William Mahfood -- Waking Up a Sleeping Giant

BUSINESS LEADER SPECIAL

William Mahfood, the managing director of Wisynco Trading Company, has more than one reason to celebrate each November. Firstly, he was born on the 16th of that month -- in 1965. Of equal importance, he says, is the fact that the elder generation of Mahfoods, all four brothers -- Sam, Joe, Ferdie and Robin -- came together on or near that day, to create West Indies Synthetics Company (Wisynco).

In the nearly four decades since its formation, Wisynco, like so many other products of Jamaica's post-Independence euphoria, has had to repeatedly undergo radical metamorphoses to survive. From a supplier of a wide range of household and hardware type items, to being a major producer of footwear, and plastic products, distributor of shrimps, and rice from Guyana, the company has been constantly shaped by market forces over the period.

But over the past five years or so, the Wisynco Group has taken on a well-defined character -- having been transformed into a modern, efficient manufacturer and distributor of a wide range of products -- and which has proven resilient even in the face of what has been to date, Jamaica's most fiercely competitive environment.

So today, soft drinks, spring water, plastic goods, foam products are manufactured in plants that utilise the same technology that is available at the most efficient producers on the globe.

Broadly speaking, At the same time, the company represents, and markets products for some of the most powerful international food brands on offer on the Jamaican market.

The new-look Wisynco Group consists essentially of four semi-autonomous operating companies, which are owned by the same Mahfood generation who were its creators.

Broadly speaking, the group is engaged in the manufacture of bottles, a range of soft drinks, spring water, plastic and from containers, and distributes some 3,000 different products for the international brands it represents.

But it is the younger generation who has collectively driven the process of change, and who has shaped it into the multifaceted, $4 billion per year behemoth it is today.

As the executive in charge of the distribution and marketing arm of the group, it is the responsibility of William Mahfood to ensure that all the products of the factories find their way to the tables of Jamaican households and commercial enterprises.

In this corporate arrangement of division of labour and specialisation, his is an overarching and pivotal responsibility -- the linchpin around which the company will either succeed in its effort at market penetration, or fail.

"The primary objective of the distribution company is to get out manufactured products to the market in the most cost-effective manner," explains William Mahfood of his role. "The idea is that the manufacturing companies must be free to focus on production."

Up to a few years ago, Wisynco relied on a complex distribution network involving multiple distributors to get its products to the market. Under young Mahfood, that system has been consolidated under one entity, allowing the group, he says, greater control in "managing our own destiny".

Yet, Mahfood stresses that running the vertically integrated group is a co-operative effort involving four senior executives:

* William Mahfood, who incidentally is son of Joe Mahfood;

* Andrew Mahfood, William's cousin and son of the chairman, Sam Mahfood, is group finance director, which gives him a sweeping perspective on all critical aspects of the group's operations;

* Devon Reynolds is managing director of West Indies Synthetics that produces a wide range of plastic disposable cups, bags, utensils, flexible and rigid packaging, expanded foam trays and plates, among other items; and

* Fracois Chalifour is the managing director of Jamaica Drinks Company, which produces the Bigga line of soft drinks and Wata brand of spring water.

"It is these four that make up the nucleus of the team," explains Mahfood. "Francois overseas information system and also production of the beverages... We are all very close. There are other managers who are key people, but the group of four is the heart of the organisation."

The older generation have practically withdrawn from the business. Sam, the chairman, is ill and has not been active in the company for a few years. Joe, whose title is that of group president, has been winding down, and though only 60 years old, plans to retire next month, having been focusing a lot of his attention these days on building houses for Food for the Poor.

Ferdie has been out of the company since the 1970s when he migrated to Miami to start a company called Essex, then Food for the Poor; while the youngest of that generation, Robin, who joined him in Florida in the 1980s, is now running the charitable organisation.

William Mahfood says that no clear successor to the president or chairman has either been anointed or identified, but that in any case, the title would have no practical impact on the role that has been defined for each other in the present corporate structure.

"The title won't change anything," he says.

Williams speaks with a sense of pride of the fact that even within the context of a family business, he had to prove himself to have been considered for the position he now occupies.

The first of four children, young Mahfood attended Priory Preparatory School, and then Campion College.

"Our graduating class of 1981 was the only year that Campion did not graduate the students," he recalls. "The class was caught drinking. Frankly looking back it was quite out of control."

The punishment was collective, decisive and made newspaper headlines. There was simply no graduation ceremony.

It is not surprising that Mahfood, in retrospect, would appear so conciliatory, despite the harshness of the punishment. He himself was, after all, and by his own acknowledgement, no spoilt, rich kid.

"One thing my father did was make me work every holiday," he recalls. "I remember from age 11 having to go to the factory and having to work in the line, packing plastics."

Mahfood remembers an incident that he says has been one of the defining moments in his life. He had, without permission, powered up the forklift and attempted to move it around, and in the process, damaged the bicycle of one of the employees.

"I had to work the entire summer to pay back for his bicycle. I was about 13 years-old."

There were other incidents that made an indelible impression on him, teaching him from early the virtues of discipline, and the value of industry.

While working in his early teens he appeared to have developed a voracious appetite for food, ordering two lunches each day for the first week.

"I told them at the canteen to charge it to my father's account," he recalls.

But to his dismay, his father rejected the bill, and instructed that the money be withdrawn from his wages. "I got no pay for the entire week and remember writing up a placard that said 'I would not work for food alone'."

Yet, as an undergraduate student of Lowell, Massachusetts, USA studying plastics engineering, Mahfood was to experience first hand, more of the firm discipline of his father.

"I was going through a rough period at university and wanted to take one year leave of absence. My father told me point blank that 'if you come back here there is a job for you here to sweep the factory floor'. He was very firm. He said he would never spend another dime on my education."

Mahfood says that those early years prepared him for the discipline that is required to succeed in business in Jamaica today.

"I am the better for it, because it taught me a lot about self-discipline. My father was strict but a loving person. I was not a spoilt kid."

Having competed in 1988 a degree in industrial engineering at North Eastern University, with a minor in information technology, Mahfood came back to Jamaica on what was supposed to be a one-year hiatus from university, to return for his masters the following year.

All that changed after a meeting with his uncles.

"They suggested that there were some warehouse problems -- related to operations, etc and that I should come in and help them sort it out."

At the time, the firm -- Wisynco Trading -- was located in the LOJ complex in Twickenham Park.

"When I started the company was in transition between harberdashery wholesale to consumer products company -- selling everything from mops to nails. There was not much focus about products and I came in as a warehouse supervisor."

The managing director was Phillip Crimarco. Wayne Kirkpatrick was sales manager.

At the time, Mahfood earned a modest salary $50,000 per year.

"You do not get a position because of who you are," he advises. "Though they will not let you starve, you have to prove your worth."

He got married in October 1989 at 24 years-old to his high school friend, Frances with whom he now has four children. The eldest, Joseph is now at Campion. There are three girls.

His first promotion was to the position of operations manager for Wisynco Trading -- which meant that he was now responsible for supervising warehouse deliveries, purchasing inventories, etc.

"That gave me the means to relate to suppliers, sales persons, and customers at all levels," he says.

Mahfood believes that this position allowed him to help improve the operations of the company -- offering better service to customers, and improved inventory control procedures.

Then Crimarco left to start his own business and Sam Mahfood came in on a day-to-day basis at Wisynco Trading. Between 1990 and1992, William Mahfood worked closely with Sam Mahfood.

"I used to handle Carib Shandy and started to look at expanding the portfolio into consumer products. We decided to drop a lot of the product lines to become more focused."

It was, Mahfood recalls, a period of experimentation -- and not at all successful. For example, around 1992 the group started a fisheries division, bringing in fish, conch and lobster through a joint venture with a Russia company.

"This had potential for a good business but there were too many uncontrollable variables," he says. "We lost a lot of money in a short space of time. Also, at one time we controlled all exports of rice from Guyana. Sam wanted to promote Caricom relationship, but got burnt badly with the rice in the early 1990s."

While his father extolled the benefits of discipline and personal responsibility, it was Sam who imparted to him "the importance of developing relationships with customers".

Adds Mahfood: "It is now my personal mantra, and I try to pass it on to staff.... That is when I started to get involved in sales -- getting to know customers -- and realised we had to change the types of products. We had in place the infrastructure but did not have the right product mix."

The company, he says, then went through a period of "intense change", now operating in a market that was beginning to open up. Mahfood realised that the multi-nationals had no representation in Jamaica, which he reckoned they would need in order to exploit opportunities as the environment was gradually transformed from a protectionist market to an open one.

"We realised that they were going to need representation on the distribution side and that on the manufacturing side there would be a threat to our industry."

Gator, a once popular shoe brand produced by Wisynco, was an early victim of the new market dispensation.

"Every year we tried to keep up with imports from China, but just could not do it," says Mahfood.

In 1995 young Mahfood became managing director of the trading company following a brief stint by Paul Shoucair.

"We began to seek out brands that on the distributing side could give us long-term growth," he explains. "The very first line Ocean Spray." Among its line is Cranberry juice.

"We went to some of these companies and very aggressively tried to tie up deals to handle their line in Jamaica. We had to put in place infrastructure with people and technical solutions for the growth," he says. "As we were developing the infrastructure to get into trade, we also got into the manufacturing of various products. What we tried to create was a vertically integrated company. We felt that by being able to control the entire chain from raw material to finished product we could give the consumers competitive products."

Last year, the group invested over $200 million in the expansion of Wata and a carbon dioxide line for the soft drinks -- a new filling line to make drinks. The new machine spits out 400 bottle per minute.

Today the group employs some 1,000 workers, and operates out of several facilities with combined space of about 150,000 square feet.

The drinks factory produces twenty 40-ft container of Bigga brand soft drinks per day. The styrofoam factory works 24 hours per day, seven days per week, and exports about 60 containers of products per month.

"Our sales force of about 60 is equipped with lap tops and is web-enabled for ordering," says Mahfood.

It is, he says, part of the philosophy of being on the cutting edge, to be able to compete with large-scale, aggressive manufacturers from countries like the Dominican Republic.

"We deliberately selected freight-sensitive products that would make it difficult for others to export to Jamaica and compete with us here," he explains.

"For example", he continues, "it is almost impossible for people to compete with us even with styrofoam even with a completely free market. Soft drinks is another such product."

At the same time, Mahfood says his company is always on the hunt for good brands to represent in Jamaica. A month ago the firm was appointed as distributor for Rayovac battery, produced by the second largest battery company in the world.

"If you build a structure that is efficient, that can get a product into consumer hands, the manufacturers will line up to beat down your door to sell their products," explains Mahfood.

A crucial plank in his company's success at market penetration, he says, is the efficient sales team.

"Companies are always impressed with the sales team at this firm. The sales team has made us successful."

To deepen worker loyalty, Mahfood introduced profit sharing at the distribution company a few years ago -- a programme which has since been introduced across the entire group. The effect, he says, has been to minimise larceny, by aligning the interest of the workers with that of the owners.

With a production capacity of seven million cases per year at the drinks company, Mahfood says that there are now plans for new products within three months.

The other important plan he says, is to continually increase the proportion of income earned from exports. At present 12 per cent of the revenue is generated from export.

"Our products are in the Caribbean islands," he says. "We sell to the UK, Miami, New York and the list is growing. We, however, have a production constraint and can only open more markets with improved capacity. We will set up an export manager in Miami -- who will handle exports for the region, including Panama, where we plan to expand."

The company also has on the drawing board, plans for a 200,000 square foot facility under which it will be able to consolidate most of the operations that are now spread across several different locations.

However, Mahfood says that care will be taken to ensure that there is optimal debt to equity combination, as the group continues to invest to avoid a repeat of the cash crunch of the early 1990s.

"We have borrowed lots of money for expansion," he says. "In the 1990s we had to put in place tight financial controls -- managing the finances like you would manage sales and marketing, to get out of overdraft. That was the key to our survival. We realised that we were working just to pay interest. We had to work on inventory levels -- cutting it down to 10 days from 30 days to improve our cash flow to 36 times per year."

Part of the strategy that is also utilised by the company, is its decision not to invest in trucks for haulage.

"We used to have our own trucks -- and I said we are not in the trucking business."

The upshot is that a group of entrepreneurial truckers have developed to provide trucking services for the company.

"They have to be on call 24 hours per day because the factories are not geared to store production," explains Mahfood.

The bottom line of all this arrangement, according to Mahfood, is that the Wisynco Group has been transformed into a resilient company. He is confident that, with 50 per cent of its revenue generated from manufacturing, and the balance from the branded products, the firm is capable of withstanding competition from even the fiercest competitors in the region.

(Observer)