Business

Sunday 11 December 2016

Interview: Neil Naughton's Glen Dimplex generation game

The future is electric, according to Glen Dimplex's Neil Naughton

Published 28/08/2016 | 02:30

Neil Naughton speaks to his father every day and says the best advice he ever gave him was unspoken - to stay close to the customer
Neil Naughton speaks to his father every day and says the best advice he ever gave him was unspoken - to stay close to the customer

When they descend in their thousands this week, the die-hard fans of American college football teams Boston College and Georgia Tech will include three generations of Irish-Americans - as well as many with no Irish connections whatsoever - bringing with them a tourism boost of up to €60m for the Irish economy.

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Fathers and sons will be joined by wives, daughters and grandchildren, along with high school students, marching bands, cheerleaders and assorted dignitaries.

The transatlantic troupe will also include more than 250 of America's most sought-after CEOs, including Coca Cola chief executive Muhtar Kent, State Street chairman and chief executive Jay Hooley and Jim Murren, chairman and CEO of MGM Resorts International.

The pageantry and drama of next Saturday's clash at the Aviva stadium will be broadcast by ESPN to millions of American homes, where fans - starved of college football coverage since last January - will be treated to fireworks, flyovers, sky divers and a half-time music spectacular specially devised for the 1916 centenary commemorations.

For Neil Naughton, the unassuming and charismatic chairman of the steering committee of the Aer Lingus College Football Classic, the game is an opportunity for Irish families to support the Special Olympics (which receives €1 from every ticket sold), to cheer on the young footballers and help 20,000 "perfect tourists" make lifelong memories.

But it's also an opportunity for serious business, with more than 20 networking events being held across the capital under the moniker 'Much more than a game'.

Naughton, son of the iconic Glen Dimplex founder and billionaire Martin Naughton, has, together with Hooley, pulled off something of a feat by convincing the Boston College Chief Executives Club - one of America's premier business forums - to sit outside of the US for the first time in its history.

Coca Cola's Muhtar Kent will address 350 prominent American and Irish business leaders including Ardagh boss Paul Coulson at the Boston Chief Executives' inaugural global forum on Friday.

The invite-only group will discuss potential deals, Brexit and issues such as technology in developing a global economy.

No doubt fresh negotiations on a new tax agreement between Ireland and the US as well as the imminent 'Apple tax' ruling from the European Commission - which last week drew the ire of the US Treasury - will also feature on the menu at the Trinity College gathering.

Naughton is confident that the forum and other events - Trinity will be converted into a welcome village for fans, showcasing Irish design and culture throughout the festivities - will yield long-term economic and social benefits.

"These guys will do business, when you give them the right atmosphere and environment, they'll do it," says the soft-spoken Dundalk native who followed closely 'The Town's' recent near miss on becoming the first Irish soccer team to reach the Champions League group stage.

The chairmanship of the American classic is something of a passing of the torch to Naugton (45), who assumed the role of Deputy Chairman of Glen Dimplex following his father's decision to step aside as Glen Dimplex President and relinquish control of the appliance and heater maker to his three children Fiona, Neil and Fergal.

This is the first time in the college classic series that the Naughtons, the country's pre-eminent arts donors, will not be joined in Ireland by Don Keough, the legendary Irish-American businessman and former Coca Cola President.

Keough, who died last year, was a close friend of Naughton Snr and the pair forged strong ties through their trusteeship of Notre Dame, one of America's leading Catholic universities, which last week formally opened its new campus at Kylemore Abbey in Connemara.

"We often say that Don was the best president America never had. He was a great Irish-American, but he was also a true global citizen," says Naughton whose younger brother Fergal (40) - now CEO of Glen Dimplex and a trustee of Notre Dame - sits on the board of its Irish studies programme along with Keough's son Michael.

"Don always believed that for a true partnership to work, it needed to be supported equally on both sides of the Atlantic."

Partnership is proving key to the passing of the corporate torch to the Naughton siblings, including Fiona, a busy mother of five who has no day-to-day role at Glen Dimplex but sits on the company's board.

When Martin Naughton stepped down last April, the move prompted a debate about how smooth the handing over of Ireland's largest private manufacturing company to the next generation would be.

The stats don't augur too well.

Research by the Harvard Business Review suggests that 70pc of family businesses are sold or fail before being passed to the next generation, with just one in 10 successfully passing over to the third generation.

But Naughton, a talk radio and sports fanatic who first played football as a child with next-door neighbour, now Newstalk broadcaster, Shane Coleman, reassures me that the transition to the next generation was one that had been planned for a very long time.

As part of the reorganisation, the company set up a new shareholder supervisory board, with the deeply private Martin Naughton as its chair.

The supervisory board will provide strategic counsel and direction to the board, with specific medium-to-long-term performance objectives.

He's not in the driving seat, but the new structure suggests that Naughton Snr, whose wealth was last estimated by Forbes at some $1.6bn, still has his fingertips close to the wheel.

So far, the handover is going well, with Fergal leading operations and Neil - who spent 12 years working outside of Ireland - assuming a more customer-facing and product development role.

If there is a burden of succession, the Naughton siblings are wearing it lightly.

"We are thoroughly enjoying it at the moment, we enjoy working together," says Naughton of his relationship with his brother Fergal. "We have a great relationship and we actually have different skillsets, probably by design rather than coincidence," says Naughton before bursting into a bellow of warm laughter.

I've always been fascinated by Glen Dimplex. The world's largest electric heating and renewable energy business, which employs some 10,000 people worldwide, has its roots in my hometown of Newry, Co Down.

Glen Electric was set up in Newry at the height of the Troubles.

Martin Naughton acquired Dimplex, a company then seven times the size of Glen Electric, in 1977, thus forming the Glen Dimplex Group. For many years after the modest factory morphed into a conglomerate, the main road home boasted a sign welcoming all to "Newry, the home of Glen Electric" - a much-needed beacon of hope in darker times.

Neil Naughton, who watched his father design products at their kitchen table and spent his teenage years working in a cardboard factory in Warrenpoint, says there was no pressure to enter the family business. But he did.

After graduating with an arts and economics degree from UCD (engineer Fergal studied at Trinity and Stanford), Naughton worked within the group, later completing an MBA at the prestigious Columbia business school in New York.

He cut his corporate teeth in Belling in the early 1990s when that company was bought out of receivership. And he stepped into his own after graduation from Columbia when he became chief executive of a personal care business in the Netherlands.

"It was a small business, but it was my baby," recalls Naughton.

It was the Netherlands that gave him the confidence to step out of his father's shadow.

"I had to earn the respect of my colleagues. You're not going to get that from a surname," says Naughton, who is married with an eight-year-old son, Martin.

Naughton speaks to his father every day and says the best advice he ever gave him was unspoken - to stay close to the customer.

Naughton, who credits his wife Deirdre as one of his biggest supports, said business school was easy, providing black and white answers.

In the real world, that's not the case.

"When you're out there in the murky greys, which is the better answer?" he asks. "Dad told me to keep my batting average up, to make more right decisions than wrong decisions. But, more importantly, to make decisions".

Decisions such as taking Glen Dimplex public, a move ruled out by his father many years ago?

An emphatic 'No' unfurls before I finish asking the question.

"We are a private company, and we like that," says Naughton, gently reminding me that we are here to talk about college football and not the deeply guarded inner sanctum of Glen Dimplex.

He elaborates all the same.

"As a private company, we can take a long-term strategy, that's really what we like. We can have our victories in private and our failures in private.

"We are also very difficult to compete against, our competitors don't know who they are competing against. I like that, it keeps us nimble".

Naughton is reluctant to trespass on his brother Fergal's CEO domain, but his passion is innovation and he barely draws breath when asked about the future of the energy sector.

Martin Naughton is a long-term backer of an €80m wind farm off the Irish Sea and renewables form a big part of the Glen Dimplex portfolio, but his son says the future is electric.

"It really is the only mass fuel that can be completely clean," he says. "Renewables bring their own challenges.

"We have to change the model and decouple the relationship between supply and demand."

For Naughton, it's about developing smarter appliances for homes and businesses, appliances, he cheerfully adds, that Glen Dimplex brings to market.

On the chill winds of Brexit, Naughton says that any return to a hard border would cause difficulties. Glen Dimplex is keeping a close eye on currencies and markets, but mostly it is staying close to the customer.

"The uncertainty at the moment makes it very difficult to react, we don't know what we are reacting to," says Naughton.

Of his own son Martin, Naughton says there would be a certain father's pride, but no pressure, to join the family business, whose future may ultimately be decided by the third generation.

"It has always been hammered home to me that there was a difference between management and ownership and that's something we have to address for the next generation.

"Who is going to be fit for the role and who wants the role? But there is no expectation."

Neil Naughton Q&A

What are your hobbies?

"I enjoy socialising with friends and family and sports (watching more than playing these days) anything with a ball, really."

What was the last book you read?

"Legacy by James Kerr, an interesting read on why the All Blacks are so different."

What's your music taste like?

"Music is varied. I normally listen to talk radio but I enjoy any live performances."

What's the best piece of career advice you ever received?

"Not to be afraid to make bad decisions. When studying in business school, there was always a right answer - it was either black or white and if you did the right analysis, the correct answer would drop out.

"Initially, I suffered from 'paralysis by analysis' and ended up spending too much time trying to figure out the answer rather than making decisions.

My father once told me that as long as my decisions were more right than wrong, everything would be fine."

Tickets for the Aer Lingus College Football Classic game, on Saturday September 3, can be bought at www.collegefootballireland.com

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