We spoke with Simon Hunter Esq, MBE, CEO of Hunter Apparel Solutions Limited (Hunter). Simon has been a Director of Hunter since 2011. He is an Accountancy with Honours Graduate of the University of Ulster, a Chartered Director and a Fellow of the Institute of Directors. He has almost 20 years of experience as a Director and enjoys the challenge of hard work.
The implications of COVID-19 are, and will be, far reaching for this sector in the widest sense. What do you think will happen over the next 12 months? What major shifts/changes can we expect?
The period ahead will test us all. Nobody has a crystal ball, yet there is a lot that CEOs who managed through 9/11 (2001) and the global financial collapse in 2008 can draw from. I certainly learnt more from being a Director during those periods than I ever learnt at school! Crises management teaches leaders to be highly agile; you must
be able to make good decisions quickly and then deploy them with urgency, while bringing your team with you on that journey. That said, any business that was not being run with the soundest of commercial footings before COVID-19 will struggle or may not make it through. Anyone can grow a business fast by being the cheapest and running on super fine margins, but the real job of a CEO is not about short termism; it is to create a cash generative and consistently profitable business that can last well into the future for its next leader. Sadly, far too many businesses are not run that way due to the way the CEO is incentivised or for other reasons, such as, MBO strategies etc., which can create real conflicts of interest.
If the business is run profitably, generates cash, and consistently grows its asset base, when tough times like COVID-19 arise (and they do and will, with 2001, 2008, 2020 as key examples) then braving the storm is possible. Hunter, for example, are financially very robust and as such we will weather this storm as we have every storm for over 84 years of our trading, in fact 2020 will be a strong year for Hunter.
In the widest sense I am certain there will be an industry shake down over the next 12 months. The simple laws of the jungle will kick in and the weakest companies simply will not make it through. Companies with weak leadership, poor financial health (too much debt, lack of asset strength to borrow against, over traders), demotivated and disenfranchised staff, vulnerable clients and bankrupt key suppliers will be more likely to go to the wall. I think there will be a further shake down globally whereby only the strongest mills and factories will survive. Ensuring the right supply chain partners will be vital. It is clear that many countries are in indefinite lock down so there is great uncertainty in that regard for the short and medium term. Factories that do survive will face huge challenges in supporting the balancing act of factory efficiency versus social distancing. This affects us all in the short to medium term, at least. The knock-on effect here will be the strain on the finances of many companies if our supply chains lengthen.
I think those of us who own UK factories can expect to see an upsurge in demand. For Hunter, we are seeing this already and have been since the very start of COVID-19. We have had to respond with recruitment, CAPEX in new machines and a redesign of the factory floor to accommodate social distancing. Hunter have this year been investing in robotics to help us drive efficiency at our UK factory. Overall, we will have invested the guts of c. £1 million in our staff, kit, IT and premises this year, as I am a great believer in investing when the market is depressed. Despite the hardship in battling with all of this, there is no doubt that tough times can bring out the best in some leaders and companies can experience an upside under the right leadership.
COVID-19 is likely to test the ability of every CEO in every sector. What attributes do you think will be important in regard to your own ability to manage your organisation through COVID-19 in 2021/22?
I think CEOs are robust people, folk who have scars on their backs. While no two CEOs are the same, it is true that when you have “carried the organisational can” for a long period, and particularly through tough times, you learn unique skills. You learn how to quickly discern what is important and what isn’t, what is urgent and what isn’t, and the difference between what is important and what is urgent. You learn how to prioritise with maximum efficiency and how important it is to communicate with your staff.
I think the most important thing right now is for leaders to look after their physical and mental health. Both will be tested. I am in the gym most days, I love martial arts and weightlifting and this is of great benefit to me during hard times, especially in keeping me in good mental and physical health. Encourage your staff to look after themselves in every way you can. You won’t manage alone, so you had better make sure your senior team understand what you are doing, why and what help you need from them and their teams. You can’t communicate too much, it seems, particularly in tough times. Your staff are worried, their families are worried, so give them comfort through communication about what the plan is, how you will do it and why you know it will work.
What do we need to do differently as sector to ensure we maximise the health of the sector over the course of 2021/2022?
I think anything the sector can do to help encourage buyers to:
• Robustly financially assess tenderers. Tendering is expensive for all parties. Investing time in ensuring financially robust partners are selected sets in motion a virtuous circle of; profitable contractor attracts better supply partners, who in turn get paid on time and are in better financial health, who in turn support the healthy contractor, which strengthens the supply chain, helping the contractor deliver the required service. Client wins! The usual measure of ‘what is your revenue figure in year x’ really is a waste of time.
• Make audit part of short listing. Visit the potential top 2 short listed contractors. What is the look and feel – do they look sustainable? Ask for full details of what sectors and who they work with. Does the premises they work at look loved? If they don’t love the place they work at, they won’t invest in it or its people or systems. It is clear that a business that is struggling, for whatever reason, will not have the wherewithal to put you, the client, first, so don’t expect anything different. Make a real effort to get to know them. A tender process without a short-listing visit is, in my view, at best, suboptimal for all parties.
• Don’t buy the cheapest. It does not work, it is that simple. If you buy cheap and buy often, hope for the best and prepare for the worst. If buyers make the best possible most informed decisions, the whole sector rises. The strongest, most reputable companies will naturally rise to the top, allowing clients to benefit from professionally run companies providing excellent products and services