Tuesday 17 January 2017

It's time to hire fresh big cheeses

Our leaders are out of their depth -- so let's call in the best and brightest business brains the country has to offer, writes Nick Webb

Published 07/11/2010 | 05:00

Free cheese

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THE proposal to give away some of the EU cheese mountain to people at Christmas is one of the most original ideas the Government has had since the crisis began. It's a sign that the Government, Opposition and civil service are completely bereft of fresh thinking.

Let the Government continue with the day-to-day running of the country but take the executive management of the economy and turn it over to some of to shrewdest, smartest and hard-nosed giants of Irish business. Give them an outrageous amount of money to fix the economy -- dependent on results -- and let them at it.

Key areas such as cost-cutting, job creation and restructuring debt should come under the remit. It would be brutal but it just might work. Civil servants and politicians should stay in their bunkers until it's over.

Cost Cutting

THE €15bn figure, representing the level of cuts in spending and tax hikes over the next four years, is probably conservative. If growth doesn't materialise, it'll probably see more hacking.

Ryanair's Michael O'Leary is unquestionably the greatest cost-cutter this country has ever produced. It all seems so obvious now but online check-in, cutting out free newspapers and breakfasts, baggage allowances, getting staff to steal biros and pay for their own uniforms, and replacing expensively laminated safety leaflets with stickers all helped to make Ryanair the biggest and most profitable airline on the block. That, and buying loads of airplanes after 9/11.

O'Leary has already said we should make bigger and faster cuts and avoid the "muley pukey" union leaders. But even O'Leary couldn't do it all on his own.

Former Aer Lingus boss Willie Walsh was a savage cost-cutter at the airline before moving on to bigger things at British Airways. Apart from selling off the Jack Yeats collection and ending Aer Lingus spending on space research, Walsh started the ball rolling on a major staff restructuring programme at the bloated airline.

He's shown no signs of ending this crusade against overstaffed bodies, with employees at BA also facing the same shock and awe tactics.

Transport also provides our third member of the cost-cutting team. Irish Continental Group boss Eamonn Rothwell -- nicknamed the rottweiler -- is a pretty terrifying prospect. He turned around the fortunes of the struggling Irish Ferries company, utilising fairly brutal and controversial means.

Rothwell replaced staff with overseas agency employees to slash his wage bill. It led to massive industrial unrest and tear gas but he forced it through and ICG is in a fairly healthy state, despite the recession. O'Leary, Rothwell and Walsh have one other thing in common -- the hide of a rhinoceros dipped in liquid Kevlar.

Job Creation

THERE can't be a recovery without solving the problem of unemployment, with last week's figures showing 430,000 people on the dole.

Denis Brosnan started work in a caravan in a field in Tralee in 1972. He was the driving force behind Kerry Group, the €5bn food company, which now employs over 20,000 worldwide. That's some job-creation track record.

Given that food and agriculture have got to play an increasingly major part in the country's economy -- having been overshadowed by construction for the last decade -- Brosnan's background in the sector will be as useful as his abilities to walk on water. Former DCC boss Jim Flavin should also be brought in from the cold. He was on the wrong end of an insider dealing lawsuit and suffered major reputational damage. At this stage, we'll have to suck up our outrage and let him at it. Flavin built up DCC from a tiny little investment company into one of the biggest firms in the country with over 8,000 staff and businesses ranging from home heating oil and surgical masks to Xbox consoles and peanuts. That shows management skills in spades and a clear ability to create jobs. We don't know much about Margaret Heffernan and Frank Dunne, who have been running Dunnes stores for the last couple of decades.

They've taken on big international players like Tesco and have a cool 22 per cent of the €10bn grocery market.

Finance

THE country has enough money to last until the end of June 2011. That's about 220 days away. We're due to return to the bond markets in January or early February. But if we're paying 7.5 per cent on 10-year bonds, the game will well and truly be up.

There must be room for fresh thinking in terms of the national finances and how to make money. Dubliner Dave O'Reilly headed up the world's biggest oil company Chevron from 2000 to 2009. O'Reilly's contacts in the Gulf state (he's just joined the board of Saudi oil company Saudi Aramco) could be vital in selling the Irish story and indeed selling chunks of Ireland and infrastructure.

The traditional institutional buyers of Irish bonds are not interested and despite the decision of two Russian sovereign wealth funds to shun Irish debt last week, some of the vast national funds of places like Kuwait, Libya, Singapore or Qatar should be persuaded to invest.

Tullow Oil's Aidan Heavey should also be brought in, given his skills in raising money in near impossible times. It should be remember that Heavey managed to refinance close to €1.5bn of debt in the depths of the credit crunch last year and then go out to raise about €1.2bn on the markets.

If he can tie in Chinese or Korean money to fund the construction of a vast oil pipeline from the centre of Uganda across hundreds of miles of inhospitable terrain to the sea, then plugging the deficit here should be child's play. Financial wizardry and wheeler dealing is also absent at the Department of Finance. Amarin founder and former Elan finance chief Tom Lynch should be brought back from the UK to work some magic with the books here. His complex financial engineering and structures at Elan almost a decade ago, saw the company soar on the stockmarkets, giving it a boom-time value of well over €20bn. It went a bit wrong after that but it doesn't mean the skills are blunted.

Restructuring

PLAYING hardball with overseas investors on our debt mountain is a prerequisite for any turnaround. Restructuring skills are vital -- the country has to be knocked down and rebuilt.

Beef baron Larry Goodman is about the only living Irishman to have taken a huge company -- his Goodman International beef firm -- through this process successfully. There have been other corporate restructuring but Goodman's nous in rescuing his empire after it collapsed with €500m in debts is the textbook example. It wasn't without controversy, but Goodman is one of the few people with any money in the country. It might also be worth calling on venture capital investor Pierse Casey who, despite a horror show at Getmobile, has a proven record of making big money from turnarounds. This is the guy who spent one franc buying European distribution company Omnilogic before flipping it a year later for almost €26m.

Despite the blowout at his debt-laden EMPG, former Credit Suisse banker Barry o'Callaghan should be brought in to help. The debt-fuelled acquisition spree at the publishing company -- formerly known as Riverdeep -- saw O'Callaghan's €1bn fortune all but wiped out.

He's been at the heart of the financial restructuring of the US-based firm, which is now controlled by hedge funds, including billionaire John Paulson (the Wall Street maverick who made a fortune betting against the sub-prime market). Useful contacts book, too.

Innovation

WE'RE still not massively convinced by the whole "smart economy" wheeze. It's pretty much the same plan as every other developed country from Denmark to Dubai and Singapore to Slovakia. But we'll give it a go all the same.

Fostering innovation and R&D are crucial to the success of this. With a track record that includes backing Betfair and Bebo before anyone had even heard about them, Balderton Capital's Barry Maloney has an extraordinary nose for spotting emerging talent and new technology. He can play the Simon Cowell role for picking companies and sectors to support.

Investor extraordinaire Dermot Desmond should also be recruited, not just for his uncanny ability to spot trends and opportunities but also because he has some pretty wild ideas -- and some of them work. How about the IFSC for starters? Desmond has already proposed a top-notch cultural and performing arts university.

The Government hasn't exactly been bursting out of the traps with that one. Maybe it should.

Before the recession arrived, Brody Sweeney turned the humble sandwich into something somewhat more desirable and his O'Brien's Sandwich Bar chain has been an extraordinary growth story. His plan for a super-brand to market Ireland as a tourism and food hotspot is ridiculously simple and smart.

Sweeney is on the board of Paddy Power bookmakers. His chief executive there -- Patrick Kennedy -- should be grabbed for the national interest. Kennedy has completely re-invented the bookie from a chain of betting offices into an international gambling empire, through smart investments in technology and spotting major gaps for growth.

Sunday Independent

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