Johannesburg - Mauricio Leyva is not a man to be overwhelmed by tradition. He appears to have given little thought to the fact that he is the first non-South African to head up a local company that can, at a stretch, trace its origins back to 1895.
Leyva, 43, who took over as the managing director of South African Breweries (SAB) in January this year, is a Colombian who joined the SABMiller group in 2005.
So not only is Leyva not South African, he is not an SABMiller “lifer”. By contrast Norman Adami, the guy Leyva took over from, is not only South African but he spent most of his working life at SAB. That’s the way it used to be at SAB. You joined as a young, ambitious graduate and became part of an elite team that ran a company that dominated the local beer industry.
In recent decades members of this team moved from Johannesburg to conquer the global beer market, or at least the attractive emerging market segment of the global beer market. SAB’s remarkable ability to develop executive talent was a key factor in its unique success on the global stage.
There was a familiarity and collegiality among the top team led by Graham Mackay, Malcolm Wyman and Meyer Kahn. Everyone knew what was expected of them as they strove for global dominance. By comparison the other dual-listed South African companies seemed uncertain about their people and their strategies and tended to wilt on the international stage.
But, long before it became apparent to the outside world, things began to change. In the early years of 2000, the pace of growth and acquisition meant it was increasingly difficult for the South African “mothership” to supply the necessary numbers of SAB-trained executives. But by now companies that had been acquired by SAB during the 1990s were producing their own executives who had been trained in the SABMiller “manufacturing way”, which was all about “world class manufacturing” and “continuous improvement”.
Such has been the extent of the change that Leyva seems a little surprised that anyone has noticed he’s not South African. He reminds me that an Italian is running SABMiller’s operation in India, a Guatemalan is running Italy, a Brit is running Europe, a Canadian is running Panama and a South African is running Colombia.
“This is a truly multinational company,” said Leyva, who described his move from Peru, where he was president of SABMiller’s Backus, to Johannesburg as “rather smooth” from a corporate culture perspective. But he is now faced with a far more complex and larger business.
Leyva suggested that the move was smoother for him than it would have been for a non-SABMiller South African to take over the top job at SAB. “SABMiller has a corporate culture that is aligned and common throughout the world; we speak the same language.”
The SABMiller “manufacturing way” is a core part of that culture. Leyva said it had been applied in SABMiller’s 97 breweries across the globe and in many of those countries it had been improved upon. “For the last two years Latin America has been placed in the top 10 in terms of manufacturing excellence within the group,” said Leyva, who was with SABMiller in Honduras and Colombia before taking up the top position in Peru.
His current plan is to apply the improved international version of the SABMiller “manufacturing way” to the “mothership”, which has slipped down in SABMiller’s global rankings. “We want to get the seven South African breweries into the top quartile within the group,” said Leyva, who reckoned an “outsider’s” perspective helped to identify the scope for improvement. When fully realised these improvements could save around R300 million to R400m a year.
To help with the challenge, SAB is bringing in a Slovakian, who is currently working as the vice-president of SABMiller’s Colombian operation, to take over as manufacturing and technical director.
That is taking iconoclasm a bit far, I suggest. Not only is he the first non-South African managing director of SAB, but he is working on ways to improve its “world class” systems.
Were there difficulties getting the backing of the locals? “None at all, everyone’s embraced the challenge very well.”
However, the focus on continuous improvement and the related “pay for performance” strategy was a key issue behind the recent strike, the first SAB has had in 16 years, suggesting not everyone was onside. The full 7 percent wage increase on offer this year was only available to employees who had achieved certain minimum performance standards. Around 200 of the 2 850 employees in the bargaining unit failed to make the grade.
There were other issues relating to representivity on the board of trustees of the provident fund and medical scheme, but as usual it was the dispute over the pay increase that stole the headlines.
Leyva is not unaccustomed to strike activity; while he was in Honduras workers went on strike during a coup – a three-month curfew and the fact that the union involved backed the ousted president complicated attempts to deal with the strike.
In South Africa, Leyva was disappointed by the Commission for Conciliation, Mediation and Arbitration’s agreement to sign a strike notice while the parties were still in negotiations. He was also taken aback by the violence accompanying the strike. Throughout the strike, management stressed that contingency plans ensured that not one hectolitre of production or delivery was lost.
Leyva said the contingency plans not only covered production and distribution, but they were also aimed at ensuring the safety of workers. “But whatever plans you make, the reality is that a strike affects everyone, it has taken its toll… there are no winners.”
Leyva said it had become apparent that there was some misunderstanding with the workers over how the pay-for-performance system worked in relation to the annual increase. Part of the settlement agreement with the Food and Allied Workers Union (Fawu) provides for continuous negotiations during the year “and not just around wage talks”.
The return to work had been smooth and tension-free. “Those who came back to work have been very professional; Fawu has lived up to its word.”
Fawu’s general secretary Katishi Masemola told Business Report that management’s commitment to “continuous dialogue” played a key role in resolving the strike. As did the robust discussions between SAB executives and Fawu national office bearers a few days before the strike was called off. “We weren’t negotiating, we were sharing perspectives… it wasn’t diplomatic,” he said.
An international perspective may help Leyva deal with the threat of a ban on alcohol advertising. Although it will be entirely new to South Africa, such a ban is not without precedent internationally.
To be expected, Leyva does not believe a ban will achieve any of the objectives targeted by the minister of health. “Restrictions in the Nordic countries haven’t affected levels of alcohol abuse and the advertising ban in France has not reduced per capita consumption.”
SAB believes in education rather than restriction, and also in “campaigns that actually make a difference”.
Leyva said one of the most significant implications of a ban was that it would entrench existing brands and make it difficult to launch new brands. This may or may not make it more difficult for SAB to implement a strategy to “develop drinking occasions” by bringing beer consumption into line with patterns evident elsewhere.
But to be expected for a company whose plans have a 10- to 15-year framework, SAB does have contingency plans in the event of an advertising ban. The plans include ways to broaden the competitive landscape. This Leyva said, sounding a little more traditional, was not about SAB increasing its share of the beer market, but about SAB increasing its share of the alcohol market. - Business Report