Editorial | What might GraceKennedy teach us?

Having survived the vicissitudes of business for a long time, this newspaper can attest that doing so for a hundred years in Jamaica is no easy or small feat. This is Gleaner’s 188th year.

Over our long existence we have observed, and chronicled, the affairs of Jamaica, including the stories of many once-powerful companies with great names that no longer exist and whose marquees are now the detritus of forgotten history. Which is why we note, and celebrate, the 100th anniversary of the Jamaican conglomerate GraceKennedy, which was formally observed on February 14, but will continue over the year.

We highlight this milestone not merely for its significance, which of itself is important. There are two other significant and interrelated reasons for doing so. GraceKennedy is a Jamaican champion. Its survival and growth has lessons for other firms, including small ones and start-ups, that now face uncertain times – from the recession and global supply chains caused by the COVID-19 pandemic, to their likely exacerbation by the Russia-NATO/Ukraine geopolitical crisis. More importantly, GraceKennedy’s growth and stability are primarily the result of the strategic decisions and actions of Jamaican managers, who often had to navigate long periods of political and economic uncertainty.

GraceKennedy is a food manufacturing, retail and financial services group operating across the Caribbean, North and Central America, Britain and a handful of other European countries. In 2020, the latest period for which its audited accounts are publicly available, it had revenue of J$115.44 billion and pre-tax profit of J$9.7 billion.

WAS NOT ORDAINED

But today’s success was not ordained. If a century ago a few men had not discerned an opportunity and were willing to take risks, nothing might have happened. GraceKennedy’s precursor’s doors might have closed for good, and any recollection of its existence would probably have been the result of some researcher noting that what is today a major US manufacturer once had a subsidiary in Jamaica.

To clarify this context, W.R. Grace, the chemicals and materials manufacturer, had by the early 20th century morphed from its founding role of mining and shipping guano from Peru to America into a significant trading company. It had a subsidiary in Jamaica called Grace Ltd. But when America’s early post-World War I economic boom quickly turned to recession, W.R. Grace felt the pinch. Its Jamaican subsidiary was a casualty.

It decided to offload the Jamaica operation in what in modern-day business parlance would be called a management buyout. Dr John J. Grace and Fred W. Kennedy, who worked for the subsidiary, acquired the business. They were soon joined by another Jamaican, James Moss-Solomon, as the new company’s accountant. The rest, as they say, is history. Except that is not quite true, in the sense that it was either easy or plain sailing.

For example, GraceKennedy had to ride out the difficulties of the Second World War; navigate the import controls of the 1970s; contend with foreign exchange shortages of the 1970s and 1980s, and the Byzantine arrangements for its allocation in the latter period. Yet, the company thrived – doing better than the anaemic performance of the economy within which it exists.

BIG AMBITIONS

Moreover, the company had big ambitions, which it shared with Jamaica. In 1995, GraceKennedy’s management announced a 25-year plan to become a global consumer group by 2020, on which it has made significant headway, even if the ambition has not been fully achieved. Which makes GraceKennedy, and the few others like it, good subjects for in-depth case studies, especially in an environment where few companies scaleup to become transnational conglomerates and multigenerational existence tend to be rare. Indeed, there are many businesses that were household names that used to sit astride King Street and elsewhere in downtown Kingston. They have long since atrophied and died. And the firms that have grown big in recent decades have been primarily those whose core business is financial services.

In other words, as Jamaica seeks to escape its history of low growth and encourage the development of firms that can compete successfully in the global economy, it would be useful to understand how those that have made the cut, or are on their way to doing so, accomplished the transition. Their managers may illuminate how in Jamaica entrepreneurial skills and hard-nosed, professional management and organisational systems intersect to deliver success.

Indeed, this should be a project of the island’s academies, with, possibly, support from the Government. The new reformed education system should bring the result of these engagements to the centre of the curricula and the classrooms, including at the primary- and secondary-school levels. Students should appreciate that being successful in formal, structured businesses is not bad – and can be an exciting adventure.