Saturday 23 September 2017

Michael Smurfit: Great leadership - and life - is all about risk

He's Irish business royalty now, but a decision early in his career taught Michael Smurfit a $100m lesson. But he insists corporate chiefs need to be first into battle - and shouldn't think about getting into politics, like old friend Donald Trump. Dearbhail McDonald, Group Business Editor, meets the 81-year-old in Dublin

‘Donald Trump is equivalent to the two hurricanes that have hit America,’ says Smurfit of his long-time friend. Photo: Steve Humphreys
‘Donald Trump is equivalent to the two hurricanes that have hit America,’ says Smurfit of his long-time friend. Photo: Steve Humphreys
Dearbhail McDonald

Dearbhail McDonald

Michael Smurfit says he "nearly died" when Jefferson Smurfit, the boxmaker founded by his father, John Jefferson Smurfit, acquired the Hely Group in 1970. Hely - the packaging, radio, television and distribution company - was four times the size of the Jefferson Smurfit group.

However, over the next seven years, Michael Smurfit honed his craft, instinctively eyeing bigger acquisitions and stepping into his father's shoes following Jefferson Smurfit's death in March 1977.

The personal shock of losing his father, a "towering person" and the most influential man in Smurfit's life, was amplified by the acquisition of the Alton Box Board Company in Alton, Illinois. The takeover of Alton cost $74m, but proved a more costly affair when a factory roof that hadn't been repaired in 40 years cost the young chief executive a further $100m.

"That [Alton] was the single biggest business shock I've ever had," says the now 81-year-old business titan, who has returned to Ireland from his home in Monaco (where he is Honorary Irish Consul) to reflect on the risks and rewards of a remarkable life in business.

Not for the last time, Smurfit turned the Alton setback into a comeback.

Formed in Rathmines in Dublin in 1934, the Jefferson Smurfit Group (JSG) was making a profit of £50m half a century later.

In 1985, JSG was named by Forbes magazine as the number one company in the world ranked by earnings growth. It merged with Kappa Packaging in 2005 and today Smurfit Kappa is valued by the market at more than £5.5bn.

"Life is all about risk," says the paper and packaging tycoon whose fears that Irish companies would get trounced as a result of the Anglo-Irish free trade agreement in 1965 drove him to seek expansion in Continental Europe, the US and in uncharted markets such as Latin America.

"Whatever ability I had in my life, it was because I was prepared to lead from the front. And if you lead from the front, you're taking a big risk because you're the first into battle, you're going to be shot at. Being a risk taker is part of leadership, risk is part of everyday life."

Smurfit, who has six children and 13 grandchildren - the family's wealth is an estimated €422m - says it is family that towers over his many domestic and international accolades, including a Knighthood (KBE) for services to British business in 2005. "It's a great part of leadership that you lead a family as well as a business," he says, adding that he hopes to pass on before any of them.

"Leading a family with the integrity and motivation that I have... I take such great pride in the fact that the family's name is as clean as a whistle. That's very important to me."

It's ironic, looking back, that JSG's expansion into overseas markets was in part driven by fears over the terms of the 1965 Free Trade Area Agreement between Britain and Ireland (FTAA).

The agreement ultimately vastly improved the relationship between the two countries which now stand on the precipice of Brexit, which is "a disaster for Britain", he says. "There's not going to be a zero effect, that's for sure," adds Smurfit, an acquaintance of the European Union's chief Brexit negotiator, Michel Barnier, who hails from Courchevel, France, where Smurfit owns a hotel.

"I think it [Brexit] is irreversible now," says Smurfit, but later added that the possibility for a change of heart in the UK now exists, however small.

"It won't be a positive effect, whatever happens."

Sage and suave in a classic three-piece suit, Smurfit throws his head back and shifts energetically in his seat when I ask if he holds much hope for the presidency of Donald J Trump.

The two men are long-standing friends - Smurfit lived in Trump Tower for 25 years - and they've been playing golf together for years.

"I know Donald quite well. I've had many a dinner with him over the decades, played a fair bit of golf with him. We have that in common, we're golfers and now he owns a competing golf club to mine, you know, he's my enemy, isn't he?" laughs Smurfit, owner of the K Club in Co Kildare.

"I think Donald Trump is equivalent to the two hurricanes that have hit America," says Smurfit, who has a picture of himself with Trump, under which he's penned the caption, 'One day I'm going to be President'.

"Nobody's seen anything like him before or since, nobody knows what he is going to do, I don't think he knows himself. I think he was more surprised than anybody when he became president."

Though the men's paths crossed many times, Smurfit doubts Trump's business skills are easily transferred to politics. "He doesn't have the tools, in my view, to deal with it, he doesn't have the skills, he doesn't have the team, he's not a consensus builder."

Smurfit says he is at a loss to understand what drove Trump to the White House. For Smurfit, politics and business are not necessarily a good match.

"I never found in my lifetime that a good businessman made a good politician because a businessman is clearly taking decisions, executive decisions and not consensuses.

"As a boss, you can't be a consensus builder all the time as a politician must be," says Smurfit, recalling a business colleague who wanted to 'take on the establishment' by entering politics, only to be belted back at the first try.

"He was a very successful businessman and that was a lesson to me. I never believed that the really successful businessman makes a good politician."

Smurfit does believe in supporting politics, though, whatever choice the electorate makes.

"My view in Smurfits was we support institutions of the country," he says.

"If the institutions of the country appoint Donald Duck, Mickey Mouse or Pinocchio or whatever, that's who we support.

"We've a new Taoiseach and I think as Irish people we rally behind the powers that be, whoever is in power."

If he gives credit to anyone for Ireland's recovery - our unemployment rate dropped to a nine-year low of 6.3pc last month, having peaked at 15.2pc in 2012 - it is the Irish people who came through the hard yards of the global financial crisis.

"The crisis was so severe," says Smurfit, who predicted three years ago that a strong recovery was on the horizon.

"I could see us getting out of it because I believed in the fundamentals of the country. The economy was sound, our education is right. The greatest natural resources we have in Ireland is our people. It's all about the people of this country and I believe in the people of this country."

It is investment in the next generation, be they sports stars or business leaders, that has brought Smurfit home again. Just as with the Smurfit Business School, a new, world-class centre of excellence for executive development carries his name, a fitting legacy for one of Ireland's stellar business icons.

 

Dr Michael WJ Smurfit, founding benefactor of the UCD Michael Smurfit Graduate Business School, UCD, was in conversation with Dearbhail McDonald on the occasion of the launch of a €5m Executive Development Centre at the UCD Smurfit School.

Sunday Indo Business

Also in Business