Despite an 80% fall in profits, Jerry Henchy is ready to take one of the Three Sisters of the dairy industry under control, says Seán Mac Connell, Agriculture Correspondent.

Jerry Henchy, the 38-year-old who took over as Dairygold's chief executive earlier this year, likes using images of the sea when trying to communicate his ideas.

Perhaps, that is why he wears a tie with a shark motif and uses shark cartoons in his visual presentation to make his point that the world of business is a tough place.

Taking over an organisation which saw an 80 per cent drop in profits last year at a time when profits in its core business - milk processing - continue falling worldwide is not an easy one.

However, the Ballincollig, Co Cork-born UCC science graduate doesn't act like a man who has just been handed the rudder of a ship heading straight for an iceberg in the fog.

There is no fog in the head of the former Kerry Group executive who ran its operations in Wisconsin, in the United States and later in Mexico before returning to Ireland to take over the helm of one of the "Three Sisters" of the dairy industry.

Dairygold Co-Op under his hand looks set to lose a lot of its ballast, cargo and a fair amount of its crew in order to continue sailing on.

With more than 8,000 active shareholders, 3,000-plus employees and an annual turnover of almost €1 billion, Mr Henchy is being forced to address a dramatic fall in profits caused by the downturn in the international fortunes of the dairy industry.

He recently remarked that the tide had gone out for the dairy industry in 2003. "You find out who is swimming naked when the tide goes out," he said, quoting the US billionaire investor, Mr Warren Buffett.

Earlier this year, Mr Henchy faced outright opposition from a number of suppliers and their supporters in the Dairygold area to his plan to close 23 of the company's trading branches soon after he took over.

Local opposition groups set up to stop the closures and the progressive fall in the price of milk earlier in the year did little to help the new man slip easily into the top job.

More battles have yet to come as 1,500 jobs look set to be culled from the Dairygold payroll with the closure of half of the four milk processing plants and a tidying- up of the legacy left by the uneasy 1990 marriage of Mitchelstown and Ballyclough co-ops which created Dairygold.

Last week, Mr Henchy talked of the road ahead for the co-op he describes as "a sleeping giant", which saw its operating profit drop from €25.2 million in 2001 to €4.8 million last year and its pre-tax profit drop to €2.71 million from €13.25 million in the same year.

To put Dairygold back at the cutting edge of the industry, Mr Henchy is devising a two-part plan to make it one of Europe's leading companies in agribusiness, especially milk.

"The first layer will be taking the pieces of the puzzle and taking every single piece out of that that we can, and we will have a lot of work done on that by December 31st," he said.

The second phase, he said, would be to look at the four sites at which they process milk and the four plants where the co-op processes meat.

"We will dilute that scale tremendously," he said. "The second phase of the plan will be getting back to fewer plants, two or possibly one.

"In the case of dairy, that can be done either by reducing the number of commodities, taking all the milk into one or two plants to manufacture one or two commodities or by sharing facilities with other processors," he said.

When talking about job losses, Mr Henchy does not use the phrase "downsizing", he uses "rightsizing".

"When we talked about right-sizing a lot of people thought we were talking about closing this plant and keeping that plant," he said.

"However, the first phase will be taking all costs out of all segments that we own today and that will go across the whole organisation - how we manufacture, how we sell, how we administer."

The 100 jobs already lost in the firm had been taken out by what he termed attrition and out-sourcing. Negotiations are continuing with the unions on the second phase of the plan.

In future, he said, the company will concentrate on milk processing and consumer foods.

He said the company did not have enough scale in the red meat area and, at its level of operation, it did not make sense to stay in processing red meat.

With a global view of world business acquired not only from his days with Kerry Co-op but with Masstock and ENSBANA in France, the former Presentation Brothers boy also knows the business from the bottom up, coming from a dairy farm in Ballincollig.

While Dairygold's milk suppliers are large by Irish standards, he believes they must become even larger in scale and efficiency to survive.

And he has no problem co-operating with the "new sensible group of managers" who now run the Irish dairy industry. He believes the threat is not from within the country but from the rest of the globe.

To meet this threat, Mr Henchy is seeking its support from his farmer-suppliers, his workers, the State and semi-state industries.

He acknowledged that where Dairygold had to be taken would not be a comfortable place for all those involved but it "will require that harmony is maintained against a background of dissent. In choosing the right path, we will not be able to please all," he said.

He said the dairy industry was not unlike the airline industry where people not operating efficiently would not have a future.

"If you look at what happened to Swissair and Aer Lingus, which had a very comfortable environment while in a highly regulated environment, they went through hell when they were deregulated," he said.

"They came out the other side, having made the right changes, and Aer Lingus became a very vibrant, capable company again.

"The Irish dairy industry is not that different from that," he added.

"But just like Aer Lingus, there will be pain from where we are moving today.

"The only difference with the airlines is that the dairy industry had a very fragmented decision- making process and Aer Lingus, a national company, made one decision and away it went."

He does not aspire to taking up the mantle of Denis Brosnan, the former chief executive at Kerry, his former boss with whom he has an excellent relationship.

"Everybody has to be themselves. That is not a fair comparison.

"I would hate to restrict myself to getting only as far as Denis Brosnan," he joked.

"If you are looking at where Dairygold is starting out, compared to where he had to start with Kerry, we are starting out in a much stronger position," he said.

Factfile:

Name: Jerry Henchy

Age: 37 years

Position: Chief executive of Dairygold Co-operative. Previously responsible for Kerry Group's manufacturing base and market in Latin America.

Interests: Work and family. He is married to Grace and they have three young children.

Why is he in the news: He told the National Dairy Conference of a planned dramatic cut in Dairygold's processing capacity.