Gareth Jenkins: Rolling with the punches
One of Gareth Jenkins’ first tasks in his new role at paper products firm Accrol was to inform the board the business would run out of money in a matter of weeks.
It was a perilous situation that he discovered within days of stepping through the doors to become its chief executive in September 2017 – the third to take the hot-seat in quick succession.
The troubled Blackburn-based toilet paper-maker, floated on the AIM in the summer of 2016 amid much fanfare and with a market capitalisation of £93m, was no longer on a roll.
The business, which makes tissue products for a host of big-name retailers, was in danger of hitting the rocks. In October that year its shares were suspended for a time.
Gareth’s rescue and recovery work began soon after he went to the boardroom to deliver the bad news about the cash flow situation. Today there is a new board and a significantly changed senior management team driving Accrol forward.
It appears they are going in the right direction. This September the business announced it had almost wiped out its annual losses with a strong year of sales. For the financial year ending 30 April 2020, Accrol improved revenues from £119.1m to £134.8m, which reduced annual losses from £14m to just £1.9m.
It put that turnaround down to reorganisation, cost rationalisation, renegotiations with customers and refinancing. Simplification has been at the heart of the transformation.
I love manufacturing and I want young kids to be enthused about going into it. The only way to encourage them is to show there is a career there
Gareth arrived at the company having spent 24 years at DS Smith, helping it become Europe’s most successful and profitable packaging group with £600m turnover.
He describes himself as “reasonably good” at running manufacturing businesses. One of his responsibilities during his time at DS Smith was finding synergies in acquisition targets.
The Yorkshireman found himself in Lancashire because he was looking for new challenges. He had the opportunity to go to Brussels to run a large multi-billion-euro operation but chose Blackburn and Accrol.
He says: “I thought to myself, ‘do you know what, I fancy this, it could be quite exciting’. There were grand plans for growth into Europe and to get bigger in the UK.
“I joined in September and within three days I realised we were not only going to miss forecasts; we were going to run out of money in eight weeks.”
He had the chance to jump ship and head for the bright lights of Brussels but decided to stay and see things through. Asked why he replies: “Because it was a really good business.”
Gareth says poor decision making led to some of the group’s problems. Money was invested in a central distribution centre in Skelmersdale for instance.
He says: “There were some dark periods. Clearly sitting down with the board and telling them we were going to run out of money was a bit depressing.
“And changing the board was difficult. But it had to be done because a number of decisions they had approved were about to change.”
He is full of praise for the group’s present executive chairman Dan Wright. His links with business go back to when private equity firm NorthEdge had a large stake in Accrol pre-floatation.
Gareth says: “We have a very short period to get things sorted. There was nothing that was going to scare me. I’d seen all the issues before, but never in the same place.”
He says one of his strengths is compartmentalising things, “putting them in boxes” and he adds “I only worry about it when I open that box.
“I don’t want perfection when I put it back in the box, all I want is that it is a bit better then when I took it out. You have lots of boxes, you just take them one at a time.”
Gareth, 52, says raising the cash that was needed was about the shareholders believing in the plan and having confidence.
He adds: “What helped was that when I talked through the main issues, I was able to explain really clearly and simply what we would do and how quickly we would do it.”
Accrol’s workforce has been reduced as part of the turnaround project– by November it will be down from 689 at its peak to 310 workers.
Gareth says “Innovation and efficiency are at the heart of the change in fortunes. Every employee and every role must add value.”
He is quick to add: “A low cost operation doesn’t mean low pay. When I arrived 35 per cent of the workforce were paid more than the living wage. Now 100 per cent of them are paid the living wage or more.”
The father of two teenage boys adds: “I love manufacturing and I want young kids to be enthused about going into it. The only way to encourage them is to show there is a career there.”
He describes the latest jobs to disappear at Accrol as pushing pallets around. Automation is getting rid of much of the repetitive work. Absenteeism is down and productivity up as staff engagement rises.
Warming to his theme, Gareth says: “It is about employing high-quality individuals doing high quality jobs that add real value.”
He says there has also been a culture change in the business. “It is about having an environment where people can feel comfortable and safe about making mistakes, to be able to get involved and raise their hand when they think we are doing something that isn’t great.”
There have been multi-million-pound investments in automation and new IT systems and Accrol’s customer base has also been transformed, with its contract work spread over a wide number of retailers. As Gareth explains: “If 70 per cent of your business is taken by one customer you never feel confident when negotiating prices.”
The business is looking to continue its growth and he doesn’t rule out acquisitions in the future, if it is right for the business. “There is no rush, no pressure,” he adds.
Another development in the future could be Accrol owning its own paper mill, either by buying or building. At present it is the biggest purchaser of tissue in Europe that doesn’t have its own operation.
Then there is expansion into core markets and diversifying into new personal hygiene and household products. Accrol is back on a roll and as Gareth says: “There’s still lots to do.”
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