Leaving F&P brings relief and sadness

John Bongard says he never expected to become chief executive when he started at Fisher & Paykel aged 19. Photo / Martin Sykes

John Bongard always hoped to retire at 55 but this was not how he expected it to go.

The chief executive of Fisher & Paykel Appliances, who this week announced plans for a December departure after a year-long battle with prostate cancer, says he is relieved it is now official but also saddened at leaving behind the organisation for which he has worked for 36 years.

"Once you make your mind up - that's the difficult part," he says.

It has been quite a journey for Bongard who joined the business as a fresh-faced 19-year-old.

Back in 1973 Bongard was in the middle of doing a science degree majoring in engineering, which for a number of reasons, he wasn't passing.

He went to Fisher & Paykel to apply for a job as an assistant chemist - but it had already been taken.

Spurred on by his mother's warning not to come home without a job, Bongard went back to the human resources department and asked if there was anything else he could do.

He was given a purchasing cadetship working for a Mr Fisher.

"I realised that sounded pretty important," says Bongard who believed he would be working under a Fisher family member only to find out later it was no relation to the family that had founded the business.

But it was in this role that he got to know Gary Paykel, beginning a friendship and mentorship that has lasted more than three decades.

It was Paykel that convinced the young Bongard to go back to university and Bongard began studying a commerce degree majoring in marketing and economics part-time.

"Marketing was around back then but people didn't know anything about it." Typically the head of marketing came from a sales background.

When Bongard finished the marketing degree, Paykel said: "Well you have got a degree in it, you had better do some."

Bongard moved out to the refrigeration factory where he became head of marketing, later he spent time in customer services before being handed his first big project - launching F&P into the Australian market in 1988.

The launch proved to be a success and the board began considering a split of the appliance and healthcare businesses.

Bongard moved into the role of heading up the appliance division.

"I was given that opportunity so when the company did split I was appointed managing director."

Paykel was still executive director so Bongard was still reporting to him as boss but a few years later Paykel stepped back to become chairman and Bongard moved up to the chief executive role.

It's a position Bongard never thought he would find himself in as a plucky 19-year-old. "Good Lord no - I wouldn't have dreamed about it."

These days it's hard to find a generation x or y employee that would be keen to stay at the same company for three years, let alone 30-plus.

But Bongard says he has never thought about leaving. "No, I can honestly say I haven't. I have just been lucky to get into a company where I have enjoyed the culture. I've got a lot of really old friends in this business."

It's working with those people that Bongard has enjoyed the most about his time with the company. "It's been a great ride."

But the last year of his career at Fisher & Paykel has been very different to the other 35. "I have had better years," Bongard puts it mildly.

Fisher & Paykel shocked the market in February when it revealed plans to raise capital and find a cornerstone investor in the wake of plunging sales and rising debt levels.

But Bongard says the board knew well before that point that things weren't going well.

"It was really the credit crunch. Lehman Brothers went up in September. In October it was like someone just turned the lights out."

There was a massive step-down in sales and the uplift that the company expected going into the Christmas season just didn't happen.

"Our operating performance was nowhere near where we expected although at an ebit [earnings before interest and tax] level we were still making money."

The company began looking at raising money before Christmas but plans for a capital note were scotched by the Government's decision to put together a guarantee on deposits for the banks and finance companies. "We had to go back to the drawing board."

By the time February rolled around Bongard says they knew there was no other choice but to undertake a capital raising.

At that point a cornerstone investor was just a suggestion on the list of options. "It was not something we went out and chased. The guys from Haier really came out and approached us."

For years Fisher & Paykel had been touted as a takeover target for both Whirlpool and Chinese appliance maker Haier.

But Bongard says the board couldn't see the sense in it. Even now that Haier is in place Bongard is keen to point out that they are just a cornerstone investor.

"This is a cornerstone not a takeover."

He says they didn't have to go ahead with Haier - they could have raised more money from the shareholders.

But the Haier investment just presented too many good opportunities.

"If they didn't exist we wouldn't have proceeded. It wasn't as if we were backed into a corner, there remained another option."

For market watchers it seemed like the Fisher & Paykel capital raising was taking eons to organise and might never happen. For Bongard and his crew it was a completely different story. "There were deadlines all over the place. I don't think the market contemplated that we were going to have everything come together at once.

"It was not just a straight equity raising it was a highly complex business scenario that had to come together within 24 hours," Bongard says.

There were weeks of staying up to 2am and 3am as they grappled with the negotiations and dealt with different timezones.

"We were dealing with a banking syndicate with offshore parents and a number of potential cornerstone investors with different time zones."

Bongard still won't say whom the other potential investors were.

At the same time Bongard was grappling with his own health issues after having been diagnosed with cancer in April last year.

"It was a difficult time but being as busy as we were kept my mind off it. The thing that gets you through these things is having such a great team of people working on it."

While it hasn't been obvious to the outside world, Bongard says his illness was known about within the company.

"Most people have known for the last year anyway. I was getting treatment so I had to do radiation every day. I didn't choose to make it secret."

But Bongard says one of the things going through the back of his mind as he contemplates the last week has been an acceptance that stepping down is the right thing for him to do.

"A business like this needs a chief executive who is 100 per cent focused on the business and doesn't have their mind wandering," he says.

Initially, when he was diagnosed, he knew there was a course of treatments and he hoped that would be it - sorted.

But it hasn't worked out that way. "If you get to a situation where I am at the moment the way through it isn't as clear. I know I probably won't be 100 per cent focused and as such it is the right thing for the company and for shareholders that I step down."

But that hasn't made it any easier for a man who comes to work every day and sees his friends.

"It was a tough decision to make. I really enjoy what I do and I firmly believe the business, even though it is going through tough trading times, will be well-positioned once the markets recover."

Bongard says there are some very capable people within the business who could take over from him but he won't name names.

But at the same time the business is now much more internationally focused compared to when he took on the role and so it is the right time to look outside of the business and see if there are better qualified people.

As for Bongard himself he is looking forward to taking the summer off to relax on the beach, go fishing and improve his golf handicap.

He hasn't ruled out a return to some kind of corporate life but says it won't be as a chief executive.

JOHN BONGARD
Chief executive Fisher & Paykel Appliances
Age: 55.
Family: married to Diane with two children.
Education: Papakura High School, Bachelor of Commerce at University of Auckland.
Career: Joined F&P in 1973 as a purchasing cadet. Roles since include manager of group purchasing, marketing manager, commercial manager, general manager of whiteware. Appointed managing director in 2001 and chief executive in 2004.