Outstanding Achievement in Business awarded to Hugh Mackeown, Musgrave Group

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Yesterday evening members of the business, government, funders and educational community gathered in Dublin to honour former Managing Director, Chief Executive and Chairman of the Musgrave Group, Hugh Mackeown with an Outstanding Achievement in Business Award. At the dinner, held in partnership by Cork Chamber of Commerce and EY at the DoubleTree Hilton Hotel and attended by An Taoiseach, Enda Kenny T.D., Hugh was presented with the Outstanding Achievement in Business Award adding his name to the roll call of business leaders that have been honoured by Cork Chamber including Sean O’Driscoll of Glen Dimplex Group; Brian McCarthy of Fexco, Darina Allen, Ballymaloe and Leslie Buckley of INM, Digicel and Saongroup.

Speaking at the event Barrie O’Connell, President of Cork Chamber said “Hugh Mackeown has been the driving force behind the growth and development of the Musgrave Group for over forty years, serving in that time as Managing Director, Chief Executive and Chairman. During his executive career Mr. Mackeown oversaw the introduction and rollout of the iconic SuperValu and Centra brands, initially with 49 stores in 1979 growing to some 1450 stores and seven retail and wholesale brands today, developing it beyond its cash and carry heritage to become the sophisticated retail partnership model that is todays Musgrave Group. The business, under his stewardship, has significant presence in Northern Ireland and Spanish retail sectors and has grown turnover from €7m to in excess of €4.6 billion and supporting some 45,000 jobs. This is a real Cork success story”, added Mr. O’Connell.

John Higgins, Partner Ernst and Young commented. “The importance of family businesses to Ireland’s economy is crucial. Family businesses employ over 50% of all workers in the private sector. Of the more than 200,000 SMEs in Ireland employing around 850,000 people, over 80% are estimated to be family businesses. Dating back to 1876, Musgrave demonstrates the success that home grown Irish businesses can have on the economy. Together with their retail partners they employ over 45,000 people and they continue to go from strength to strength

On behalf of everyone at Musgrave we would like to extend our sincerest congratulations to Hugh on this prestigious occasion.

Read Hugh Mackeown’s full speech below:

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hugh_mackeown10 November 2015

I am really delighted to accept this award, on behalf of both Musgrave and myself.

For me there is a particular pleasure, because in many ways I am not a typical Corkman – I was not born in Cork, not educated in Cork, and did not live fulltime in Cork, apart from 1945 and 46, until I got married and graduated from TCD in 1965.

However two of my grandparents and both my parents were born in Cork, and while growing up that is where we spent most of our holidays. Such a background has made this award especially important to me. The point being, if I am not from Cork I am not from anywhere.

It would be wrong for me to speak only about what was achieved in Musgrave during my time, which was possible only because of what had been achieved already.

When I joined the company it was already 90 years in business, with a first class reputation in Munster and a national tea brand. I would guess that the average age of my audience tonight is probably about 45, which means what happened before 1980 is ancient history. However, I cannot do justice to what was achieved without delving briefly into the past. I hope you will bear with me – history was my degree subject.

You will be aware of the turmoil of the 1st half of the 20th century – first two World Wars and all the disruption they caused, second, and even more traumatic, the war of independence and the civil war. These were very difficult times, when survival and struggle were paramount, not growth and profits.

Recently I read a most interesting and disturbing book called “The year of Disappearances”. It describes what happened in Cork during those years of major conflict, both with England, and between Irishmen. It set me wondering what must life have been like at that time for my grandparents, one side Methodists trying to run Musgrave, and my Mackeown grandfather a Presbyterian minister who worked in Cork all his life. The contents of this book took me by surprise, because in Cork have never seen any sign of sectarian conflict. Indeed my grandfather from Co. Tyrone maintained that the first time ever he encountered true Christianity was on arrival in Cork to take up his ministry. To give just one factual illustration of what must have been a harsh reality, between the census of 1911 and the census of 1926, the non-Catholic population of Cork was cut in half – from 9000 to 4400 – in 15 years!

Next year is the centenary of 1916, and I believe most people, including an audience such as this, recognise that it is now time for open discussion about a very difficult and conflicted period, something that Protestants have been very slow to do.

Perhaps I should make it clear that I am not a religious person, and I am a committed Irish nationalist? If this subject interests you, read the book “The year of Disappearances – political killings in Cork 1921 – 22” by Gerard Murphy, which is most professionally researched. It has to be said that compared with the European massacres of the 20th century anything that happened in Ireland was minimal, to say the least.

As well as wars there were years of economic hardship, something we have experienced again very recently. In the 1930’s the great depression caused serious disruption, not least to Musgrave Brothers, as it was then known. Following the 2nd World War, the 1950’s in Ireland saw stagnation and emigration which drove our population below 3 million.

That brings me up to 1961 when I first worked in Musgrave for several months, in Cornmarket Street, or the coal quay if you prefer. I need to give you some basic facts about the company: it started in 1876 when 2 brothers arrived in Cork from Leitrim and opened a shop in the North Main Street. It became a company in 1894 and went on to develop the Metropole hotel, and several other businesses. Musgrave is now 76% owned by the family, and 24% by employees and former employees. My opportunity for this career resulted from my mother being a Musgrave, and an invitation from her brother jack, the MD, to join the company. The business consisted of ambient food wholesaling – such as tea, sugar, biscuits, canned fruit and veg. Shortly after I started full-time work in 1965 my uncle sent me to a seminar, at which the guru from America made it perfectly clear that wholesaling was on the way out, what we would now call a rust-belt, smoke-stack industry!

There is no denying that he had a point. Trade for us in the 60’s and 70’s, despite our adoption of innovations such as voluntary group trading for independent grocers (such as VG, Mace and Spar) and cash and carry, was extremely difficult. We were growing, but not nearly as fast as the supermarket chains such as Dunnes, Quinnsworth, H. Williams and the rest.

I would need to bring you back to 1980, to be able to give you the clearest idea possible as to the kernel of the Musgrave achievement. At that time, no knowledgeable trade commentator, including ourselves, would have even entertained the idea that by 2015 Musgrave would be the largest food distributor in the country. In fact, we were meant to fade away. Make no mistake, we are now the largest – SuperValu on its own matches Tesco, but to that must be added Centra, Daybreak and Marketplace, which gives us a clear lead, at about 30% of the market.

To the best of my knowledge no traditional wholesaler in any western developed economy has been able to re-invent themselves and achieve anything approaching that. There has been no shortage of overseas competition – from Canada, from Britain, from Germany – and you might wonder how this has looked from a small business in a small city, at the southern edge of an Atlantic Island. To illustrate how it feels imagine if you will a farm somewhere in Co. Cork……… They now know we are a bull, despite having virtually obliterated the people like us in their native countries.

I think another area of important achievement has been our long-term policy towards those who work with us. In times past we were ahead of the unions and our competitors in introducing benefits like holiday pay, sickness pay and pension schemes – items now taken for granted, but not 50 or 60 years ago. Where possible we introduced bonus schemes for productivity, which were of great benefit to employees as well as the company. Another benefit, introduced in the 1980’s, and as far as I know still unique in any major Irish private company, is our share ownership scheme, which is open to all employees. Everyone, including family, has the same class of share. In effect, the family has given away a quarter of the company. I do not think any company can match Musgrave’s record of employment in Cork, going back 140 years. Even in the days of Ford and Dunlop factories in Cork, Musgrave was considered very desirable employment.

Speaking of longevity, another Musgrave achievement is to have lasted and thrived so long as a family business. Most family businesses do not get beyond the 3rd generation. In our existence we had 4 family leaders of the business, which came to an end when I retired as chairman 5 years ago. Our tax system militates strongly against long lasting and substantial family enterprises, to a greater extent than our neighbours in the UK. Many will probably ask “does that matter? It most certainly does matter, particularly when you think of the present political drive to boost our economy by encouraging entrepreneurship amongst smaller undertakings and start-ups. I would suspect the majority of these will be family businesses. In 2003 “business week” magazine conducted an analysis of business performance in the us, which demonstrated that family companies performed over time substantially better than their non-family peers. Returns were 15.6% as against 11.2%, and revenue growth 23.4% pa compared with 10.8%.

Between SuperValu and Centra we have over 600 customers, 95% of them family owned, and most of them in towns and villages in rural areas. Many such rural towns are struggling to maintain viability. Which type of retail outlet is going to do most to help – a family owned SuperValu or Centra outlet, or a foreign chain? The evidence is clear that a local owner is of most benefit to both the local community, and also nationally. Most local owners will reinvest their profits locally, and we see that time and time again, with significant benefit to these under-stress towns. As far as foreign owned chains are concerned, their profits have the advantage of the 12.5% corporation tax, and are then distributed to shareholders outside Ireland, where the rates of personal tax are probably lower because of higher corporation tax. Typically, no local surplus is re-invested locally, and none of the foreign chain’s profit is subject to the high Irish rate of personal taxation, so the overall Irish tax return is 12.5%. The communities are losing and the state is losing, for evermore.

At times I get the impression that politicians and media have an unthinking obsession with overseas investment, to the detriment of Irish-owned enterprises. Of course we need both, only a fool would think otherwise, but in recent plans for recovery it has emerged there is a strong need for Irish-based innovation and developments. To effectively achieve this a shift is needed in the basic assumptions of government and media as to the desired balance of promotion between native and overseas enterprises. As a recent example, what kind of a message does it send to Irish businesses when our minister of finance goes to Shannon to meet Mr. Trump, who plans to invest in an existing golf club? No Musgrave CEO has been met by a politician off a plane, or anything else, in 140 years!

I want to conclude by saying a few words about Musgrave people, and about my own role. My main contributions were in company strategy, in the motivation of everyone I worked with, and by being a committed and reliable presence. In strategy we concentrated on cash and carry and the retail grocery market, eventually evolving our partnership model of SuperValu and Centra as you see them today. In order to make this viable we spread geographically from the south of Ireland into the whole island. Our other Cork-based, peripheral activities were gradually disposed of. I always regarded myself as a professional manager rather than as a family member, and believed strongly in creating the conditions in which my reports had the autonomy to do a good job without me trying to do their job for them. Very often this worked well, and when it did not action was quickly taken. With that kind of treatment people are much more highly motivated than with restrictive supervision. For me the levels of commitment and dedication that existed in Musgrave right through the organisation were a constant inspiration – indeed there were times they kept me going rather than the other way around. And I should say here that this was particularly apparent in Cork, which has always been our headquarters. Together we grew the business from about £7 million in 1965 to just shy of Eur 5 billion in 2007, before everything shifted a gear. In a world that would quickly turn anyone into a cynic, my overall experience of the people I worked with in Musgrave ensured that has not happened to me.

Again I want to thank you, President, and the Cork Chamber for honouring me with this award. We all have to make our own way as individuals and as companies, but it is reassuring to occasionally learn that it’s not happening in a vacuum.

Hugh Mackeown, 10th November 2015


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