Glass Act

REDMOND O'Donoghue, the new chief executive of Waterford Crystal, speaks the language of Harvard Business School

REDMOND O'Donoghue, the new chief executive of Waterford Crystal, speaks the language of Harvard Business School. Not only does he peak the language, he believes the message. This faith is the result of a brainwave in the 1980s when the company sent its sales and marketing directors on a three-month Ivy League management development course.

The management technique known as best practice - achieving the best international standards - is a mantra for Mr O'Donoghue who assumed his new post at Waterford last week. its observation, in all aspects of Waterford's business is one of the five key objectives Mr O'Donoghue has set for the company over the next five years.

Other aphorisms are also drawn from the Harvard course textbooks. He wants the company to be forward looking, committed to change, act in a brand-enhancing manner, and be geared for growth.

Mr O'Donoghue is familiar not only with the theory, he is also a practitioner. He was sales and marketing director at the company during a sometimes traumatic turnaround, which he ventures would itself be a strong candidate for being a Harvard case study. His challenge now is to build on the achievements of his predecessor, Dr Paddy Galvin.

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When talking about himself and his business, Mr O'Donoghue speaks in easily digested phrases. He readily volunteers a range of anecdotes and personal details to give a flavour of his personality.

These include being a member of the Munster veteran tennis team and an old movie buff. His favourite films include the classics Casablanca and Twelve Angry Men and his knowledge of his hobby verges on the encyclopaedic. He once won a case of champagne from the Sunday Independent for his selection of the best movie moments of all time, as judged by Hugh Leonard, he will happily tell you.

Speaking about his new role, he says that the time has now come for Waterford Crystal to "draw a line in the sand" concerning its past troubles.

This month the company will launch a range of branded table linen. It is the first step in a strategy aimed at taking advantage of the brand's luxury image, particularly in the United States.

The limited size and mature nature of the luxury crystal market has given Waterford the incentive to look at these products according to Mr O'Donoghue. The US quality crystal market is worth $325 million a year and Waterford already has a market share of over 30 per cent.

"To grow we have to break out, particularly through brand extension," he explains. "People in the US perceive Waterford to be a much bigger business than it actually is. The brand is bigger than the business, which gives us an opportunity."

Linen was an obvious area to get into because it is also a table top product. It is also not a category of products that is particularly heavily branded in the US.

Waterford Crystal has committed itself to the linen project for three years. Its success will be judged on criteria other than mere financial achievement, according to Mr O'Donoghue.

Some ways of building markets are quite straightforward. Expensive crystal is usually found on the top floor of the large department stores which are the primary outlet for Waterford Crystal. However only about one shopper in forty actually makes it as far as the top floor. "We want to see a Waterford presence on other floors of the department stores," he explains.

The company is already looking at other products that could be sold under the Waterford name should the linen project be successful. However, non-crystal products are not expected to ever account for more than 15 per cent of the company's business.

The Incentive to look at extending the Waterford brand to other products is in creased by the cost of breaking into new markets. Waterford Crystal has spent over £5 million in the last six years to build its brand in Japan, which still accounts for only 2 per cent of sales. The company's investment in the US over the last 30 years would equal $300 million in today's money, according to Mr O'Donoghue.

The US remains far and away Waterford's biggest market. It accounts for just under 70 per cent of total sales of £109 million last year. The company employs 400 people in the US under Mr Chris McGillvarey, the chief executive officer of the US division.

Waterford introduced its Marquis range of cheaper crystal to the US in 1991. The new range was made for Waterford by lower-cost crystal manufacturers in Europe. Despite the fears of the Waterford workforce, the new products range did not damage the existing range and allowed Waterford to increase its market share in the US premium crystal market from 23 per cent in 1991 to 38 per cent at present.

The group's other main markets are Ireland, which accounts for 18 per cent of sales, and Britain which accounts for 15 per cent. Waterford bought Stuart Crystal in Britain last August for £4.24 million. The acquisition of Stuart, which has 15 per cent of the British crystal markets, gives Waterford a total 23 per cent share of the British market.

Despite the success of the Marquis brand, Waterford Crystal remains committed to the city from which it takes its name, according to Mr O'Donoghue. The company has just spent £8.5 million on a new tank furnace which will become fully operational in the autumn. Waterford now employs 1,500 people in the County of Waterford and no further staff reductions are planned, according to Mr O'Donoghue.

The first Waterford-born chief executive of the company, Mr O'Donoghue is keen to emphasise the company's commitment to Waterford and its workforce. "Over 78 per cent of all we sell will be made in Waterford," he promises.

Another group of individuals who will be keen to test Mr O'Donoghue's commitment to them is Waterford's long-suffering shareholders. The Waterford Wedgewood group, which owns Waterford, recommended dividend payments for the first time since 1988 last April when it announced a dividend of 0.8p. The company is due to announce its 1995 results this month and shareholders are hoping for something a little more substantial.

John McManus

John McManus

John McManus is a columnist and Duty Editor with The Irish Times