Copy of Bord na Mona CEO Mike Quinn's Speech from Chamber AGM Dinner 2017
Feb 02, 2017
Speech by Mike Quinn, CEO, Bord na Móna to Dublin Chamber of Commerce AGM Dinner
Good evening ladies and gentlemen. I’d like to thank the Dublin Chamber of Commerce for inviting me to speak to you tonight and to extend my warmest congratulations to Brendan Foster, your new President and CEO Mary Rose Burke, who only joined the Chamber late last year. They will both be spearheading a transformational vision – for Dublin 2050.
I’m now going to speak to you about another Irish story of transformation – the one that is well underway at Bord na Mona.
Eighty-three years ago, in 1934, the Turf Development Board, a limited liability company set up by the Irish government, started harvesting commercial grade peat out of the bogs of Ireland to heat Irish homes.
By 1944, with an acute wartime shortage of imported coal, the company had no choice but to nearly double its pre-war harvest. That peat helped to keep the trains running and the population from freezing to death for six years.
The Second World War showed how important peat was for our national energy security, and in 1946 the Turf Development Board was transformed into the commercial semi-state company, Bord na Móna, which I joined as its Chief Executive Officer in January 2015.
Having been away in the United States, I went from running 5 businesses as part of a global division of a huge, cutting edge, $10 billion dollar company, Precision Castparts Corp in Philadelphia - that manufactured parts for the aerospace industry in 161 factories around the world, to a, state-owned company in the midlands of Ireland that was in the process of transforming itself from a largely peat based company into a renewable energy, heat and resource recovery business.
Let me set the scene: I would say most of you in this room haven’t heard of PCC. PCC was acquired by Berkshire Hathaway in 2016 for $37.5bn cash – their largest acquisition ever.
Well, it was GE on steroids! It had the 2nd highest performing stock in the US since 2000. When I joined in 2005 its turnover was $1bn, by 2015 it was $10bn. It had a relentless focus on quarterly improvements. Every quarter I spent a day with the CEO and each review was like a job interview for me. There could never be two or three consecutive bad financial results, As the Americans say – 3 strikes and you’re out.
Just to give you an idea of the culture - in one of these reviews, when I admitted I was really struggling with a particular problem, the CEO listened carefully and then went up to the whiteboard in the meeting room and drew a little well with a roof and a really deep shaft – 20 ft deep. At the bottom of the well was a little stick figure.
He asked me the name my eldest child and then he said, “Ok, that’s Ella at the bottom of the well. What are you going to do?”
I said what every parent would say, I’d instantly pull off my shoes and clothes and go in after her; that I’d do anything and everything to get her out. And he responded, “so long as that’s the attitude you take in solving your problems here, you’ll survive. I want that mindset every day”. I lasted a decade.
So when the role came up in Bord na Mona, my Irish friends and family thought I was absolutely crazy to leave PCC and take up a job running what they perceived as a less than cutting edge performer in the town of Newbridge, Co Kildare.
And so to Bord Na Mona:
We’ve often been described as an ‘iconic’ company. Does anyone remember the old signature tune, ‘The Marino Waltz?’ [- pause -] … you won’t be able to get out of your head now.
I always worry a little when I hear a company has been branded, “iconic” - like Polaroid.
Or Remington Typewriters, which never became Remington Computers. Or even Compaq. An “iconic” computer company from the 1980s that barely made it into the 21st century before it was gobbled up by Hewlitt Packard.
What Bord na Móna had become over the decades was an iconic Irish company that was going to be left behind if it didn’t reinvent itself.
What I quickly discovered was that peat for our power stations did not have a long term future, and in September 2015, in BNM’s 3rd Sustainability Report - the company announced that peat for power generation, its primary source of revenue and profits, would be phased out by 2030. We needed to transform and at speed or we would simply cease to exist.
That transformation is now well underway and it means that in five or six years time, let alone by 2030, Bord na Móna will not only be unrecognizable to its founders, but probably to most of you in this room who still think of us as the people who make the briquettes you burn on chilly nights.
I didn’t realise how little people knew about Bord na Mona until I attended an IBEC dinner a few weeks after I started. I was introduced as the CEO of BNM, to which people would say ‘Ah the peat briquette company’, then I would launch into an explanation about our involvement in many other industries – wind, resource recovery, biomass etc. But when I got to the 8th person, I gave up and agreed – ‘yes the peat briquette company’ – even though Briquette sales only account for 10% of our turnover today. This is an engrained perception about Bord na Mona that we have to change.
So let me fill in some of the other gaps for you…
- Bord na Mona has the largest tractor fleet in Europe – over 1,000 tractors
- We have more rail track than Irish rail
- We manage 200,000 acres of land – 2nd biggest land owner in the company – that’s equivalent to 12,500 Croke Park stadiums!!!
- We collect over 5 million domestic bins annually
- We generate enough renewable energy to power over 150,000 Irish homes
Bord na Móna isn’t a sleepy commercial semi-state company anymore. It’s a commercial company with a €450 million euro turnover that just happens to be owned by the state. To be clear, we used to be a heavily subsidized commercial semi state company, now since December 2015 we’re a purely commercial company whose shareholder happens to be the state.
There is a big difference between a commercial semi state and a commercial company whose shareholder happens to be the state – I cannot emphasize this enough.
The company is now organized into six operating divisions - Biomass, PowerGen, Resource/Waste Recovery, Fuels, Horticulture and Peat – and each must contribute to our profitability, which is driving our expansion and acquisitions, and the dividends we pay our shareholder while employing 2300 people in the Midlands of Ireland. We’re moving from a position where 80% of our profits were generated from peat based business to a situation where no one division will generate more than 30% of the profits giving us a much more balanced portfolio.
The Sustainability 2030 Report has laid out how our future will be secured by the production of renewable sources of energy, fuelled by the same, great land bank in the midlands that once produced clods of turf for our ancestors, peat briquettes for your fireplaces and milled peat that once exclusively ran our power station at Edenderry and the ESB’s two peat burning power stations at Lanesborough and Shannonbridge.
As I said, today, we generate enough renewable energy to power over 150,000 Irish homes – over half of our total generation capacity. Within four years another quarter of a million Irish homes will be powered by renewables – wind, biomass solar and other innovations that become commercially viable.
Last year alone our Edenderry power station co-fired almost 400,000 tonnes of biomass.
For those of you unfamiliar with the term, and contrary to some misinformed reports, biomass does not come from the burning of whole trees.
Bord na Móna biomass is a mixture of sawmill residues which are by-products of timber production like sawdust, stripped bark and very low, carbon-emitting wood pellets derived from forest residues.
Bord na Mona is NOT cutting down trees to create energy, the biomass we use is a by-product of other industries. We will only take biomass from sustainable sources. We are also in the process of developing sustainability principles and resulting KPIs for our biomass business. We will report against these principles openly and transparently, and they will be a key driver in how we run this business.
We’ll be importing wood pellets from the US and other countries until our own self-sufficient sources – the willow plantations and fast growing eucalyptus we’re planting on farms and BNM land - come on stream over the next 10 – 15 years.
Our vast peatlands already provide some of the most ideal locations for wind farms and some of the new wind facilities we’re building between now and 2030. These sites will also provide opportunities for co-located solar energy facilities.
Our waste collection business AESBord na Mona has over 110,000 customers, from which it collects and treats waste. Our expanding state of the art waste and recovery business at Drehid collects landfill gas that is then processed and generates enough sustainable electricity to power 8,500 homes.
As peat production is rapidly phased out by 2030, we’ll have more land to be rehabilitated and restored for new sustainable land uses - such as wind power, local community amenities, energy crop development etc.
Ihave to admit that one of the most compelling reasons why I took this job was the company’s great land bank. We have what other energy sector companies do not have – land and lots of it.
Our Sustainability 2030 Report also includes other positive environmental uses for the thousands of acres of bogland that we won’t be using for alternative energy production.
Post production bogs are already being brought back to life and seeded with native flora and fauna by our team of ecologists. More eco-tourism projects are being developed and last year over 100,000 tourists – birdwatchers, anglers, cyclists and walkers, families and nature lovers - visited our award winning Lough Boora Discovery Park in Co Offaly. Please come if you haven’t already.
However, the two years since I’ve taken over as CEO haven’t been plain sailing. Far from it. Every division faces its own set of challenges like carbon taxes and the unfair fuel pricing.
The impact of cross border trading is having a significant impact on the fuels business – where VAT and carbon tax are not being applied equally.
Also, we have to deal with the misinformed objections of environmentalists to biomass production, and the ongoing planning nightmares that take up far too much of the time, and forgive the pun, the energy of the people who run the Powergen division.
We’re not alone in this, of course. It’s happening to lots of different companies everywhere – from the Apple data center in Athenry to the Radisson in Golden Lane in a city that has a critical shortage of hotel rooms.
The planning process in this country has lost the run of itself, allowing single objectors to stop key capital infrastructure investments. It even has a new acronym – DBANA – Don’t Build Anything Near Anywhere. “Yes, we want renewable power in our homes and businesses, but just don’t build that power station or wind farm near me.”
If this process is not fixed and soon any ambition we have as a country to transition to a carbon emissions free economy will literally go up in smoke.
One of my first priorities in 2015 was to visit every Bord na Móna facility in every county. This has been something I have consistently tried to do – 2-3 times a year. If the transition is going to work, we have to bring our workforce along with us.
As Vince Lombardi, the great American football coach once said...
“It is essential to understand that battles are primarily won in the hearts of people. People respond to leadership in a most remarkable way, and once you have won their hearts they will follow you anywhere”
There aren’t too many other businesses in Ireland with generations of employees who have as unique and close and enduring a relationship with the land and the company as our 2,300 workers have.
Last year we relaunched the company to our employees and to the outside world. This involved a new brand identity, the first in 25 years, and our new positioning Naturally Driven. We are very proud of this relaunch, but it wasn’t easy to convince people that the way they’ve done their job for decades and their core beliefs had to change.
We ran a series of employee conferences – the first of which only attracted relatively small groups of sceptical workers, but by the end of the ninth employee conference, we had a turnout of over 1,100 employees - a first for Bord na Mona’s 80 year history. We had started to mobilize our company and our employees around one new modern brand and a ‘Naturally Driven’ future. Now the journey continues with our external audiences.
We’ve achieved a lot in the past two years, including successful acquisition of 3 operating companies, but given how disenchanted so many state employees are today, one of our most significant achievements has been our historic industrial relations agreement last year.
When I joined the company there were 11 separate and fundamental issues at various stages in the IR process involving pay and conditions – clearly an unsustainable position. We reached agreement with the unions to allow these to be consolidated into one single case and went before the WRC. There were 27 sessions at the Workplace Relations Commission, and one full Labour Court hearing. We now have an historic agreement with the unions and our workforce until 2019.
As I’ve reminded people more than once: we had a culture of ‘Pay for Change’ at Bord na Móna. Now we have ‘Change or Pay’ culture and if we don’t change WE WILL HAVE NO FUTURE. And while we will be a very different company with very different products and work practices, we’re here for the long haul and will remain a large-scale employer in the Midlands.
I outlined earlier how Bord Na Mona is now structured into six operating divisions. Our operating model is migrating to one of a small corporate staff with a shared services center and six standalone operating divisions where capital will flow to the divisions which provide the greatest return.
Pay will follow suit. The days of company-wide pay increases are at an end. There will be no pay increases just because you are an employee of state owned Bord na Mona. Our divisions compete in the private sector and staff pay rates must follow in line with this, allowing us to compete effectively in the open market.
There’s a great expression, “You plan, God laughs.” Or, in a single word, Brexit.
You may not expect a company like Bord na Mona to be effected by Brexit , but we are all operating in very uncertain times. We have great plans to step up our exports to the UK, where we’re the biggest seller of growing media for the horticulture and gardening market. A weaker Sterling, and the possible introduction of trade barriers and levies is going to be an additional challenge.
Not many people know this, but for 6 months of the year we are the largest mover of freight in the State, with over 300 trucks per week going to the UK.
Thankfully the English love their gardens.
We were fortunate enough to have opened acquisition discussions with a UK rival in March 2016 before BREXIT and the deal closed in December 2016. This UK company will act as a natural hedge against currency fluctuations.
There’s no option but for Bord na Móna to succeed in a globalised, sometimes uncertain world.
We still import nearly 85% of our energy in this country. We remain one of the most energy vulnerable EU member states, perched as we are on the most western edge of the continent.
Our nation’s only indigenous fossil fuel is not sustainable. It has to be replaced by cleaner, lower emission energy that is accessible, affordable and sustainable.
Our goals are very clear: as a commercial, natural resources company, owned by and for the benefit of the people of Ireland, we will be the number one provider of that energy by 2030.
It is important to remember we were set up over 80 years ago to provide an indigenous source of energy which is more relevant than ever today and, more critically, to provide employment to the Midlands of Ireland. We take that duty of care very seriously. We are committed to our employees and their communities, and to the ongoing provision of large scale employment in the Midlands.
So to close, I would like to share with you a quote that inspires me especially in challenging times - in the words of the great Nelson Mandela...
“It always seems impossible until it is done”
Thank you for your kind attention and enjoy the rest of the evening
- Ends -
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