Monday 18 December 2017

Bunge jumping and food fights, this Irish Hardie boy done good

Gordon Hardie rose from the poverty of 1980s Ireland to become one of the most senior Irish figures in corporate America. He told his fascinating story to Donal Lynch

Gordon Hardie rose from the poverty of 1980s Ireland to become one of the most senior Irish figures in corporate America
Gordon Hardie rose from the poverty of 1980s Ireland to become one of the most senior Irish figures in corporate America
Donal Lynch

Donal Lynch

It's only a few moments after my interview with Gordon Hardie ends, and already his American head of corporate communications, Susan Burns, is on the line complaining about the "pointed" questions that were put to him.

These related to the equally pointed analyst and media coverage concerning Bunge - the $60bn food ingredients group of which Hardie, a mild-mannered Corkman, is managing director.

It's been a rough few months for them on the communications front. In February the Wall Street Journal called their recent results "lacklustre" - and the Friday before our interview, Reuters went even further, comparing the company's results unfavourably to one of their biggest competitors, ADP, opining about "hurting share price" and saying that Bunge's CEO Soren Schroder is "coming under pressure".

Operating profits in Bunge's core agribusiness segment fell 14pc in 2014 and since July 2013, when Schroder took over, the company's share price reportedly advanced only 23pc versus 50pc for its nearest rival - all subjects that were out of bounds according to Burns, who sat in on the interview.

She wants to see Hardie's quotes before they go to print.

Fat chance.

Anyway, Hardie (as you might expect from one of the most successful corporate citizens in Irish history), seemed not in the least perturbed by any of the questions. In fact he seemed to expect them.

In response to the recent negative coverage of Bunge, he says: "It's hard to get every piece of risk management right all the time - but we have put in very good risk -management systems. We have over 50 researchers globally in all parts of the world, verifying what's going on everywhere from farm to markets.

"Of course there can be volatility, weather events, labour disputes - things are certainly one-off events that have an impact. But I think risk management is a core competence of ours. Our batting average is good.

"It's hard to get it right all the time. The quality of the people, the quality of the research - that's an important part of being a global supply chain, as is acting as a buffer for our customers.

"Weather is the hardest risk. It's a fundamental risk and it's the hardest one to manage. Political unrest is also very difficult, as we have no control over that."

Of Schroder's performance, he says: "I think everyone is under pressure to deliver results."

Perhaps the sole piece of positive media coverage for Bunge in recent weeks has related to the $250m acquisition of Canadian grain handler CWB - but the deal, in which Bunge is partnering with Saudi Arabia's state-owned agricultural investment firm, is thought to be too small to impact on the results of a company as enormous as Bunge. after all, their market capitalisation tops $12bn.

Hardie, for his part, appears quite chipper about the deal: "It's another piece of the puzzle in terms of building out our global grain network," he says.

"We're very strong in this area in the US and Latin America. This was another step on our journey to build out our grain origination.

"In the past the two gaps for us were Canada and Australia. The Canadian announcement was a key element of addressing that gap, and in Australia we've invested in grain elevation and export capability in an area which is a couple of hundred kilometres south of Perth. We're focussed on optimising the local food supply chain. It gives farmers better access to local markets - and gives better choice to our customers."

Hardie is going to be back in Ireland to receive an award from his alma mater at the Smurfit School, and as a local boy made good (at the moment he's probably the most senior Irish figure in corporate America), he seems ideally placed to comment on the food industry here and the growth we can expect over the coming years.

"If you go back 25 or 30 years the food industry in Ireland was what I call a sunset industry," he says. "Today it's a sunrise industry. There's a lot of really good stuff happening in Ireland. The quality of producers and the qualities of the operations and the skill sets of the people on the ground are world class.

"For all of those reasons there's a really huge opportunity for Ireland. What customers all over the world want is for you to build a sustainable supply chain - but they also want you to be able to prove it, so that they in turn can prove it. I brought a group of Bunge executives to Ireland and they came away very impressed that that could be done at a national level."

He sees potential risk and reward in the ending of milk quotas: "If you look at deregulation in the dairy industry there is a massive opportunity. What's happening there will open up markets - but of course it will do that for everyone, which will in turn create some volatility. So you have to look at how to manage that volatility.

"Ireland can look at companies like Bunge and others and take away some lessons about risk management. There's an opportunity for the industry to become fitter, to become world-class in terms of efficiency in operational excellence. We need to get fitter before we get bigger."

What does getting fit entail?

"It's about producing more per cow and actually improving operations on the farm. And also it's about getting the bottom third up to the average of the top third. I think there is an opportunity for Ireland to be world-class for ingredients and innovation."

Will there be another green revolution and where will it come from?

"That's a very big question. I think if you look back over the last 30 years there have been massive changes in production. One of the big issues is that it tends to get ideological very quickly - and if you look at the different constituencies in the food debate, whether it's organic or environment or business, they need to work together.

"And that's where leadership is needed. There is not one silver bullet here, it's a very broad church."

On that score, does a firm like Bunge - which obviously has profit as its bottom line - have difficulty in getting on the same page, as say, environmental lobby groups?

"No, I think at the end of the day there is a focus from all groups on feeding people sustainably, and I think a system of certification for sustainability in food could play a very important role.

"The Origin Green programme [a Bord Bia initiative which encourages sustainability in the food supply chain] could be the genesis of something really transformational."

Hardie's own story has been an odyssey from small town Ireland to the pinnacle of corporate America. He grew in Bishopstown suburb of Cork. "My father in the early part of his career was a merchant seaman, as were all my mother's family," he says "and their stories of travel were elemental drivers in my career."

His father eventually came back from sea and went into pharmaceutical sales. As a boy, Hardie would travel with him on work trips, which also left an impression on him and encouraged an interest in business. The closure of the Ford factory in Cork in 1984 coloured his ambitions and he says that thereafter there was a huge climate of fear and emphasis of "being employable for life".

Perhaps to this end he studied languages at UCC and qualified as a teacher, eventually tutoring in languages in the university, though he says he lacked the patience for teaching.

He went to Smurfit to do an MBA and got what he calls his "big break" when he joined Irish Distillers with responsibility for the Americas. The business was in a period of huge growth.

"During the 60s, 70s and 80s, Irish whiskey was flat - then it was resurrected in the 1990s. That was fortuitous for me. I was in the right place, at the right time."

He moved to Australia in 1999 - his boss at the time jokingly warning him that "the average IQ would go up in both countries" - and joined Fosters Brewing Group, developing the beer brand throughout Australasia and the Middle East. Then, in another piece of serendipity, he was asked to join Goodman Felder, an 100-year-old food group, which in that period was being taken over.

Hardie was asked to run its baking business which was in trouble - the toughest point in his career, he tells me.

"Just having to make hard decisions and sit down with people and tell them they had no jobs - that was very difficult. Everyone who had to leave the business, we tracked them into new jobs."

Hardie tracked the company onto greater prosperity as well. In four years he had shepherded it through private equity ownership and completely turned it around, delivering a fourfold increase in profitability. It was eventually floated in 2005 in what, at the time, was the largest IPO in Australian history. In 2009 he formed Morningside Investments, which focussed on private equity-supported deals in Australasia.

He's been MD of Bunge, which is listed on the NYSE, since 2011 and his salary there is reported to be around $2.4m. He lends his expertise to the Smurfit School food programmes, including the school's collaboration with Bord Bia and the Origin Green Programme, and he also serves on the supervisory board of Zaklady Tluszcowe Kruszwica - a leading oilseeds processor in Poland which is listed on the Warsaw stock exchange.

The sun might never set on his business interests - but in recent years he's been drawn back home. While in Australia he and his wife Rachel adopted a boy and a girl from Korea. "We have a bit of a transnational family, they love Irish culture and GAA and they're learning Irish now too," he tells me.

He moved to Manhattan, to an apartment overlooking Central Park, where he spent the last few years (he calls it a "tough city with a really fast rhythm"), but after so many years away there came a period in his life where "you think about turning the horses home" - and he and his family have recently relocated to Ireland.

"My son turned to me a few weeks ago and said: 'Dad, why do Irish people talk to each other so much?' I think our ability to make conversation, and to be at ease with people is great. It feels good to be back."

'I couldn't even afford to go to a disco'

The most broke I've ever been was… "I remember as a 17-year-old not having the price to get into a disco at a GAA club in Bishopstown."

The best thing that money has bought me is… "it's enabled me to help others."

My favourite investment has been... "I'm really Irish here - but I'm going to say property. I have a reasonable portfolio and a nice house."

The most extravagant spending I've ever seen was… "one of my friends in Australia told me that he and some of the lads went salmon fishing to Siberia. That seemed pretty extravagant to me."

If you could give younger self some advice… "stop worrying. Most things you worry about in life never happen. Growing up in the 1980s with the catastrophic closures in Cork, there was an assumption that most of my generation would leave. But things worked out and worrying about it was wasted energy."

The best trip I've ever taken was... "camping under the stars in the Outback."

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