Source: http://worldcityweb.com/home/MIA/publications/magazine/46/863/

(4) CEO Roundtable - the Beat Goes On

by WC

At a Biltmore breakfast, the regional CEOs of Kroll, Egon Zehnder, Tuthill and SeaFreight rejoice over business prospects in the regional and share some thoughts on how environmental concerns are impacting their firms.

The bullish outlook on Latin America and the Caribbean reflected in our annual CEO Survey on pages 17-20 were borne out at our CEO Roundtable in June, when the top guns at risk consulting firm Kroll, Swiss recruiter Egon Zehnder, Miamis own SeaFreight shipping line and Chicago-based industrial manufacturer Tuthill Corporation met for breakfast and frank talk at The Biltmore Hotel in Coral Gables.

The companies are growing at breakneck speed and adding jobs across the region. Theyre confident that the region will continue to grow, though theyre wary as ever of volatile Venezuela. Business is great and growing across the board, said Christ ian Aitken, managing director of Tuthill Corporation, which manufactures a wide variety of specialized industrial equipment. The firm grew 32 percent in 2006 and expects to repeat that performance this year. Latin America is a young market for Tuthill, having only ventured into the region eight years ago. It accounts for only 3 percent of global revenues. Nevertheless, it is growing fast and is extremely profitable. Latin America has been the star performer.

By contrast Krolls Latin American operation is huge, representing 13-14 percent of global revenues. Even so, growth is almost as brisk. Last year, the company grew by 18-20 percent, said regional managing director Sam Anson, who expects to do well again this year. Every office in the region is growing, said

Anson. The only bottleneck for us is finding talent. That kind of lament from a regional CEO is, of course, music to the ears of recruiting firm Egon Zehnder, which is also experiencing rapid growth. Last year business was up 17 percent and, this year, the projection is to top 20 percent.

Despite the solid numbers, said German Herrera, the companys worldwide CEO reminded the partners that, while Egon Zehnder had enjoyed solid growth, it wasnt doing any better than their major competitors. That was awake-up call, said Herrera, so this year we are growing and capturing market share.

Miami-based shipping line SeaFreight Agencies is another company riding a wave. Revenues were up 12 percent last year, as international trade in and out of South Florida hit a record $72 billion. In the first quarter of 2007, sales were up another 15 percent and founder and CEO Roland Malins-Smith is hoping for even better results in the second half of the year. We didnt do as well in the first quarter as we thought we should have, said Malins-Smith. Nevertheless, the shipping line which operates seven ships out of Fort Lauderdales Port Everglades, as well as the Port of Jacksonville, recently added new service to Haiti, Montego Bay, Jamaica and Grand Cayman, where, added Malins-Smith there is a remarkable level of activity and construction.

The only dark spot on the horizon for SeaFreight is Venezuela, the shipping lines second most important port of call and South Floridas second largest trading partner with $5 billion of two way trade in 2006. Although we see a strong Venezuelan market, said Malins-Smith, its not predictable. Each time there is a street demonstration there, the importer sends instructions not
to ship. And each time that happens, we suffer.

Venezuela aside, the news from the region was all positive.

One of the drivers for trade with Latin America, pointed out Tuthills Aitken, has been the sharply rising currencies in Brazil, Chile, Colombia and other countries. Our products, which are priced in U.S. dollars are much more affordable now.

The rising currencies have spelled trouble for Latin American exporters, many of them clients of Egon Zehnder. But even that hasnt dampened business. With the dramatic revaluation of the Colombian peso, we thought business with our exporter clients would fall. Instead, they have had to change their business model and we are now helping them restructure, said Herrera.

Cash-rich exporters, explained Herrera, see opportunities to consolidate and buy their weaker competitors. These companies end up looking for senior executives who can take advantage of acquisition opportunities. The bottom line for us, concluded Herrera, is that change is good. In our business, the only problem is when nothing happens.

Krolls Anson concurred wholeheartedly. We are in the risk consulting business, so any change or instability can drive our business. When things are going well and there are lots of mergers and acquisitions, we do more due diligence-type transactions. When things fall apart, we do more of the investigations-type transactions.

What About Green?

At our monthly CEO Roundtables, the discussion generally revolves around two simple questions: Hows Business? and What keeps you awake at night? But this time, we decided to throw another one into the mix: How is the growing concern over climate change and environmentally-sustainable business practices impacting your companies and your jobs on a day-to-day basis, if at all?

To our collective surprise, each one of our guests had something substantial to recount. In one way or another, the green revolution is affecting them all very directly.

Tuthill, said Aitken, has begun offering a new line of biofuel pumps, a direct response to the growing use and promotion of ethanol and other biofuels in the Americas. We dont have a green policy per se, said Aitkin, but our product portfolio has to keep up with the changing mix of fuels.

Kroll is also taking advantage of the headlong rush into biofuels. The green part of the business that we see are people investing huge sums of money in biofuels, particularly in Brazil, and this provides great opportunities for Kroll in consulting services and due diligence services, said Anson. The companies and private equity funds piling into the biofuels market often purchase family-owned sugar mills and other local operations, explained Anson, that dont have the most transparent accounting systems. We go and help scrub the books.

The environment is beginning to drive Egon Zehnders C-level recruiting business, too. We are starting to see demand for green executives, said German Herrera, adding that his clients want to know who are the leading companies in environmentally sustainable business practices. Our clients are looking to recruit people with this kind of expertise to learn what leading companies are doing in this area. They are serious about it.

However, no one at the table had taken the green challenge more seriously that Roland Malins-Smith, both in business and in personal terms.

For starters, Malins-Smith feels the sting of rising oil prices directly in his business. While the price of crude had risen 14 percent since the beginning of the year, Malins-Smith said the price of bunker oil for his ships had risen 29 percent, twice as much. As a result, he said, we have to try to use less fuel. In addition, SeaFreight now buys all its bunker oil in Surinam which has high quality oil with a low sulphur content. We are one of Surinams biggest customers, noted Malins-Smith, adding proudly that We run green ships.

Malins-Smiths concern for the environment is also reflected in his personal life. Earlier this year he began driving a Toyota hybrid. I wanted to reduce my own carbon footprint, he said. As business people, we have to see an interest to invest in green technologies and sustainable practices, but ultimately each one of us has to make that decision to make a difference.