'We hit 2008 way over-borrowed, was it tough? It was unbelievable' - Zeus Packaging boss Brian O’Sullivan
Published date: 06/12/2019 07:39
Originally published on Independent.ie - Author: Ellie Donnelly
'We hit 2008 way over-borrowed, was it tough? It was unbelievable'
At some point in our lives, we have probably been questioned about a career choice, by a sceptical friend, spouse, family member or colleague. In Brian O'Sullivan's case, the question came from his mother.
Faced with the choice of full-time work as a farming contractor or heading off to college, he took what was at the time "the road less travelled". It has made all the difference, but at the time staying in education wasn't the default option it is for many now. O'Sullivan was the only one in his last year of second level to go on to third level - a normal enough statistic at the time for those attending the local Tech.
It meant giving up the 140 Irish punts (€178) a week he was making working with an agricultural contractor drawing silage. He was offered a full-time job to run the operation after his Leaving Certificate. "My mother said to me, 'why are you going to college?'. [Even] though I loved that, it wasn't for me," O'Sullivan says.
Instead, he has gone on to set up Zeus Packaging, which today has an annual turnover of €185m.
Growing up, he says: "I was balanced, I had a chip on both my shoulders. I would say back then [as a child], I wanted more."
A particular incident stands out for him. His father, who was working for Dairygold co-op driving a forklift, crashed the family car: "[He] fell asleep for sure from exhaustion and I remember we didn't have a car. I'm not saying it affected us, but certainly I said back then when I was only seven or eight years old, they are great parents, but I'm not going to be there."
After primary school, O'Sullivan went to the local technical school in Fermoy.
"The farmers' kids went to St Colman's, the posher school I suppose; I don't care. But that kind of wanting to be better [was there]. I was the only one in my year to go to college, that is just how it was," he says.
Throughout his time at school, he was "always working". So third level wasn't just a rite of passage. He went to Thomond College, now part of the University of Limerick, and studied teaching - incidentally, O'Sullivan's own teacher filled out the CAO form for him.
His work ethic continued through his undergraduate studies, and while undertaking a masters in engineering. All the while, he was importing and selling mobile phones.
"This was the start of the mobile phone era. The big mistake I made was probably not sticking with selling them, because this was prior to Carphone Warehouse or any of these things," he says.
We get to Zeus. O'Sullivan founded the business while he was working as a teacher. One of his first big customers was Baxter Healthcare in Mayo, a firm that is still on the books today.
I ask him to describe Zeus in one sentence - and for the only time in the interview, O'Sullivan, a natural salesman, falls silent. "Zeus is... Zeus is, that's a very good question," he says.
"Like, people use the words 'packaging business'. We are, but I can't answer the question you have asked me because I don't think it's a fair question," he adds in Corkonian tones. "Zeus is way more than a packaging business; we have got 9,000 different stock items, we have one million sq ft of warehousing, we have got €23m in stock for customers, we innovate for our customers.
"So I can't answer your question, because your question is too difficult. Zeus is way more than a one-line company. We have a team of people developing software. You take customers like Frank and Honest Coffee. All the software behind the stock-taking each time the staff press a button to serve a coffee, that's all Zeus technology at the back of that.
"Even the customers who just want a cup and a box, Zeus gets behind the design on all that."
In its most recent financial year, Zeus had revenue of €185m. The company employs 420 and operates in 13 countries.
It has gone literally from one man in a van to become among the biggest privately owned packaging firms in Europe.
Along the way Zeus went through very difficult times during the recession which hit Ireland in 2008. In the years leading up to the downturn, the business was "growing like mad".
To expand O'Sullivan had borrowed in the boom, heavily - he gestures to his neck.
"We hit 2008 way over-borrowed," he says, adding that he ended up every Friday telling his bank how his next week was going to be.
O'Sullivan recalls: "So was it tough? It was unbelievable. I would say if my business had been less borrowed, I think I wouldn't have the business today because they potentially would have had something to take."
The solution to getting through this period was to keep going.
"We had no one to get rid of, there was no excess. I was the buyer, the seller, the management," he says.
"Yes, the team had got bigger because we had bought a few companies and that's what I had borrowed the money for. I didn't borrow for anything else."
The companies he acquired "were all good investments".
He adds: "But that's no good when your customers are evaporating before your eyes and they were losing their businesses, and that's what was happening in 2009, 2010, 2011.
"I had bought a business in the UK in 2008. Every week I would go there, and I could see the recession was not as bad there. And I thought, 'Brian, keep going, this will come right'."
The banks were eventually repaid. The business survived and the acquisitions continue.
"Unless you are Mark Zuckerberg or Steve Jobs, you grow a business through acquisition, and I'm not one of those guys, I know I'm not.
"I would say [with] all other traditional business, you need organic growth and you grow by acquisition.
"And you try and make sure what you acquire is a fit or that it is not going to break you, because you are going to make a mistake; there is no way they are all going to fit.
"Maybe one or two, we probably didn't do a good job in how we integrated, but we have learned from that."
Having scraped through the crash, I ask how he's facing into Brexit.
"I have more meetings about Brexit, and I don't want to be flippant here, because I have customers - like Zeus - who have spent [so much] on warehousing.
"We have outside warehousing full twice already and the cost to my business has been substantial in us trying to insulate big customers against Brexit.
"I'd say if you filled every shed in Ireland, you couldn't bring enough stuff in to really insulate with what we would require. Like, we have 600,000 orders per annum; how [would] you insulate against that if you had to duplicate it even for a three-month period?"
If a hard Brexit does occur, O'Sullivan says "countries would be in trouble, not just Zeus group". He adds: "But will it materially impact my business against my competitors? No, my competitors will have the same issues that I will have, only we'll be better.
"Our UK business is clearly part of the group, we buy some products in the UK. But so do our competitors.
"We import products from other countries into the UK; so do our competitors. If there is a duty that goes on [any of the goods being imported], the same duty goes on for my competitors."
Meanwhile, changes in regulations and a move to more environmentally friendly packaging and products will bring other challenges for the sector.
"We have been selling compostable cups for 10 years, but nobody would buy them because they were too expensive. Now everybody wants them," he says.
"Because people have to commercially look at what they can pay for a product. If you have 100 coffee shops and you have to make a change, that is going to cost your business X amount of euro. And the others [the competition] don't do it. It might be great to do it, but you commercially can't, and that's the problem."
Zeus has been showing customers how to reduce the spec on boxes and use less pallet wrap.
"We have been doing this for years, it's why Zeus is what Zeus is; it's what I said earlier on.
"We are not just a packaging company; we innovate.
"In the food service sector, [which] everybody is ranting on about, we have ... 500 products in that range called LeafWare, where every single product is made from not just a compostable, but a sustainable, product."
O'Sullivan plans to step aside from his role of chief executive, making way for Keith Ockenden, currently the group managing director of Zeus.
O'Sullivan will go back to being a salesman, he says.
"I have no issue giving up control at this size of a business," he says, "because what he [Ockenden] has to do now I have no interest in doing; it's structures after structures, it's plc stuff.
"I couldn't do it. I don't have the micro patience that he is bringing to this business and I know that.
"At €125m [turnover] I felt, 'yeah, I've got this'. At €250m [where he sees the business growing to over the coming years], no, I don't have it."
O'Sullivan is obviously bright. I ask if he did well academically.
"I went to the tech, there were no honours subjects, I did four on my own with the help of a teacher. I did OK with them."
But, he adds, "I have oceans of common sense and cop-on. I have bucket loads of that and I know I have".
He continues: "I'm not very bright, nah. I'm bright enough, and I am bright enough to know to have a good accountant, a good logistics manager, and I'm bright enough to know that I need a good CEO."
I wrap up the interview asking the father of four what he does to switch off. The response from O'Sullivan is not at all surprising.
He responds: "I don't relax, I'm not interested in it and I can't do it. I'd watch a soccer match, but there is no way that I'm just watching the match.
"There is no second except maybe the three or four hours I sleep that I'm not thinking about what we should be doing or the missed opportunities."