The glue that binds: Henkel’s Irish chief on acquisitions that work

Persil, Sellotape, Right Guard . . . when the chemicals giant makes a buy, it sticks

Liam Murphy, president Henkel UK& Ireland at the company’s facility in Tallaght.Photograph: Cyril Byrne / THE IRISH TIMES

Liam Murphy, president Henkel UK& Ireland at the company’s facility in Tallaght.Photograph: Cyril Byrne / THE IRISH TIMES

 

A security guard explains why Henkel’s Irish headquarters mirror the entrance to Fort Knox.

“There are at least 30,000 chemicals on site here,” says the guard, cheerfully, as he points the way to reception. Suddenly the company’s initial invitation to meet its president in a city centre hotel seems more appealing.

Security is tight at the Tallaght facility, where some 350 people are employed, about a third in the firm’s research and development centre. But neither the guard, nor indeed Henkel head Liam Murphy himself, seem overly concerned about the potentially explosive cocktail of chemicals surrounding them.

Being the group’s global vice-president for safety, health and environment as well as president of Henkel in the UK and Ireland, Murphy would be forgiven for having the odd sleepless night. But he insists he can switch off when the day closes.

“I find it fairly easy to park things,” he says. “Given my position, you have to be prepared to be available 24/7, but it’s not a problem if you’ve the right mindset. I tell colleagues they can contact me outside of office hours, but only if they really need to, and that seems to work well.

“Obviously as a chemical business, we’re very aware of the risks that have to be managed. But our key priority is making sure our employees and communities are safe.”

Global leader

After 38 years with Henkel or companies connected to it through mergers, Murphy is, unsurprisingly, an evangelist about the group, a global leader in diverse brands and technologies across adhesive technologies, beauty products, and laundry and homecare. But talking up his employer is not necessarily a bad thing: the Frankfurt-listed chemicals giant is generally more low-key than some of its competitors.

You might not think you know Henkel, but chances are you use its products every day. Among the well-known brands it produces are Persil, Sellotape, Unibond, Super Glue, Schwarzkopf, Pritt, Right Guard and Loctite.

Founded in 1876, the German-headquartered company employs 50,000 people across more than 120 countries and has revenues of about €18 billion.

Along with the Tallaght site, Henkel has a manufacturing facility in Ballyfermot, which produces 400 formulations and ships 135 million items per annum. There is also a homecare site at Little Island in Cork, where the popular Punch Colour Catcher product (known as Shout in the US) is manufactured.

Punch was founded by Cork woman Abigail Punch in 1851 and was originally known as a specialist in teas and then shoe care before moving into fabric care. It became part of Henkel when Henkel acquired Punch’s parent, the Spotless Group, in a €940 million deal in 2014.

The Irish operation is no slouch when it comes to contributing to the parent – turnover for Henkel Ireland Operations and Research Ltd rose by €3.8 million to €135.5 million in 2015, as operating profits rose to €4.49 million.

Henkel’s presence in Ireland began with Loctite, the New England firm that it acquired in 1997. Loctite (then International Sealants and Adhesives), began operations locally in 1966 when it opened a manufacturing facility in Ballyfermot through a subsidiary.

Given its heritage, the Irish operation is still highly focused on adhesives, which account for 50 per cent of Henkel’s total revenues.

The main activities in Ireland include research, product development and manufacturing of adhesives for consumer and industrial market applications. But the purchase of Spotless and its recent acquisition of Jeyes homecare unit, which includes brands such as Bloo, Jeyes and Parozone, have seen Henkel increasingly diversifying into mainstream consumer goods over the past year.

Process engineer

Murphy, a native of Newbridge, Co Kildare and still a resident of the town, joined Loctite as a process engineer in 1997, four years before it opened the Tallaght plant.

After completing a degree in natural sciences at Trinity, Murphy spent three years working at Donnelly Mirrors, a Naas company that produced internal car mirrors, before moving to Henkel, where he has remained ever since.

As he has gained experience working in a number of roles, Murphy has also bolstered his learning with stints at UCD, Harvard Business School and Penn State, picking up a master’s in industrial engineering and a diploma in chemical engineering along the way.

Almost half of Henkel’s R&D-focused Irish employees are educated to PhD level. Having a strong educational bent has served Murphy well, but as someone who is managing across all segments of the business, he insists he’s knowledgeable about more consumer-led areas as well.

“My mother was a hairdresser,” he says, “so I was familiar with brands such as Schwarzkopf long before I joined Henkel. I can easily talk turkey with hairdressers. The consumer-facing business obviously has slightly different dynamics than B2B, particularly with beauty and laundry items, which are more everyday essentials. But it is still a case of serving the customer to the best of our ability with great products.”

Henkel has been in business for more than 140 years, and Murphy is the first to admit that some of its products may be viewed as a little old-fashioned. Nonetheless, he is keen to highlight advances made across its portfolio.

“If you look at something like Super Glue, there are people who think it is the same product it always was, but that’s not true,” he says. “Items can now be repositioned once they’ve been bonded, and the product is also humidity-resistant and so on.

“We’re also working in areas such as engineering adhesives, producing items that are replacing mechanical fastening technologies that have been around for centuries. And we’re increasingly involved in the area of 3D printing. So we’re covering all bases.”

Digitally driven

The Henkel group’s chief executive, Hans Van Bylen, who took over last May, recently announced a new digital strategy aimed at boosting online sales. The intention is to double “digitally driven” sales to more than €4 billion by 2020. Henkel also intends to increase capital expenditure by 50 per cent, raising spending to €3 billion from €2 billion. The group has also set up a €150 million venture capital fund to invest in tech start-ups.

The new strategy comes as competitors in the consumer space, including Unilever and L’Oréal, are also making moves in this direction.

The strategy, Murphy stresses, is aimed at industry as much as consumers and reflects a wish from customers to shift focus. “Digital sales will play a major part in Henkel’s future,” he states, dismissing suggestions that the company has been slow to go down the online route.

Another key tactic is for Henkel to acquire more businesses, something Murphy says it is particularly good at doing. The group may be famous for its adhesives, but finding the glue to bind two disparate businesses together was only learned through trial and error with its 1997 acquisition of Loctite.

“Henkel and Loctite weren’t exactly natural bedfellows,” he says. “One was a publicly quoted US company with a New England entrepreneurial spirit behind it, the other a family-owned conservative German firm. It wasn’t easy in the beginning but, credit to Henkel, one of its key strengths is being able to acquire businesses and integrate them swiftly and successfully, which is exactly what it did in this case.”

Last year Henkel completed the second-biggest acquisition in its history when it bought Sun Products for €3.3 billion. The deal makes Henkel the second-largest laundry care maker in North America, behind Procter & Gamble.

“At the end of the day, only one culture can dominate,” Murphy says. “But you can take a lot of what is great about the company you are acquiring and build it in for the future.”

Local linchpin

He says Henkel’s future is one of steady growth, with the Irish operations continuing to play a major role for the group.

“Ireland has been a fantastic place for us to get talent, and still is somewhere that we can readily get people who are very skilled and who really want to work in this environment. Henkel very much sees the local operation as being a real linchpin in its global strategy, and the fact that we have such an important R&D centre here is proof of that.”

He says the company has yet to feel the impacts of Brexit or the election of Donald Trump. Being global means that Henkel is protected to some degree from geopolitical concerns, he stresses. But Murphy worries about the impact of Brexit and wonders if the Government has truly woken up to the dangers it poses for Ireland.

“It is obviously a disappointment for anyone in business because a weakened European community and an uncertain future for trade in Britain is something that nobody would have desired. I worry that it could have a very negative impact on Ireland in particular.”

As someone who always wanted to be an engineer and whose interest in science was sparked by an enthusiastic teacher, Murphy is also concerned about how successfully the Government has been in making Stem subjects (science, technology, engineering and maths) more palatable for children.

“The focus on practical science has not been at the level I’d like to see,” he acknowledges. “Science and engineering are practical subjects, and to interest people in them you can’t just sit in a classroom and learn the theory.

“What attracted me to science was a teacher who hooked us by showing it in action. I was hooked very early on, but if I had been forced to sit through dry, boring theory I’m not sure I’d have been drawn to it. I worry that this is the situation for many at second level.

“I’m also concerned that third level investment is being done on a shoestring, which can’t be good.”

Travel required

At the age of 62, and having led Henkel’s local operations since 2004, Murphy shows no signs of slowing down, with a business trip to China and Malaysia on the cards. He has tried to cut back on travel, but that’s not easy to do.

Still, he says he is quite capable of switching off when he leaves work. Murphy’s hobbies, which include photography, theatre, music and travelling around in his motor caravan, help him unwind.

“It’s not always easy leading things,” he admits. “In fact, sometimes I feel like a football manager in that you have to work on the strengths of each individual in the team and ensure they are playing in the right positions. But I find that being able to spend time well when away from work allows me to enjoy it that much more when I’m there.”

CV

Name: Liam Murphy

Position: Henkel’s president UK & Ireland and global vice-president of adhesives technologies safety, health & environment

Age: 62

Lives:Family: Two grown-up sons

Education: Trinity and UCD (with additional stints at Harvard Business School and Penn State)

Something you might expect: Murphy always wanted to be an engineer, although he would have happily settled for a life in academia instead

Something you might not expect: He is now a keen caravanner, but motorbikes were his first love. He was once the proud owner of a Harley-Davidson Road King.