Farmers department stores’ founder Robert Laidlaw was one of New Zealand’s most successful business people. But he was also a man of deep faith who for most of his career gave half his earnings to charity.
Murray Kennedy recalls reading Ian Hunter’s biography Robert Laidlaw: Man for Our Time in his 20s and says the entrepreneur’s story still inspires him.
“I enjoy the challenge of making something profitable and making money, but that you can also make a difference,” says Kennedy. “In some senses, that’s frowned upon in the not-for-profit sector; it’s like, ‘You’re a capitalist, you can’t be this, too.’ But I think you can be a capitalist and a socialist, and that’s what Laidlaw was. He made no excuses for making the most money he could make – but then he gave it away.”
Kennedy is CEO and co-founder of the Pathway Charitable Group – a collection of social enterprise businesses and social services based in Christchurch. The group began in 1997 when “social enterprise” wasn’t a familiar term, and Kennedy says some people still misunderstand the scale and success such businesses can achieve.
Pathway’s central business, Alloyfold, is a prime example. The multinational commercial furniture business has sold almost a million chairs in the US and for a couple of years in the mid-2000s was ranked among New Zealand’s fastest-growing companies. While it still sells about 40,000 chairs annually in the US, that market now accounts for about 20% of sales, with the rest split between New Zealand and Australia. For 20 years, Pathway has also run a business supplying labour for unloading shipping containers that, although slowing through the pandemic, still employs 30-40 casual staff at any one time. Combined, the firms have an annual turnover of $11 million.
Fresh start
Profits from the businesses, in turn, help fund Pathway’s social services for people struggling with addiction, long-term unemployment, housing insecurity or imprisonment. Its services include a drug and alcohol rehabilitation facility, a social housing arm and employment support through a network of more than 100 Canterbury employers.
For about 15 years, a Pathway team has also been helping former prisoners return to the community. Four years ago, it developed a reintegration programme called the Navigate Initiative, which it has been running with the Department of Corrections and Christchurch Men’s Prison. The programme works with men both behind and beyond the wire to help reduce recidivism rates.
New Zealand’s reoffending rates are high. Ministry of Justice figures show about 70% of people with previous convictions are reconvicted within two years of release from prison, while about 49% are re-imprisoned two or more years after they get out.
So far, about 100 men have been helped to reintegrate into the community through the scheme. It’s unique, says Kennedy, because the reintegration work starts inside the prison during the final third of an inmate’s sentence, with community members teaching them skills they’ll use outside. Upon release, the men receive accommodation, employment and social support through the programme.
Kennedy says early data on the programme’s effectiveness, such as its impact on recidivism rates, looks encouraging and is being independently evaluated by Dr Jarrod Gilbert, a University of Canterbury academic focused on crime and justice who had previously assessed the impact of Pathway’s pre-Navigate reintegration work.
Kennedy says he will be excited to see the results of how the programme is helping to better reintegrate prisoners. “Clearly, as the current recidivism rates show, we could use some fresh ideas – and we think we have something to contribute. Time will tell.”
An idea with legs
It was a desire for fresh ideas that initially spawned the model for Pathway.
Growing up in Queenstown, Kennedy had never seen people living on the streets until he moved to Christchurch in the mid-1980s to study engineering. To help those living rough, he got involved in a project through his church, alongside fellow Pathway co-founder Victor Tan, handing out soup and sausages on Friday nights in Cathedral Square.
“But we realised after three years that they were still there. We were keeping them alive on the street, but we weren’t moving them off the street, so we were thinking about how to fix this problem,” he recalls. “One of the questions we always asked people was, ‘What do you want to do?’ and invariably the answer was, ‘I want to get a job.’ And so we said, ‘Well, if we’re going to do something about this, we’ve got to do it properly.’”
A fellow church member and Pathway’s other co-founder, Mike Goatley, was an engineer who’d worked for a Dunedin-based manufacturer of folding chairs that had been wound down. So the trio came up with the idea of building a chair-manufacturing business that could offer jobs to those in need. It was an overly simplistic idea, Kennedy notes, which should have raised all sorts of red flags, including that the people they were trying to help “were probably not going to generate a lot of excitement in terms of charitable donations from the public”.
On the business side, the trio were ambitious about what they wanted to achieve. “We knew there was a market in America for the type of folding chair that Mike had been involved with previously. He knew manufacturing, I knew sales and marketing, and so before long we began manufacturing and selling thousands of Alloyfold chairs to American rental companies. We had no other products and the Americans were 90% of our sales – not what you’re supposed to do, but it got us started.”
Growing the business, however, wasn’t easy. Employing unskilled workers created high levels of “seconds” and the variables of an export business made margins hard to manage. After five years, the business was almost insolvent, so the trio made the tough call to move manufacturing to the US. (To further reduce costs, manufacturing later moved to Taiwan in 2009.) As a way to continue offering local employment, in 2003 Pathway set up its logistics business, Oak Tree Devanning, which continues to operate unloading containers in Christchurch.
Increasing demand
Kennedy says lessons learned about how to survive in business help Pathway run its charitable services more efficiently. Being part of a broader group means its charitable services benefit from a scale and levels of consistency and professionalism – supported by marketing, HR and fundraising staff, for example – not always available in the not-for-profit sector.
The businesses now contribute about half of the funding required to run Pathway’s social services, with the remaining provided through contracts and other sources, such as grants. Funding demands have consistently increased, says Kennedy, as the scope of the group’s overall vision has grown.
As the business of doing good continues, Kennedy says his biggest challenge as CEO has been adding the right staff at the right time while maintaining the organisation’s culture.
“The more capable the people we can attract and retain, the easier my job is,” he says. “But the team that works for Alloyfold is really motivated about reaching their sales targets because everyone knows what that money is supporting. So we have a lot of good people here who want to do something meaningful with their lives.”
