Deciphering the International Language of Treasury with Stephen Harper

Foreign welcome to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week I talk to treasurers about how they built their careers, where they are now, where they see both themselves and the treasury profession. Going to next this week's show, joined by Steve Harper, General Manager, Treasury Europe at Neideck Europe. Now, some people might not know nidec NIDEC are a integrated sales company based in the Netherlands comprising nidec, NIDEC Servo techno motor, basically centered around communications, home appliances, industrial equipment. So, you know, sort of a specific niche group as it were, but very international and everything else. I'm actually going to get Steve as usual, to explain a bit more about NYDA later. Steve and I have known each other for many years. We were just talking before the show and I've spoken a couple of days ago. A lot of the guys I interview on the show in the U.S. for instance, well, they'll start out in banking and they'll make a move into corporate treasury, discover it through their clients and so forth. A lot of UK and European guys tend not to. They go straight into corporate treasury or accidentally move into IT stuff. Steve's slightly unusual in that regard. He started off in banking, treasury or banking rather in the uk before discovering the wonderful world of Treasury. Steve, as always, enough from me, perhaps explain how you started off your career if you would, and then let's go all the way through now. Over to you, sir.

Yeah, thanks Mike. So yeah, I think sort of after university I sort of probably fell into banking as opposed to, you know, seeking it out but realizing that, you know, it was a very solid good founding sort of as to my basic finance knowledge, if you wish. But I soon found that the UK banking sector was rather limited in what it was trying to achieve with its so called graduate management trainee programs. And so I moved across through a number of American banks and then through into American bank commodity houses. So when you find yourself in that situation in the early 90s, it was a relatively dangerous place to be. But having sort of gleaned a really fairly wide experience through the sector, I actually decided to move into corporate and I made a very strong commitment to myself to move abroad. That being said, I jumped in a car and back then I took the ferry and I went to Europe and I sought out what I hope would be viable opportunity. That was back in the day, that was Merck Sharp and Dome nsd. They were based in Belgium and then subsequently in the Netherlands and I worked for them for a number of years.

And why just jump in there? Just because again, that's quite unusual. A lot of Ukraine treasury folks will pursue their treasury career as they can do all the way through and stay within UK groups and things. And again, this was back in the 90s, so there was early days of Treasury International per se. What was that drive for you? Was it just something you bit of a wanderlust or what was the situation there?

No, it wasn't that exactly. We could talk about this all day, but UK Treasuries back in the day were very much cash FFP debt. So they were, I wouldn't say they were ivory tower, but they were somewhat staid and they were somewhat sort of financially regulated, more a subset of a generic finance function. And what you had on the European continent was the first sprouts, if you like, of treasury that actually required a treasurer to spread his wings somewhat wider to get involved into things that were outside of the three basic pillars of generic corporate Treasury. And by that I mean project financing, I mean working capital enhancement, I mean a lot of greenfield development as a number of the European operations were seeking lower cost blue collar input into their manufacturing. So I probably was one of the early adopters, if you like. And you might ask me why I would then leave someone like msd. And I can answer that very simply. I left MSD because my learning curve was becoming somewhat one sided. Merck Sharp and being in pharmaceuticals are an incredibly profitable company. And so much of my treasury skills that were being developed were on the the positive cash side. And I thought that in order to make myself a more rounded individual, I needed to go and work for somebody who desperately needed money as opposed to somebody who had a lot of money. So that sort of took me down to the Flextronics of this world, probably one of the biggest companies that nobody's ever heard of, that is an outsourced manufacturer and works on one and one and a half percent margin making electronic equipment for everybody else around the globe. And that involves serious complex funding strategies, it involves working capital management, it involves new efficiencies and those efficiencies sort of take you across the border from pure finance into what I would call financial operations. And indeed, one of the first things I noticed at that point in time was that I no longer had an office. So I stopped working in an office and I actually moved myself and sat on the factory floor because my boss, the CFO at the time, would always be very fond of telling me that if I couldn't see where the excess and obsolete was inside the factory, then I couldn't actually see where my cash was. And as the treasurer, that was my problem. So having done Flextronics and Flextronics being a truly global company, so I was a part of moving operations from Ireland to the Czech Republic, from Austria, Austria to Hungary, from Sweden to Poland, ultimately from Hungary to the Ukraine. This also transpired that we were moving from Japan to China, we were taking a lot of European operations down into Malaysia, and indeed we were moving operations from the likes of California across into Mexico. And that meant that I was traveling 90% of the time. I had offices around the globe because we were always trying to apply best practices wherever we learnt them to our other factories. And as such, you know, the company sort of profited from that very flexible workspace allowance that it gave employees.

And with. With that international exposure, if you like, you're meeting these. So. And again, for the listeners, Flextronics, headquartered in Vienna, but we're covering California, doing China and stuff. How are you finding the differences in attitudes towards treasury and, you know, towards finance and sort of what was it like with that international? Because you were truly traveling the globe.

Yeah. And I think at that point in time, what you notice is, you notice who are the early adopters, and the early adopters are those typically who need to adopt quickly when your margins are that low and that small. So the European businesses were being driven by people like Alpertel and Phillips and Ericsson at that stage, all of who were struggling to come to terms with what was a much more multicultural environment that didn't have so many borders. Don't forget, Mike, this is the very early days of everybody moving their manufacturing to China, everybody setting up their shared service centers in the likes of Chennai, India and Mexico. So you saw very advanced techniques within Europe and you saw a lot slower adoption within the US because it didn't need it, it didn't need to move as fast. The US still had its own supply chains in place and it was very tried and tested. It didn't need to look too far beyond. And it takes a global downturn to really make people appreciate or see that their cost structures perhaps need to be amended.

And then you did that for a number of years and grew the sort of function and things like that. But then you thought, yeah, Vienna to Australia, you've made some great moves. So that's one of the things we wanted to focus on. The cultural shift in treasury, what was it like? And then making a move.

Yeah, so that was an interesting one for me because obviously I'd been at sort of the cutting edge of what treasury had to offer because as I said, the margins were so low. I mean, without being unkind to Australia, Australia was running about seven or eight years behind the likes of California and Europe at that stage. And I was asked to go down there to the world's largest packaging company. And Australia is a huge continent by itself, but it still was looking very much at Australian customers. It had four banks that were all A rated, it was safe, it was rich and it was somewhat stagnant. Now ultimately, if you're going to remain more than just one of the shining lights of the Australian pension funds, you need to move and adapt. And one of the things I needed to do was to take what Australia had, effectively move it to Europe to create a European treasury center so that the changing dynamics of the business had the infrastructure there to cope with it when it arrived. So I went down to Australia, taking with me basically experience that was maybe five or six years ahead of what they had. This was a time when Australians typically did Australian bond issuance. They didn't do private placements, they didn't do Swiss private high net worth individual borrowing. They didn't even consider really issuing money in anything other than Australian and perhaps occasionally looking towards the US dollar. But that meant that their underlying assets weren't really being adequately mirrored by the financing they had in place. It was an out of date loan portfolio that they had that needed to sort of be updated and revised and the maturity profiles sort of reset if you like.

How did you find the, the teams different? Because by this stage you'd, you know, gone uk, you've gone Vienna, you know, in Austria and certain cultural things, but then exposure other areas, then you're in Australia. What was, was it the treasury teams like? Because then also wanted to sort of pick on that within the move back to Switzerland sort of thing. So you know, just go through the sort of the team culture sort of move.

When I first started out, particularly sort of Belgium and the Netherlands, you're never going to find just people from Belgium or the Netherlands. You're going to find Spanish, French, Germans, you're going to find everything. So it's very multilingual, different facets of experience. If you think that a lot of European colleagues go to technical universities as opposed to purely learning economics or accounting finance. So you get a different skill set, you probably get a lot stronger analytical base, but you probably get a slower development chart. And what I mean by that is a lot of my male colleagues would have done either military service or its equivalent, the overseas educational structure sometimes starts later and finishes later, particularly in the German speaking world. So you find more mature, more technically able individuals who perhaps have less experience than you might be used to. So it's a different fit when you get down through Asia and you know, with, with Flextronics, my offices were in Vienna, they were in Brazil, they were in the US and they were in Asia and you get different people everywhere. Probably the hardest region to work is Asia and that's purely cultural where people are, you know, incredibly polit, relatively subservient, probably had worked through one company for most of their working career. So you don't get the sort of bounce back that you would find in an American or a European workplace where people are very forward offering their opinion, so they're more reticent. So it's harder sometimes to read the group. In Australia you get 100% Australian workmates. Yeah, but what's an Australian? Right, because effectively that means they're an Australian Greek, they're an Australian Italian, they're an Australian German and Australian English. So you get the underlying culture, but you don't. It's not immediately obvious. The security of the environment in which they work means that people are less committed to the company and more committed to their career path. I would say that Mike.

And then just talk us through the next few moves because for people listening, again, they might not know. You made some really interesting ones internationally, which again, you've let treasury truly take you around the world. You know, I remember when I first ever started treasury recruitment, I like the idea of maybe you can take us to different conferences with wife and kids and things like that. And it truly has, you know, we then established a business for. We did a lot of stuff in Asia Pacific. That market went down. Our US business is flying. And so again I do a lot of speaking when it's not canceled from various viruses and things like that. But you know, we've had, you know, it's due to be doing Texas, Chicago, New York and we will do a lot of those speaking years later on in the year. But the great thing with treasury, it's a truly international language.

Language.

International language of Treasury. I love that one. You know, with you write that down. Yeah, I'll copyright that quick. You know, so with yourself and as you walk through, you sort of went, you know, you did Melbourne, Australia, Switzerland, Australia. Back again. Was it just for the air miles, what's going on?

Yeah, obviously nothing beats a good 26 hour flight, right?

Yeah.

To be fair, what I did When I was initially in Australia, as I. As I sort of alluded to, we had to build European and international treasury centers. And as such, I built myself into a role in Switzerland that probably needed me more than Australia, and hence stayed in Switzerland for a while. I ultimately got headhunted by the major competitor of my original employer back in Australia, and I went back. I mean, in hindsight, I think that was probably a mistake. There is a term that they use called boomerang ponds, where people who emigrate to Australia always want to come back to Europe and then they always want to come back to Australia and so on and so forth. You know, the lifestyle and everything you do and everything you can imagine are so incredibly different. It's almost like living two lives. But for me, the moves that I've made, I've always stayed very close to manufacturing, I've always stayed very close to heavy manufacturing, and I've always stayed close to companies that are either evolving or migrating or in some respects have been in some degree of distress. And that's what keeps you challenged. Because the great thing about treasury and the reason that it is so marketable is that it's a skill set that is forever expanding. And then better than that, you never have to do the same job in the same office with the same people every day, right? So, you know, it's like you're taking it as an armoury sort of, that you take with you, and you know that wherever you apply it, the situations might be slightly different, but if you've covered enough breadth and depth, then you can slot right in. So, I mean, treasury can be very plug and play in that regard and.

Then just talk us through then the moves, you know, or bring us up to date, really, because then you went into consulting and they had some great experiences there. Again, for the listeners, you know, what. What would you say to them? Because they're. Well, you know, we have a variety of different listenerships. We have found a lot of people in UK and Europe tend to be more treasury managers and senior treasury analysts learning the way up the curve and wanting advice from you about that, what to do Versus in the US and further afield, they're a little bit more older, they want to hear some of your war stories. And I think you've alluded to that a little bit there. But, you know, just. Just going back with that, you know, you made these other moves, so talk us through the rest of it.

So I think, yeah, I mean, I think, you know, some people go back and do an mba, some people like to, you know, move on to universities and teach. There comes a point when your corporate experience really becomes about looking at your next title or your next pay rise and it doesn't really become about your own development. The reason I went into consultancy was that the consultancy I was doing was primarily driven by pe. And the great thing about private equity is that you're basically either doing an acquisition or you're doing a divestiture or you're doing a health check on a company that's already within their portfolio. So it's very short, it's very punchy in many respects. The things that you would do in a corporate treasury over an 18 month period, you're doing within a PE backed owned company within a matter of six, eight or 10 weeks. So it really sort of reinvigorates and refocuses as to what is truly important. If you're going to strip down and run with or divest from huge corporations, those parts of the business that are non core but in effect are still very big and very interesting in their own right. So the consultancy is like a breath of fresh air really. It wakes you up, it refocuses you, it sort of gets you really excited and reminds you why you were really excited to begin with. Then from the consultancy aspect, you're then ready for your next move. You've sort of, I don't know that consultancy forever would have been. For me it is very demanding, it is very demanding on travel and very demanding on time. So you know, there's a lot of 20 hour days and there's a lot of time, you know, when you're six or seven weeks away from the family just because you're working on a, on a project timeline. What I've done most recently is I've come to the Netherlands, which is a great place to work, irrespective from where, wherever you come from or whatever nationality you are. It's very liberal and it's very embracing. I work now for a major Japanese corporate that is probably the, or basically the world's largest maker of electronic motors. Be that they're in the windmills or the electric cars or in home appliances. Again, a hugely different culture, a Japanese yen dominated culture, a culture that is not overly familiar with expanding and making acquisitions, acquisitions overseas. So a large part of my role is in M and A and is in expansion. NEDEC is a company that makes basically six acquisitions per annum. It's in a growth phase, but it's in a development phase. And that growth is taking place outside of its country at birth.

And with yourself and springboarding from that experience. What would you be saying to people? We're facing challenging times around the world and people are saying, oh, this virus and everything else, Treasury's prepared for it. And this is what you do. You guys spend your days looking at, at planning for situations. Then they come up and, oh, hang on, press the button sort of thing. Now I know that you've used all that stuff in your back pocket if you like, but then bringing it to the fore you and I spoke before that, it's much more about integrating with the CEO, cfo, COO and things like that, and bringing the treasury to front and center. How have you done that and how would you know what have you used from your past experiences to do that?

It's a very good point. I would say, Mike, that even 10, 15 years ago, treasury was always a subset of finance. And when you sort of read an advertisement, perhaps coming from yourself, it would have said that, you know, you had this cross fertilization with tax and accounting and finance. And I think that's no longer the case. I think very much now, my cross fertilization, to use a term I don't really like, but it's with procurement, it's certainly within sales, it's certainly within inventory management. And I think that the corporate treasurer has become a corporate crossover into operations. I mean, if you look at where, you know, it's very hard to find an area now where you can really make a huge difference. Now, once upon a time it would have been securitizations, it might even have been receivables factoring. Now people look at the supply side. Everyone's very concerned with the supply chain. Everyone's very concerned with inventory management. A lot of the accounting changes have made some of the more exotic solutions a little more unpalatable. So you really have to work with the guys in departments that you once might never have thought about visiting in order to get treasury up to date. I look at excess and obsolete inventory numbers. I look at inventory turns, I look at inventory breakdown as to whether or not not it's raw material, work in progress, or finished goods. I look at logistics. And when you, you know, and that all brings in commodities, you know, so commodities are a much, much bigger part of the treasury portfolio than it ever used to be. There's very few things are manufactured out there that don't have copper, zinc or aluminium in them. There's a lot of people looking at their footprint. So, you know, whether or not transportation costs are something that you should be taking into account. And ultimately, when you're in manufacturing, I think that people look at you now as to the footprint that you leave. So I think you and I both know, Mike, that very soon the likes of your S and P and Moody's ratings will take into consideration your green footprint, not just your financial footprint. And so when I'm looking now to issue bonds, I go straight to the green bond market. I don't go anywhere else because the green bond market allows me to assist the company in other ways in terms of how it's perceived or how it promotes itself. And we're just very lucky that being in electronic motors, we qualify in a number of those categories to be able to issue that. But it's important.

So let's look at you for a moment and just on that, as we wind up today's show, looking at the future for treasury, that was a great segue actually. I didn't actually do it on purpose. But where do you see this sort of future Treasury? You touched there on the sort of green stuff coming in. But what other things are you thinking? You know, I sometimes say on various shows that the CFO is using the treasurer as their scout, pushing them forward and things like that. Is that something that you see yourself or is that, you know, is it what are you seeing the future role of the treasurer, as it were?

It's a good one, I think, to be. If I could answer it in two ways. Number one, it depends on your cfo. It depends whether or not you have an inward looking CFO or an outward looking CFO. A lot of CFOs are either ex treasurers or frustrated treasurers. And a lot of CFOs are accountants who don't want to be overly involved in Treasury. What I would say is that I think treasurers are becoming more involved in the business per se. Really good example of that would be customer contracts and supplier contracts. Once upon a time they would have just passed you by. But now of course, you're looking for embedded derivatives. You're looking for whether or not you're purchasing in the right currency. Are you moving the foreign exchange exposure to the level or to the counterparty who's best able to cope with it? So you think it's very normal that you're charging your suppliers in dollars? Well, if you charge them in renminbi, would it be a more advantageous price to you? Would it remove some of the pressure of the foreign exchange exposure on the supply chain? So you're becoming much more integral to customers. You take on the suppliers you take on the supply chains that you're building and I think that's a good thing because we may as well be blatantly honest. Mike and I would say that what used to be the three pillars of treasury, cash, FX and debt, they're not that complicated. If you learn them, you know them and the interest factor that surrounds them. Albeit you might be implementing a new treasury management system or you might be managing a very large risk portfolio, those would be specific treasurers. I think the widening of the remit into the business is good and I do think that you'll find yourself as you move forward a much more of a link pin, almost a link pin between a CFO and, and a coo. And that probably, if we're going to approach an end to this conversation, makes a much more attractive future for what is deemed to be a corporate treasurer.

So I think a lot of the time the treasury nowadays and as I've seen it evolve in my treasury recruitment career has been as you talked about those three pillars, if you like, of treasury and then it's about everything else you do now in the early days, that's what I learned chop my teeth on. I remember first ever asking about you run my treasure at lockbox processing 20 years ago. God, you know, but then once you learn all about that and then you learn the next levels and things and you know, got to know that then treasury is about so much. It's about the integration with the business. When I'm recruiting, I'm recruiting this, this big role as we know for in Saudi Arabia, corporate treasurer. And it's actually about. There's a lot of assumed. Well, we know the person is going to be a complete subject expert. They're going to know all those different areas. That's already a tick in the box. That's by the time you've been 20 years in it, they assume you've been around the block and you've got the progression. It's all about everything else. And you know, bringing that into the sort of to close Today show, if someone looks at your LinkedIn profile and they say, do you know what? I want to have a similar background to Steve. I want to do something like that or follow, you know, take it around the world. What are the tips you would give them? And again, we'll put your LinkedIn LinkedIn profile in the show notes. What tips would you give to people?

I would say firstly, I think I would follow your desire to learn. I would say there's an old adage, right, if you're under 40 and you don't move every four years, you're crazy. If you're over 40 and you move every four years, you're CRAZY. But I don't quite buy it. I think industry, jurisdictional, social experience, at the end of the day, a good treasurer is all about breadth and depth and it being supremely flexible. And even if you're doing a very similar remit, you will do it very differently in different places around the globe. You'll know when to stop. And funny enough, as you know, Mike, there aren't many people who carry on in treasury as long as the likes of you and I. And that's because if you're getting it right, you'll still love it and you'll still stay in it. I'm almost saying that if you get it wrong, you'll move on, you'll graduate, you'll cross over into something else, and that's fine, too. A lot of people like to move into FP and a. A lot of people like to become a cfo. But I honestly think that if you want to stay away from the pure accounting side, then I think treasury probably offers you a much more interesting career. And I've never been limited by borders. I only go where the job is. I only go where the most interest is.

I think that's exactly right. I totally agree with you. And actually, it's funny, I think you can use treasury as that springboard, if you like, can't you? And it's certainly springboarded your career into all different countries and different roles and different things like that. And I think anyone who's in it now and thinks, oh, actually I could go, go to those other, explore those other areas. You might come back to treasury one day. But it's certainly in more limited fields. You just become a specialist, Whereas Specialist Treasury. 20 Years Ago, you, you know, I expect people to finish as treasurers. Now I don't anymore. You know, I see so many people that sort of on LinkedIn profiles, they sort of update themselves. They move to this or they move to general management or they're off this new exciting event. I think that's so much better for the profession as well.

I wouldn't be at all surprised if 50% of treasurers, following the route that I would follow today, find themselves in more generic corporate management. But very possibly it won't be in financial management, it will be running the business.

And 20 years ago that would never happen. You know, I never saw that at all. And you know, when I first started treasury crewmen, so now. You're entirely correct. So, Steve. Thank you, sir. Great, great words from Steve there. We'll put his details in there. You'll have some show notes. Great talk through his international career. Thanks for your time today, sir.

You're more than welcome, Mike. Anytime. Take it in. Thank you, sir.