Trading the good life for Tranz Rail

By JIM EAGLES and PHILIPPA STEVENSON

Taking over as interim chief financial officer for ailing Tranz Rail sounds like receiving a hospital pass.

After all, the company's share price has collapsed, its credit rating has been slashed, an asset sale is urgently needed to meet payments, survival is pretty much dependent on the goodwill of the banks, predators are circling and the Government is weighing its options.

So why would John Loughlin forsake an idyllic life running his family vineyard in sunny Hawkes Bay - with a few well-paid directorships on the side - to grab such a greasy ball in the full knowledge that several heavy tacklers are looming up fast?

"Well," he says, "as a director I'm on the line for the performance of the company anyway.

"And I've always believed that as part of a team you do whatever it takes to get the job done."

In this case, he said, the Tranz Rail board decided that the company's plight urgently required a chief financial officer with a different set of skills "and I'm the one everyone looks at, and you can't avoid all the gazes".

Plus, he admits, "I do enjoy a challenge, you always learn a lot from a challenge."

It's understandable the other directors would look Loughlin's way because he spent some years in banking - and dealing with banks will be a crucial part of his job - as well as serving as chief financial officer and then chief executive of meat giant Richmond.

Certainly his appointment has been widely welcomed and, in particular, the fact that he has, as managing director Michael Beard put it, "a long and constructive association with the banking industry and is widely respected in financial circles".

The son of an eye surgeon, Loughlin was born in Dunedin, spent six years there and two in Nelson before his family moved to Hawkes Bay in 1967.

After schooling in the region, he went to university, where he was great at socialising, ordinary at studies, and "retired hurt" after a year.

He joined the Napier branch of AMP as the office boy, learned every job in the office, was relief manager in other provincial branches, worked in management accounting and property management and went on to run the AMP share portfolio.

An ambitious youngster, he took note of the qualifications of AMP staff. "You could see the pattern and I formed a view that I wasn't going to run second to anybody just on qualifications."

Mostly studying part-time, he ended up with a masters degree in economics and business strategy.

Next Loughlin moved to Westpac, where for four years from 1989 he ran the bank's investment management business.

In the back of Loughlin's mind, meanwhile, was the possibility of returning to Hawkes Bay. He and wife Kathryn bought land there with a plan to develop a winery in about 10 years.

"But suddenly this job of finance manager at Richmond came up and I thought I could accelerate the whole process."

The lure of Hawkes Bay was strong and the couple and their young family - they now have three children - decided to make the move.

"It's a place that holds a special affection for me. My parents are still there, and it's a part of New Zealand I've become very attached to."

His father established a winery, Waimarama Estate, and has since planted another small-scale vineyard, although Loughlin says he got his own interest in wine "from drinking it".

In addition, Loughlin says he was keen "to move away from industries that just dealt with paper to industries that made things - I wanted to get into the real economy as opposed to the paper-shuffling economy".

The fund manager wondered what created value in a company. "I'd spent years outside of companies looking in and trying to work out what made companies tick, what was the linkage between position in the industry, the business strategy, the quality of execution and shareholder value."

Loughlin acknowledges that "in the early days, I focused a lot more on the winery" but then he "really started to get drawn into Richmond".

The company was going through a period of dramatic growth under the legendary John Foster when it was transformed from a small exporter into the biggest meat processor in the country.

For Loughlin, the turning point came in 1994-1995 with the industry-wide plant rationalisation exercise.

It was something of a mission impossible, he says, to persuade 17 warring meat companies to agree on a common framework for the deal, cajole banks which were trying to get out of the industry to put in $50 million more, and persuade the Commerce Commission that the deal was not anti-competitive.

It proved such a buzz that he became entranced by the meat industry.

By the time Foster retired in 1997, Loughlin, then 38, had formed such strong views about where Richmond should head that he had to put his hand up or leave.

His vision for the company, to abandon the traditional focus on treating meat as a commodity and instead to add value and develop brands, swung a close-run contest.

As a lover of good food and wine himself, Loughlin was convinced the premium end of the market was where meat companies should be aiming, and he is credited with transforming a lot of industry attitudes.

However, the jury is still out on how well the strategy has succeeded, not least because Loughlin announced his retirement a year ago at the same time as Richmond reported a $1.5 million half-year loss.

On the other hand, that result came after a particularly difficult season which also knocked the profits of other meat companies, plus a debilitating fight with South Island predator PPCS, and so far Richmond has continued down the path Loughlin set it on.

His resignation - which was in line with a promise that he would stay in the job for only five years - was widely regretted by farmer suppliers, the company and the industry and the share price dropped in sympathy.

At the time Loughlin said he wanted to focus on developing the winery and spend more time with his family, something his new role will make difficult.

He plans to live in Auckland during the week and commute to Hawkes Bay for the weekends, "something the four women in the Loughlin family are not happy about".

That alone, he says, means that he wants his term in the job to be "as short as possible" though he also adds that he will stay on "for as long as it takes to get the job done and get the right person in the role".

At least he will be able to continue the tradition of cooking the Saturday night meal. "I like picking a wine, picking a food style to go with it and building a meal round the wine."

As for the family, they are resigned to being short-handed in the vineyard for the next few months.

"Mind you," says Kathryn, who largely runs the winery, "we've long ago given up on John as a grapepicker. He does go out but he usually spends more time on his phone than picking grapes."