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The Peak Interview: Johann Heinrich Jessen

With one eye on the company's 118-year heritage, this third-generation boss of one of Singapore's most successful family-owned enterprises reveals how he intends to secure its future.

As unlikely as it may seem, Johann Heinrich Jessen, dressed elegantly in a crisp white shirt and blue wool jacket for our interview at the headquarters of his billion-dollar industrial enterprise, started his career slumming it in the jungles of Papua New Guinea as a tropical biologist. “The field station had no power or running water. It was mostly uninhabited, remote and the closest village was a nine-hour hike away,” remembers Jessen. “I loved it.”

The 45-year-old chairman of Singapore-based Jebsen & Jessen (SEA) had been expected to join his father in the family-owned business, which his grandfather, after whom he was named, co-founded. He chose instead to break away.

He reminisces in the office located in the industrial heartland of Tuas: “After graduating from university (in the US), I took a job offer that was farthest away and seemed the most exciting. I was very interested in the tropics, having also grown up here.”

In a way, this adventurous spirit mirrors that of his forefathers over a century ago, when they were deciding their future in Shanghai, known as the Pearl of the Orient, on New Year’s Eve in 1894. In their 20s, cousins Jacob Jebsen and Heinrich Jessen senior were a long way from their home in Denmark, a small yet renowned seafaring town called Aabenraa near the German border.

Before the New Year was rung in, they hashed out a plan for a shipping and trading business, which culminated in their company – Jebsen & Co – being created a few months later in Hong Kong. Today, the cousins’ former trading partnership is a global enterprise, with a network of sister companies throughout the world. Among these is Jebsen & Jessen Group of Companies South East Asia, set up in Singapore and Kuala Lumpur in the turbulent post-colonial year 1963. The company has manufacturing, engineering and distribution capabilities in sectors such as material-handling, cable-technology and chemicals.

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A FAMILY REUNION
But ultimately, it was family history that brought Jessen back to the fold. In the rainforest, where the only evening activity available to the handful of scientists was reading, he pored over an old book that he had taken with him. Written in German, it detailed Jebsen & Co’s origins.

Then, something clicked. With Jebsen & Jessen transforming from its trading business into one that was more industrial, why not start a company-wide Environment, Health and Safety (EHS) Programme? He spoke to his father, who supported the idea.

So Jessen, who had graduated summa cum laude in environmental studies from George Washington University, went back to school. He got an Ivy League master’s degree in industrial-environmental management from Yale, then moved permanently to Singapore and started the programme in 1995 at Jebsen & Jessen at the age of 27. He would eventually take the company down an environmentally sustainable path.

Yet, he is ever mindful of the readings in the jungles of Papua New Guinea that redirected his career. Jebsen & Jessen’s pride in its strong heritage and Asian roots is evident even here, in the boardroom. You see it in the life-size portraits of his grandfather and father, Arwed Peter Jessen (the latter founded the Singapore off shoot). It’s there also in the vintage photographs on the walls, featuring the old ships that used to ply the seas for Jebsen & Co, and the framed sketches of Aabenraa.

Third-generation Jessen, born in Germany, is clearly pleased with the progress of his enterprise as it celebrates its 50th anniversary at the end of this year. He takes pains to point out that while the group has “tremendous pride in our heritage and roots”, it also has its eye on the future.

“We are always very conscious of how if you just anchor yourself to your past, you are in danger of perishing,” he says, adding later that this forms the very cornerstone of the business. “We follow a policy of renewal and adaptation, and are always seeking to be ahead of the game in our various businesses.”

PIVOTAL MOMENT
A key turning point, he explains, was when the group decided in the early 1970s to expand its activities to cover crane production, after his father was approached by German industrial enterprise Demag.

Manufacturing overhead travelling cranes for the fast-growing port in Singapore was uncharted territory for Jebsen & Jessen, which had previously been involved only in trading, distributing and wholesaling products ranging from pharmaceuticals and construction equipment to textiles and luxury watches.

Says Jessen: “No one else was doing it. Everyone else was shipping cranes from places as far away as Germany and Japan.” So, in 1972, agreements were signed between Jebsen & Jessen and Demag, and a company known as MHE was born, with a small factory in Singapore and another in Malaysia. In 1986, the company became a 50:50 joint venture and was renamed MHE-Demag. Today, it engineers, makes and maintains cranes and other material handling products with 1,325 employees and a $220-million turnover.

The crane business opened the way for other units – from material-handling and packaging to chemicals and life-sciences – to be created within Jebsen & Jessen. The group is now more than a trading company; it is a sizeable industrial enterprise, with more than 4,000 staff in over 50 subsidiaries and associate companies across Asia in eight different business units. It has a recorded $1.2-billion worth of assets in 2011 and a $1.1-billion turnover in 2012.

To stay nimble, the company has embarked on a growth path that started in 2010 as an acquisition strategy to double its revenue over five years. With a “war chest” of $250 million, it has, to date, bought eight companies with turnovers ranging from $5 million to $100 million, including a food-and-beverage packaging manufacturer in Malaysia and a material-handling unit in Taiwan.

Jessen says: “How we continue to adapt ourselves has become a cornerstone. We have the entrepreneurial spirit of the trading company that we once were, but we’re today an industrial group that’s moving more into running our own destiny with our own products.”

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GREEN DREAMS
The necessity of having to adapt and stay relevant is “just like in nature”, he muses. “Nature reveals to us things from the ancient past, yet nature shows its adaptability to survive, too.”

The comparison with the survival of the fittest comes as no surprise. After all, Jessen has had “a fascination with nature” since his childhood in rural Denmark – it was “very ulu (out of the way)”, he says – and in Singapore, where he studied at United World College (UWC).

It certainly led the former boy scout to specialise in environmental studies and work in Papua New Guinea. Jebsen & Jessen today is, in part, a reflection of his passion.

His focus, he says, was on “cleaning up our act” and ensuring EHS compliance across the group. For instance, it stopped selling a toxic chemical called tributyltin that was used in paints to keep barnacles from encrusting ship hulls. It also banned shark’s fin at company dinners in 1995, reportedly one of the first companies to do so.

Jessen, who left the environmental programme after two years to work in the group’s packaging and material-handling businesses for eight years, admits that some of the moves were “quite unpopular”.

But the programme started seeing economic benefits – lower insurance premiums after putting in various risk-mitigating procedures such as fire-prevention systems. It was also one of the first groups in the region to implement ISO 14001 certification for environmental management in all member companies across Asean.

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THE WEIGHT OF RESPONSIBILITY
Today, Jessen – who became chairman of the group in 2004 after his father retired, while concurrently assuming the post of regional managing director at MHE-Demag – believes that Jebsen & Jessen has “achieved what we’ve wanted” in environmental sustainability, by tackling its carbon footprint and reducing the amount of carbon emissions in the atmosphere.

Last year, it became one of the first carbon-neutral industrial companies in Asia, buying 47,000 tonnes of carbon credits. It aims to reduce its carbon footprint even further, through internal activities rather than through carbon off set. For instance, better energy efficiency means that offices across the region now use LED lighting.

This sustainability drive “has become part of how we do business, which is what I’m very happy about”, he says. The company is also proud of its staff welfare, with ergonomic chairs and standing desks, which Jessen himself uses in his office. Framed photos of long-serving staff , some of whom have stayed with the company for more than 20 years, line the walls.

He admits, though, that environmental sustainability is a hard slog ahead. “We’ve done something but we are not green angels. You have to be realistic.”

He also says that things could have been done a lot faster, pointing to how the group started a feasibility study for carbon reduction initiatives in 2007, before signing a three-year carbon credit agreement in 2011.

For a person who believes strongly in green issues, they don’t, however, cause sleepless nights. What does keep him awake is “the weight of the responsibility of the business”, he says. It’s sustainability of a different kind.

“That’s a big, personal challenge. (The family enterprise) has been going for 118 years. We have to constantly ask ourselves: Are we doing the right thing? How do we ensure that the business is sustained? These decisions can have a big impact. It’s a heavy responsibility.”

One strategy the company uses is affirming its roots in the Asean region. Its motto, after all, is this: “We speak the language of South-east Asia.”

He says: “You look at our name – we don’t sound Southeast Asian but we are. There’s no headquarters in Denmark or Germany, where we came from. We are not a Danish company. We’re an Asean group that’s made up of different nationalities and cultures.”

Like the company, Jessen, too, has an international background. He spoke Danish to his father and German to his mother. He can speak four languages – English, Danish, German and Indonesian – fluently, and admits to having an “accent in every language I speak”. (His Singlish? “I get by, but not now during the interview!” he says with a laugh.)

His wife of 10 years is Indonesian, a former teacher whom he met while he was studying Bahasa Indonesia in Yogyakarta on a three-month sabbatical. They have two boys, aged six and nine, who study at his alma mater UWC. Because he spends about a third of his time outside of Singapore, he prefers to spend what little free time he has with his family, playing football with his sons or having dinner with them at home in Bukit Timah.

The nature buff in him is also appeased with family hiking trips to different parts of the region – they climbed Mount Ramelau in East Timor recently.

He says he became a citizen earlier this year for practical and emotional reasons. With its diverse mix of cultures and a strong immigrant heritage, Singapore attracted him – “it just felt like home”, he says. He hopes to see his kids – who know the names of all the LionsXII players – become Singaporeans and do national service too.

He adds: “The company would never be what it is today, if it hadn’t been for Singapore allowing companies like us to thrive. I also wanted the company to be Singaporean. It’s the right message to send to the market. And it’s also about time – we’ve been here about 50 years. Roots are important but it’s even more critical that we demonstrate that Asean is truly our home.” In that, Jessen can sleep easy.

RULES OF THE FAMILY BUSINESS
The hurdles in the way of sustaining a family enterprise are legendary. “Shirtsleeves to shirtsleeves in three generations” is one common saying about such challenges. In China, there is another that goes, fu bu guo san dai or “wealth does not pass three generations”. As Johann Heinrich Jessen says with a laugh: “I’m the third generation, and my KPI is to make it to the fourth.” He says that the trick for family businesses is “to have rules that are communicated and adhered to”.

BE IN THE BUSINESS IF YOU WANT A STAKE IN IT.
“We don’t have any silent shareholders”, he says, unlike the situation in many other family-owned businesses. The group has only three shareholders: himself, his older brother, J. Peter Jessen, and a cousin in Hong Kong. His five older sisters, who live and work in Europe and South America, don’t have ties to the business.

SHARES ARE NOT INHERITED.
“You have to buy your shares and, when you retire or die, you have to sell your shares – so they don’t go to your wife or husband or kids. It means that those who buy the shares are making a decision to be willing to take risks. It means they will work very hard to ensure that the legacy is continued. I’ve bought my shares and paid them off through dividends, which are also put back into the business.”

A FLAT MANAGEMENT STRUCTURE.
“There are no reporting lines among family members, so I never reported to my father,” he says.

FINANCIAL RESPONSIBILITY.
“We never rely on banks, a principle that goes back to my grandfather’s time,” says Jessen, who flies budget on regional trips. Its widely reported $250-million war-chest growth strategy “is entirely our own money”. “It’s vital for people to know that we are absolutely religious in our tradition of financial stability. This money is not being played around with.”