Monday, October 21, 2013

Paint proves thicker than blood

David Haymes had his first go at joining the family business at the age of 18. He was knocked back.

It was 1961. His father Henry, who founded Haymes Paint in 1935, had died from emphysema six years earlier at the age of 50. After his death the Ballarat paint business he'd started was taken over by his two brothers, David's uncles Tom and John.

When he finished school, David decided he wanted to continue his father's legacy, so he asked Tom for a job. "Sorry", was the answer. "There's nothing here for you."

So young David went into the shoe business, working for Paddle Shoes in Ballarat, and then as assistant manager at Hush Puppies in Melbourne.

David says Tom and John probably just wanted him to get more life experience, but there was something else that I think may have been a factor. You see David Haymes was adopted.

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David, and everyone else, knew it from the beginning. In fact he says it made him feel especially loved, since Henry and Mavis had come to Melbourne to pick a baby, and from all the ones put up for adoption at the hospital they chose him.

But he wasn't blood, and in those days such things mattered. It probably explains why he couldn't get a job in the family firm… at first.

Eventually David married Jenny and it turned out that his new father-in-law was a good friend of the independent chairman of Haymes Paint, Morgan John. He told him about this young bloke who carried the name Haymes who was doing well at the shoe business and advised him to hire David.

And so, several years after leaving school, the adoptive second generation of the Haymes Paint dynasty returned to Ballarat and to the family firm, as the third staffer in a warehouse that needed only two.

Another advantage of being adopted, apart from being the chosen one, is that David was an only child. That meant he and his mother owned 30 per cent of the business, whereas the other 70 per cent was eventually spread among 50 shareholders – descendants of John and Tom, who had been equal shareholders with Henry, and a few investors.

David and Mavis were the largest shareholders, and in the early 1980s David made a formal takeover offer for the rest of the company.

Looking back now, he says it was a very anxious time because they borrowed all the money from the bank for the takeover. But it turned out pretty well in the end: Haymes Paint now has 7 per cent of the national paint market, turns over $70 million a year and employs 150 people

David, now 70, is chairman of the board and son-in-law Rodney Walton is chief executive. The other directors are David's wife Jenny and his sons Tim and Matthew, both of whom work in the business, as head of new business and industrial products respectively. Daughter Belinda runs the family office.

Ownership now sits in a family trust that will outlive David and Jenny. They have a Family Constitution; there's a fortnightly meeting between Rodney, Tim and Matthew where they talk as equals even though Rodney is CEO, and there is a formal Family Council that includes all partners and meets every three months to discuss big picture issues.

Also, the three children and their partners talk separately (without David and Jenny) to an adviser from Family Business Australia every six weeks, to air any issues. The dividend policy was assisted by Dominic Pelligana of KPMG and they set up a charitable foundation to handle donations.

All up, I'd call them pretty well organised. David says: "the biggest challenge when you grow is to retain your culture. The basis of ours is 'family-ness', as we call it. And we exploit that – a lot of our customers are family hardware stores".

Over the years Australia's paint industry has consolidated, specifically with the acquisition by Dulux of Berger and British Paints. Dulux was owned by ICI, which became Orica, and was then spun off into a separate business.

David says the Haymes family has had many offers for the business, formal bids as well as informal approaches, but always knocked them back. "Once the kids got involved in the business, no one ever wanted to sell."

What's it all about? Well, I think this statement from David in our interview sums it up: "Dad would be so proud of what we've done with his creation".

He recalls going to a company sales conference on the Gold Coast a while ago and addressing a room full of 43 sales reps for Haymes Paint.

"I got quite emotional. 'Wow', I thought: look what we've achieved. My kids could see I was welling up, and I told them: 'I'd love to bring Henry into the room and say to him – look at all this Dad, this is your business".

Will Haymes Paint be able to stay a family business? David's not sure. They have no intention of selling right now, but "you've got to be mindful of what the business needs and whether it's sustainable in family ownership".

A few years ago David was tracked down by the younger sister of his birth mother, now in her 80s. He wasn't interested at first, but eventually went to visit her to learn about his biological parents.

He was one of seven.


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