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Family Business


FTdynamo takes a sideways glance at some well-known companies which are in fact family businesses in this week’s column

The reorganisation at Ford Motor, which has created an “office of the chairman and CEO”, effectively puts chief executive Jacques Nasser and chairman Bill Ford (great–grandson of founder Henry Ford) into joint harness and will allow Ford to become more closely involved in the day-to-day management of the firm.

The Ford family, now in its fourth generation, controls some 40 per cent of votes in the company. Bill Ford’s move to strengthen his role in the group follows a fairly disastrous time for Ford Motor, with morale suffering, productivity falling and, especially, questions over the safety of its best-selling sports utility vehicle, the Explorer, and the $3bn recall of 13m allegedly faulty Firestone tires. (Ironically enough, Ford’s mother, Martha Parke Firestone, was granddaughter of the tyre maker’s founder, himself a close collaborator of Henry Ford.)

Such assertive behaviour, though couched in diplomatic language, by a family behind a major corporation is rare. Generally, families like to stay well in the background and reclusiveness is probably the common trait they most share.

For example, when the Netherlands-based clothes retailer C&A announced it was closing its UK and Irish stores, much was made of the family-run group’s apparent secrecy. C&A was losing £1m a week in the UK and admitted that it failed to respond to competition and changing consumer fashion. But it was the reclusiveness that really attracted the press. Few had known, it seemed, that C&A chief Lucas Brenninkmeijer was a direct decedent of founders Clemens and August (hence C&A), who started the chain in 1861. There has rarely been a non-family member at senior level in the group and the family fortune has been estimated at $2.5bn.

The UK multimillionaire businessmen (and twins) David and Frederick Barclay are universally known as the “reclusive Barclay brothers” yet manage to own the Ritz Hotel in London and the Scotsman newspaper, among other things.

Howard Hughes was another privacy-freak. Perhaps the best known of today’s recluses, if that’s not a contradiction in terms, is the family heading the global chocolate maker, Mars. The Mars family may be publicity shy, but for more than 80 years their enterprise has been a market leader around the world. In that time the company has created one of the most powerful brands on the planet. The Mars family’s wealth, the product of nearly a century of corporate success, has been estimated at $10bn.

But, then again, perhaps car firms are different. Surprisingly enough, this modern high-tech global industry remains dominated by families – and most are active and relatively high profile.

Thus, the Quandt family owns over 40 per cent of BMW and the Peugeot clan nearly 30 percent of the equity, 40 percent of the voting rights and six out of eight members of the supervisory board of PSA Peugeot Citroen. Descendants of Ferdinand Porsche, who created the sports car group, still control 50 per cent of that company’s voting rights while his grandson, Ferdinand Piech, incidentally also chairman of Volkswagen, sits on Porsche’s supervisory board. In Italy, the Agnelli family controls just over 30 percent of Fiat, and Giovanni Agnelli, honorary chairman of the group, still takes an almost daily interest. John Elkan, Agnelli’s grandson, has joined the Fiat board. Toyota, Japan’s largest carmaker, has two member of the Toyoda founding family on its management board. Chung Mong Koo, son of founder Chung Ju Yung, chairs Hyundai Motor.

Whether this close involvement is for better or worse is open to discussion. Some argue that family involvement has stifled innovation and perhaps rationalization in the industry. Others concede that family interests allow for a much longer management timeframe with less pressure for financial results. It certainly does not seem to militate against aggressive management. Ford, for example, has been on something of an acquisition spree in recent years, picking up Land Rover and Jaguar among others to fill niches in its product range. Last year the Agnellis sold 20 percent of Fiat Auto to GM and in the process became the largest shareholder in the US giant.

Nor has it done the families any harm financially. According to research by the Financial Times, a sister company of FTdynamo, recommended dividend payments to leading family shareholders in the auto industry totalled almost $470m in 2000.

Bill Ford was recently quoted in the FT as saying, “I wake up every morning concerned about what the future looks like. I do not feel like I am working for myself but working for my grandfather and great-grandfather.” The Ford Motor boss certainly seems to be in it for the long haul; co-boss Nasser will have to get used to the family presence at his shoulder, or else.

FTdynamo features writings and opinions by leading people in the the world of work and business.

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