The first day in a new job can be exciting and nerve wracking in equal measure. When that first day falls right in the middle of a full-on pandemic, it takes on a whole different dimension.
Fortunately for the new chief executive officer of the James Donaldson & Sons (JDS) Group, he’d had the best training for the job. And he had his brother alongside him. The siblings in question are the next generation of Donaldsons to take the Group forward – Andrew, previously group finance director, took over as CEO from Scott Cairns on April 1 and Michael, current deputy chairman, becomes chairman on the retirement of their father, Neil, on July 31.
Stepping into the top job when the 160-year-old business is closed and turnover is zero was certainly not part of the career plan but, as Andy explained, the decision to shut up shop temporarily was relatively straightforward.
“There are times when business takes priority but our take on the whole coronavirus issue is that this is a humanitarian crisis before it’s a business one,” he said.
He added that when Scotland’s first minister Nicola Sturgeon announced the lockdown on March 23, the operating board gathered – virtually – for a conference call at 9.30pm the same day and the decision was made to close the business in its entirety “there and then, with immediate effect”. The majority of staff were put on furlough leave.
“I wouldn’t have been comfortable attending my place of work, so there was no way I was going to ask our 1,100 employees to do the same,” said Andy. “We did the right thing from a moral perspective.”
For a few weeks the company only opened up very briefly to supply councils with materials essential to dealing with coronavirus – and then it was a case of someone going in, picking up stock, sending it out on a lorry and closing up again.
There was some confusion in the UK over whether the construction trade should continue to operate but, as Mike added, the instruction was “crystal clear” in Scotland that building work should halt.
“I understand all the arguments about keeping the economy going but isn’t the health of the nation a bigger deal?”
Following the gradual lifting of lockdown restrictions by the UK and Scottish governments, the JDS sites have since reopened, but with a different look and feel.
“Before re-opening any of our sites, we went in and made sure our staff would be able to work safely,” explained Andy. “We’ve introduced temperature checks before entry at every site; posted signage and floor markings to ensure strict social distancing is maintained at all times; staggered shift patterns; boosted onsite hygiene with hand sanitizer stations; introduced additional PPE; and anyone who is able to do their job from home has been encouraged to continue to do so for the foreseeable future.
“We’ve been back on site for a while now, and the team is doing a fantastic job under these challenging circumstances.”
The brothers’ careers started out at the same point – summer jobs at the sawmill – but their early aspirations differed. Mike always wanted to work for the family firm, so joined straight from university. His first job was on the shop floor at Donaldson Timber Engineering’s Cramlington branch and after honing his timber picking and roof truss manufacturing skills he moved on to other parts of the business where opportunities to learn came up.
He worked in three of the five (now seven) trading companies on everything from launching new products to setting up timber recycling, through to sales and operations.
“It’s been everything from shopfloor through to director and everything in between,” said Mike, whose most recent role prior to becoming deputy chairman, was commercial director at MGM Timber, the Group’s merchanting arm.
Conversely, for Andy, joining the family business was “the last thing I was going to do”. After university he did a couple of internships in Edinburgh, one of which was for KPMG, who offered him a permanent job and put him through his chartered accountancy qualification.
“I fell into accountancy,” he said. “It was never part of a long term plan but when you are offered these opportunities you have to take a chance – and it’s been worthwhile for me throughout my career.”
In 2010 Andy felt the time was right to join the JDS group and rather than go straight into the finance side he wanted to “get out and see what was happening across the business”.
“At that time Scott Cairns had become group managing director and David Mansell had taken over the running of MGM Timber, which was a growing business. I became commercial director but I learned very quickly that I lacked product knowledge.
“I asked if I could become a sales rep and did that for a year or so at MGM’s Broxburn branch. I spent a lot of time out on the road, meeting customers and suppliers, as well as doing the commercial director role and I really enjoyed that.”
The opportunity then came up to work as commercial director at the importer/ distributor/sawmilling/processing arm of the group, James Donaldson Timber (JDT).
“It was a great learning curve and I would probably still be there but our group finance director, Ian Hawkins, decided to retire and I was offered the job. I realised that if I did want to progress through the company, I needed to stop looking at the business as silos and start looking at it at group level and how each of them works together.
“The next ‘bombshell’ was Scott deciding that he wanted to take early retirement and I was asked if I wanted to take over the chief executive role.”
Essentially, Andy’s role as CEO is around the commercial and trading performance of the business, while Mike’s is to lead the supervisory board, which comprises chair, four non-executives (including Scott Cairns), finance director and CEO.
“My role is to set the agenda and make sure the executive is looking beyond the day-to-day trading,” said Mike. “This includes working with the non-execs for the betterment of the business, overseeing governance issues, ensuring compliance and making sure that we treat staff right and ensure they want to continue coming to work.
“It’s about driving that best in class – not just in our industry but also best in class in governance. Yes, we are a construction products-based company but it’s a family business and our culture and values are about doing the right thing, looking after staff.” All that being said, the brothers’ roles will dovetail and co-leadership and comanagement will be the order of the day.
“We will both be customer and supplier facing and will both be involved in developing strategy for the business,” said Mike. “We will both be involved in communicating and sharing our purpose and values around the group and driving them. It’s not just an Andy thing or a Mike thing – it’s an us thing and that is going to be the case for evermore.
“Our job is to better the business so that when one or both of us steps back from day-to- day management, we leave it in a stronger position than when we took it on.”
The last couple of years have seen some other changes in senior management – for example, Luke Roberts, a long-standing employee of DTE took over as its MD in 2019 and Les Calder joined as business technology director 18 months ago, bringing “a completely new dynamic” to the technology space. Recent company acquisitions have also brought new faces into the group.
“We’re now planning for a period of stability in the senior leadership team,” said Andy. “We’re fortunate that we have excellent people with experience in our markets.
“The counter to that is that when a new CEO and chairman come into any company it’s not going to be business as normal – they are going to want to mould it into what they see the future being. A chief exec in a plc would come in and think ‘what am I going to do in the next 6-12 months?’ whereas Mike and I are fortunate that we can plan for a generation. Thinking about what we are going to do in the next 15-20 years allows us to take a different and holistic approach.” Post-coronavirus the short to medium-term aim is to get the business performing as it was before the pandemic. Following on from that the company is likely to continue its market expansion and acquisition programme.
Four or five years ago and following many years of record growth and profitability, JDS decided to expand both geographically and across the supply chain.
“We realised we had the opportunity to become a much bigger national player and the way we decided to do that was through acquisition,” said Andy.
Nu-Style was acquired in 2018, followed by Cambridge Roof Truss and Robert Reid & Sons, a small merchant business, in 2019. At the end of January this year doorset, staircase, and window specialist Rowan Manufacturing and kitchen maker Smith & Frater were added to the fold.
“We were looking to get into the doorset market for years and it was a product stream that our customer base was asking for more and more frequently,” said Andy. “We approached the principals at Rowan about their doorset business and the conversation quickly morphed into ‘we have a kitchen manufacturing business as well’.
“All our MGM branches have a kitchen showroom enclosed within them, with their own designers, and they sell £2.5-3m of German kitchens annually. The ability to design, manufacture and supply our own brand of kitchens fitted strategically, so Smith & Frater was a real attraction to us.”
The two businesses are now run by the DTE management team. “Particularly with the doorset and joinery manufacturing side of the business we see the opportunity to grow nationally throughout the UK because their customer base is fundamentally the same as DTE’s – regional and national housebuilders,” said Andy.
A good fit with the overall strategy is clearly important but it’s not the only prerequisite. Shared core values are essential.
“With every business we look to acquire, the culture has to fit,” said Mike. “The business could be good, bad or indifferent, that’s less of a problem. It is whether they fit with the rest of us on a cultural level and whether we are going to get on with the people within that company. It is the people and the connections that make it work and that is the probably the hardest thing to find.”
And, he added, they won’t risk “the family silver”. “If an opportunity comes up, great, but it has to be within realistic grasp. We’re not going to chase a far off dream that might work, but might not.”
Longer term aspirations include the potential for international growth.
“If we were a £220m turnover business based in France I’m pretty sure we would be trading in Germany and the only reason we’re not [trading internationally] is because we’ve got a bit of water between us,” said Mike.
He also believes that investment in upgrading technology will result in more people being able to work from home, which will bring benefits to the company.
“We know we can do it because we’ve been forced into this situation just now and we can do it pretty efficiently,” said Mike.
“And that allows you to tap into a different skillset within the business and gives you a larger pool of people to draw on because not everyone has to go into a branch every day.”
Other longer term opportunities include new product streams, particularly mass timber and, potentially, modular housing.
There are also “masses of opportunities for growth within the group, even in the current circumstances,” added Mike. “We just need to be smart about how the different divisions work hand-in-hand, supporting and leveraging off each other. The whole is greater than the sum of its parts.”
JDS has a conveyor belt of investment and an unwritten rule that it will re-invest at least 50% of profits back into the business every year. Annual capex is “many millions of pounds” as machinery is upgraded or replaced to keep up-to-date with technology.
Alongside this are more major investments, including at Nu-Style where, by the end of this summer, most of the machinery at the Aberdeen factory will have been updated.
“We are finalising the installation of a new pressing line and in early summer a new beam saw will go in,” said Andy. “We are tripling production availability there.”
An increase in capacity is also on the cards for Smith & Frater. The lease on the unit next door to the Grangemouth business has already been acquired, which will increase its footprint by 40%.
“We have got the machinery to go in there and are planning to increase kitchen output,” said Andy.
There are “much grander” capex plans fermenting away but these are currently commercially sensitive, so are under wraps. Implicit within these growth and investment plans is the need to ensure the group has “the bandwidth” to cope with it. Hence a continuing focus on bringing software and IT systems right up to date, and on training.
“As a business grows you need more management within it,” said Mike, adding that a second cohort of employees is currently going through the group’s management trainee scheme.
“We are investing in succession and the future leaders of the business. You need to have a pool of talent bubbling away waiting for their next opportunity. We need to strike a balance between internal growth and promotions from within and bringing new blood, with different ideas, from outside the company.”
One thing the Donaldsons will not do is chase turnover for the sake of it. “We want to grow but it’s not really a monetary value that’s important to us,” said Andy. “For us it’s more a case of how successful we are as a business, how our employees view us as employers and making sure we do the right thing for everyone who is a stakeholder.
“It’s about the next generation, not in terms of the next generation of Donaldsons but of the communities in which we work and our employees. That is more important to us than having a financial target.”
There will be road blocks in the way – coronavirus and Brexit, to name the most obvious – but Andy and Mike cite gaining the respect of the workforce and leading them through the obstacles as being their biggest challenge.
“That is going to be our number one challenge over the next 12-18 months,” said Andy, “but both of us are confident we can achieve that.”
