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BUSINESSMAN OF THE YEAR

The growth imperative

Heinrich Jessen has taken family company Jebsen & Jessen (SEA) on a diversification path far beyond its trading roots.

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Mr Jessen believes that a growing business creates a positive cycle.

BEING just a market player is not good enough for Jebsen & Jessen (SEA) chairman Heinrich Jessen, 49, who oversees an industrial conglomerate generating more than S$1 billion of revenues a year.

"If you have a meaningful presence in the market in the No 1, No 2 or No 3 position, that's good. If it's below that, you either have to invest to get up, or get out," he said.

Jebsen & Jessen (SEA) makes hoists and cranes, food packaging, cables as well as chemicals among other things. The family business is more than 120 years old, though its South-east Asian branch began in 1963.

Through the years, the company has evolved significantly from its trading and distribution roots to now manufacture its own goods for customers. In the last two years, it is also sharpening its focus after an aggressive acquisition drive from 2010 to 2015.

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For example, it was distributing healthcare equipment in just two countries. As it was unable to grow the business, it sold the firm last year to a larger player. Similarly, it also sold off its communications division. "There are not many businesses left where we're only marginal, perhaps just a couple of cash cows. Most of the things we do today, we're in a meaningful position," Mr Jessen said. The group, which has seven divisions, is riding on the growth of South-east Asian countries such as Indonesia, Vietnam and the Philippines.

BEHIND S'PORE'S INFRASTRUCTURE

In Singapore, its engineering expertise comes in handy. A major segment, dubbed "material handling", is its industrial crane manufacturer MHE-Demag. The firm helps out with Singapore's MRT line construction by supplying gantry cranes and lifting systems to bring soil from tunnels out to the surface. It also supplies specialised cranes to handle jet engines for aircraft maintenance.

MHE-Demag has left its mark on local landmarks. It designed and supplied a system of pulleys for the Singapore Sports Hub roof, a gondola system used to clean the greenhouses of Gardens by the Bay, and adjustable platforms for the events plaza of Marina Bay Sands. Currently, MHE-Demag is supplying an automatic parking system at Robinson Tower. At Changi Airport Terminal 1, Jebsen & Jessen (SEA)'s cable business, JJ-Lapp Cable, won a contract last September to supply power, control and data cables for a baggage handling system.

Looking ahead, the group will increase its presence in places where the product mix or geography complements its existing business, Mr Jessen said. Indonesia is a focus as South-east Asia's biggest economy is not yet the biggest revenue generator for the group, he said. By sector, the group is also looking to acquire targets in packaging, ingredients, or oleochemicals. Other than its crane business, the most profitable segments are the packaging and ingredients businesses.

PACKAGING SUCCESS

By expanding within its areas of competence, the group has achieved some success. The packaging segment, Jebsen & Jessen Packaging, is a case in point. Jebsen & Jessen used to do packaging for just electronic components, and felt it needed a second leg to stand on. In 2011, it diversified into the food and beverage industry by buying Labplas Sdn Bhd, a company in Malaysia that made plastic bottles, jars, caps and closures, and offered tailor-made design and labelling services.

In 2015, it bought Plashouse, a Malaysian plastic injection and blow moulding firm with numerous multinational customers.

The segment has been booming. "We got the jackpot," Mr Jessen said. "First of all, the food industry has grown. In business, we have the capability that competitors don't have, which is to produce prototypes very quickly, very cheaply."

TRADING ROOTS

Mr Jessen used to be a tropical biologist before he joined the family business in 1995. Named after his grandfather, he is the third-generation Jessen in the enterprise.

The roots of the business go back to 1895, when cousins Jacob Jebsen and Heinrich Jessen decided to set up Jebsen & Co in Hong Kong initially to represent their Danish family's shipping business in Asia.

Jebsen & Jessen was formed in Singapore and Malaysia at the end of1963. In the next 10 years, the group expanded into pharmaceuticals, engineering, photographic products, construction equipment and home appliances.

As Singapore boomed in the 1970s, it moved away from trading into production for the first time. In 1972, Jebsen & Jessen partnered German industrial group Demag to make overhead travelling cranes in Singapore and Malaysia. A new company, Mechanical Handling Engineering (MHE), was formed.

Meanwhile, Jebsen & Jessen Packaging began in 1976 after an investment in Insulpack Industries, a foam packaging business. Insulpack subsequently bought a competitor and expanded into packing for the construction and electronics industries.

CABLES AND CHEMICALS

Other than the older businesses of cranes and packaging, partnerships and acquisitions in the cables and ingredients businesses in the last 15 years also led to the two latter segments growing to their current form in Jebsen & Jessen's corporate structure today.

In 2003, a joint venture with German firm Lapp led to the company, JJ-Lapp Cable, distributing cables here, such as for the construction of the Singapore Flyer.

At end-2010, the company partnered Indonesian cable manufacturer Sinarmonas to start making its own cables. "By building your own products, you understand the product better. If you can understand your product better, you become a much better salesman," Mr Jessen said.

For its ingredients business, Jebsen & Jessen has similarly moved from just distributing chemicals, to actually making them.

Its recent growth story began in 2010 when Jebsen & Jessen Chemicals bought a food ingredients distributor in Thailand. The expansion was fortuitous because the conglomerate had a lot more products to sell in a growing Asean market.

And in 2014, Jebsen & Jessen Chemicals entered into a joint venture with UK malted ingredients maker Muntons to build a factory in Thailand. Malt extract is a popular sweetener used in drinks. "We suddenly realised how big the market actually is," Mr Jessen said, adding that the group makes malted ingredients for "everybody other than Nestle".

Today, the group's packaging, cranes, cables, and marine and offshore businesses are based in Singapore. Its ingredients business is based in Thailand, along with its technology business, which among other things supplies irrigation systems for golf courses. Finally, its oleochemicals business, which builds refineries for major players such as Wilmar International, is based in Malaysia.

PEOPLE CHALLENGES

Asked about succession, Mr Jessen said there is a large fourth generation pool, but none are working in the business yet. He has two kids aged nine and 12. Nobody in the family can just sit and collect dividends: The group's philosophy is that the next generation cannot inherit shares, but have to buy them and work at the company. As such, there are only three shareholders in the third generation, he said.

He has no plans to list, because there's no intention to exit the business, which also does not need external money to grow at this point.

The biggest challenge is finding the right people. Mr Jessen remembers how his father has emphasised that a flat management structure has been good for the firm, and key decisions should be taken by people on the ground given the diversity of the business. But that means that good people have to be found and trusted. "I spend most of my time thinking about who should be doing what, where," Mr Jessen said. "It's not just family succession, but we have some long-serving pioneer managers . . . going into retirement."

Ultimately, his ambition is for his group to remain in the businesses it has chosen as the core businesses, and ensure that it has a leading market position in all of them.

One final insight he offered is how a company can start shrinking if it does not invest and push people to grow the business.

And so while integrating all the companies his firm has acquired in recent years has been a challenge, the whole point of the exercise was to spur people to think about growth.

A growing business creates a positive cycle, he said. "If a business is growing, good people are attracted to join. If good people are attracted to join, customers get better people to deal with, they're happy, they buy more," he said. "This dynamism has come out of our willingness to invest, to push everybody to find opportunities to grow, and to be forward looking."

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