandate to “prepare the banana and fresh produce business for a future in which the trade protection for Jamaican bananas ceased to exist”.
This meant that the director had to quickly find new sources of bananas to feed JP's distribution operation in the UK while at the same time build a more robust Jamaican business by priming the local banana chips market.
“We did both,” he beams. “During the period, we became a major distributor of bananas from Africa, Central America, and elsewhere in the Caribbean. This strengthened the business and ultimately allowed us to divest it for an attractive price. We also built the St Mary's brand and dramatically increased the brand presence of JP bananas in Jamaica.”
There is little doubt that at this stage it must have been an easy transition to the CEO's office once Marshall Hall, who was getting on in age, decided to step aside in 2007.
One of the first major decisions that the nascent leader faced was how to separate from two major operations that had been important to the company's sense of identity.
Here is how he laid out the case for diversification:
“The banana business that I ran as divisional director was affected by a string of hurricanes — Ivan, Dean, Dennis, Emily, and Gustav — and this had forced the group to discontinue exports. At the same time, our UK-based diversification initiatives that were not part of the banana division were seriously affected by the economic crisis of 2008, and we elected to dispose of them.”
Running on parallel tracks with the programme of diversification was a fairly aggressive acquisition posture — with decisions that Hall says “fundamentally redefined JP and have given it a great new platform for the future”.
A retrospective view of many of his actions gives Hall cause for a little bit of self-back-patting, even as he is the first to acknowledge that many challenges still lie ahead for the company he runs.
“Our best deals were often not obvious winners in the eyes of stakeholders and observers,” he wryly remarks.
There is a poignant subtext to this reminder: Hall admits that he had to overcome boardroom scepticism when he made the pitch for the acquisition of some of these companies — because they were losing money at the time.
“I am pleased that we were able to get the support of the board for these bold moves and that we were ultimately able to justify their faith in our ability to execute,” he beams.
Hoogesteger (the Dutch business) and Mavis Bank are two of the standout cases of operations that bled red ink before the JP Group moved in to staunch the bloodletting and turn them into big money spinners.
There are other examples.
“We had to justify getting into world-class manufacturing in Holland; doubling down on Jamaican agriculture by getting into Blue Mountain Coffee; diversifying our snack production into the Dominican Republic; and going into the capital-intensive port business when the cost of capital in Jamaica was only just beginning to come down to commercially reasonable levels.”
Some may argue that this is the stuff that visionary leadership is made of.
Hall holds no lesser point of view of his leadership. Here is how he puts it:
“I feel that a major part of my contribution to our success has been my ability to chart a course outside of an extremely tough legacy core business and to conceptualise, structure and negotiate a new direction with tremendous attention to detail and a comprehensive understanding of risks,” he says.
Moses Jackson is the founder of the Business Leader Award programme and chairman of the Award Selection Committee. He may be reached at email@example.com
— Freelance journalist Nazma Muller contributed to this story.
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