The Starting Gates
Between 1950 and 1972, Grace, Kennedy & Co., Ltd. moved into both the expansion of existing business and the introduction and development of new interests.
In those twenty-two years, the Company’s sales grew from about £1 million in 1950 to over £14 million in 1969-70, the financial year during which the denomination of Jamaican currency was changed from pounds to dollars (September 8, 1969). Importation of goods in bulk had realized about £600,000 in 1950 and general imports such as Anchor butter, Gold Medal Flour, and Hellaby corned beef, all brands represented by Grace, Kennedy & Co., Ltd., had brought in about £400,000. By 1970 sales of bulk imports totaled about £4.25 million and general items about £1.25 million; but the most notable increases had come from sales of Grace Brand goods at £4.5 million and goods sold from cold storage for some £4.25 million. A major cold storage item, chicken necks and backs,had grown from a disposal of about six to about eighteen carloads a month.
By 1970, Grace, Kennedy & Co., Ltd. were among the largest firms in the island, dealing in a wide variety of goods and services; and the Company was moving towards further business in the production and distribution of ‘non-food’ items.
On Friday, August 17, 1951, Hurricane Charlie hit Jamaica, causing great loss of life and severe damage to property, especially in St. Thomas and the Corporate Area of Kingston and lower St. Andrew. The Gleaner of Tuesday, August 21, carried news of a rising death toll and of heavy damage to banana and coconut crops, buildings and services. By then 132 persons were known to have died, 10,000 were homeless in St. Thomas, 12,000 in the Corporate Area and 3,000 elsewhere. Consequently, there was a demand for food and hardware. Help was on the way:
This morning a food convoy will leave Kingston bound for Spanish Town, Old
Harbour and May Pen, taking supplies for distressed persons in those areas. This
will augment trade channels, which are in operation and sending out foodstuffs in the normal course. Further food supplies were sent to Port Royal yesterday.
At the same time, H.M.S. Bigbury Bay, due to arrive here this morning, will
proceed to Morant Bay with a large cargo of food, medical supplies, and technical
personnel to augment the assistance already sent to this area in the Lady Huggins, which, leaving Kingston Sunday night, arrived in Morant Bay early yesterday morning with a detachment of police, two doctors and seven nurses on board.
Wherever there had been damage, there was a general rush for basic foodstuffs and for rebuilding. Some dealers were said to have resorted to rationing in an attempt to spread available stocks as widely as possible. During the next few weeks, relief supplies came pouring in and trading companies sought the assistance of Government in speeding up the arrival of expected shipments of foodstuffs such as codfish from Nova Scotia. Grace, Kennedy & Co., Ltd. had, however, gone a step, ahead of its rivals.
On the evening of the Sunday after the hurricane, Directors and senior executives of the Company met at Mr. James Moss-Solomon’s home. No record of their discussions exists, but there is personal recollection and a record of one important outcome. On the Monday morning, Carlton Alexander’s secretary observed him pacing the floor, picking at his fingernails. She recognized this as his habit when in deep concentration. Then he turned and dictated a cable to Canadian sources requesting the immediate supply for Grace, Kennedy & Co., Ltd. of hardware items for building repairs. especially nails, shingles, and zinc for roofing. The Company had been blown into the hardware trade. By this quick action, it was the first to bring in building supplies to meet the heavy demand.
The incident also had additional significance. Carlton Alexander, the young billing-clerk of 1933, in his eighteen years of service with the Company had steadily moved up to a senior managerial position and would soon be appointed to a Director’s seat on the Board. Under the guidance of Luis Fred Kennedy and James Moss-Solomon, with whom he worked closely, he would become more and more influential both in the rapid growth of the Company and in the larger national arena.
In May 1952, a Directors’ Meeting was followed about two weeks later on the 29th, by the Annual General Meeting of shareholders. In attendance at the former were: Luis Fred Kennedy, H.H. Dunn, James Moss-Solomon, F.N. DaCosta, Simon Soutar, J. A. Kennedy and S.C. Alexander, with G. L. Kamicka, Secretary. At the latter were: James Moss-Solomon, F.N. DaCosta, Simon Soutar, J. A. Kennedy, F.X. Kennedy, S.C. Alexander, and G. L. Kamicka, Secretary. The shareholders’ meeting was informed of the increasing profitability of the Company’s operations. Net income, before tax in 1950 had been £26,783; in 1951 £78,147. In 1950 the capital had been increased to £93,000, and in 1951
there had been a further increase to £200,000.
The increases had been achieved by the creation of ordinary and employee shares. In 1951, £96,000 of the General Reserve Fund had been capitalized and distributed among shareholders in proportion, one share distributed for each share held on December 28, 1951. Thus the Company’s strength was enhanced by the ploughing back of accumulated profits and the equity of existing shareholders was at the same time increased.
The 1951 increase had been made by creating 930 ordinary shares of £100 each, and 140 employees shares of £100 each – a total of £107,000 to bring the £93,000 up to the new figure of £200,000. The Directors also announced dividends for 1951 of 8% on preference shares and 5% on ordinary and employee shares, subject to tax deductions where due.
By similar means in 1952 and after, the capital of the Company was several times further increased. In 1954, it reached £300,000 by the creation of 930 ordinary and 70 employee shares of £100 each, and the capitalization of £99,200 transferred from the General Reserve Fund. In 1956, there was a further increase to £425,000 by the creation of 1,130 ordinary and 120 employee shares of £100 each, and the capitalization of £100,500 from the General Reserve.
Two years later, another increase to £525,000 by the creation of 930 ordinary and 70 employee shares, and the capitalization of another £100,500 from the General Reserve to shareholders. In 1961, capital was brought by similar means, to £800,000; and in 1966 to £1,000,000. There were further such increases, and in December, 1971, by the creation of 2,000 ordinary shares and 500 employee shares of $200 each, and the transferal of $560,000 from the Profit and Loss Account to finance the issue, the Company’s capital was brought to $2.5 million.
Throughout these years, the business had been expanding and net profits before tax had been £97,250 in 1962 and £139,250 in 1963. In all of this, the offer or allotment of shares, whether to outsiders or employees of the firm, lay entirely in the discretion of the Governing Director. In the case of ordinary shares, precedence would clearly be given to members of the families of those in control of the Company and to select business and other associates. In the case of employee shares, offers were guided by status within the company, length of service, and personal assessment. Grace, Kennedy & Co., Ltd. was
still, in 1972, a family-owned and controlled enterprise.
On February 29, 1956, the announcement appeared in the Daily Gleaner:
Dr. John J. Grace, a co-founder of Grace, Kennedy & Co., Ltd., died in San
Rafael, California, U.S.A., on February 11. He was in his 88th year….
Widely known in Jamaica where he lived for over 20 years, Dr. Grace was held in
high esteem…. He was a director of various local companies until his retirement in 1947, and was also a local Justice of the Peace.
His wife, a son and two daughters survived Dr. Grace. But long before Dr. Grace’s death, the Grace family had divested all but about one per cent of their financial interest in Grace, Kennedy & Co., Ltd. When, in 1972, his son and daughters came as specially invited guests for the celebration of the Fiftieth Anniversary of the Company, the family already long established in control was the Kennedys. There was, however, change in the offing. As early as October 1968, Luis Fred Kennedy had raised the question whether Grace, Kennedy & Co., Ltd. ought not to open into a public enterprise. That was to happen several years later, but an outline of managerial changes between 1922 and 1972
is interestingly indicative of the changing order.
At first, the Company had been run by Dr. John Grace as Governing Director and his joint manager, Fred Kennedy. Then, with the death of Mr. Kennedy, his son, Luis Fred, had become a Managing Director. On Dr. Grace’s departure, Luis Fred Kennedy and James Moss-Solomon had taken over as Managing Directors, with the former as Governing Director and Chairman of the Board. The lists of Directors and Officers of the Company at April 1957 shows the early growth of the firm:
Directors: Governing Director: Luis Fred Kennedy
Directors Others: J.S. Moss-Solomon, H. H. Dunn, S.C. Alexander, Simon Soutar, G. L. Kamicka, G. E. Dodd & J. A. Kennedy
- Managers: J.S. Moss-Solomon & L.F. Kennedy
- Assistant Managers: S.C. Alexander & Simon Soutar
- Secretary/Accountant: G. L. Kamicka
- Cashier: A. F. Williams
When Luis Fred Kennedy was absent from a Directors’ Meeting in January 1962, the Chair was taken by James Moss-Solomon. By the late 1960s, however, Mr. Moss-Solomon was gradually withdrawing from leadership and, with Luis Fred Kennedy’s support, was promoting the influence of Carlton Alexander. In 1967, of the then six subsidiaries of Grace, Kennedy & Co., Ltd., Luis Fred Kennedy and Carlton Alexander each chaired the Boards of three. James Moss-Solomon was a member of the Board of one. In August 1968, when again Luis Fred Kennedy was absent from a Board Meeting of the parent Company, Alexander took the chair although James Moss-Solomon was present. In May 1970, Kennedy appointed Carlton Alexander to the position of Deputy Chairman. Thereafter, his policy- forming and managerial responsibilities were rapidly increased and when at the end of February 1972, James Moss-Solomon retired from the firm (but still remained on the Board of Directors) Carlton Alexander joined Luis Fred Kennedy as a Managing Director.
Local Expansions – 1951 to 1972
Between 1951 and 1960, though business was good, there was little in the way of new ventures but the Directors were moving towards the acquisition of Messrs. Sheffield & Co., a hardware business indebted to Grace, Kennedy. In August 1956, it was decided that premises at 8-10 Slipe Road, formerly purchased at auction by Grace, Kennedy & Co., Ltd. for £12,000, would now be resold to Sheffield & Co. for £16,000. At the same time, the Company would acquire 44,985 ordinary shares of £1 each in Messrs. Sheffield & Co. These would be paid for by the liquidation of £40,000 of Sheffield’s indebtedness
to Grace, Kennedy and the balance of £4,985 in cash. Then in June 1957, with Sheffield and Co. still in trouble, the Directors of Grace, Kennedy & Co., Ltd. agreed to sign a guarantee of £75,000 to cover a loan to Sheffield from Barclays Bank.
For a few years nothing more transpired except an increasing deterioration of Sheffield’s financial position due, in large part, to failure to collect receivables. By the beginning of 1967, Sheffield & Co. had been taken over by Grace, Kennedy & Co., Ltd. In January 1968, as Sheffield still struggled under the burden of uncollected debts, Robert McConnell was sent to take charge and to give high priority to collections. He apparently had more success than his predecessors did for, in August, the Grace, Kennedy Directors noted that Sheffield & Co. was now making a profit.
Nonetheless, outstanding debts were still high. Additional financing was necessary, so Barclays Bank was asked to extend the overdraft limit to £168,000, to be reduced by December 31, 1968 to £148,000. That having been agreed, the Directors subsequently turned their attention to finding warehousing space for the subsidiary. But Sheffield & Co. was not Grace, Kennedy’s first business acquisition. There had been another eight
On April 21, 1960, Luis Fred Kennedy as Governing Director of Grace, Kennedy & Co., Ltd. informed his Board of Directors that he had acquired for the Company the business of Cecil de Cordova & Co., Ltd. and asked their approval of his action. The transaction had followed an agreement between Mr. G.J. de Cordova and Luis Fred Kennedy. All the shares in Cecil de Cordova Ltd. were to be issued in the name of L.F. Kennedy who would transfer them to Grace, Kennedy & Co., Ltd. The total purchase price, about £150,000, would be borrowed from Barclays Bank with repayment to be completed over a period of seven years. The takeover had, in fact, been affected on April 19 and a deposit of £50,000 had already been paid to de Cordova.
Cecil de Cordova & Co., Ltd. was, like Grace, Kennedy & Co., Ltd., an importer and distributor of various goods, including provisions, with agencies for internationally recognized brands such as Del Monte in foods and Haig Whisky. It was an older firm, established in the late nineteenth century by Cecil de Cordova and Audley Solomon, but it was not one of the larger rivals of the ‘upstart’ and increasingly successful Grace, Kennedy & Co. Ltd. It may have been that Cecil de Cordova & Co. was unable to meet the increasing competition of more rapidly developing businesses, a circumstance which,
if real, would certainly not have escaped the notice of Luis Fred Kennedy.
Luis Fred’s brother, F.X. Kennedy, and D.F. Figueroa were sent to manage the newly acquired Company. By June 1961, all but about £300 of the purchase money had been paid. In January 1968, the Cecil de Cordova Company was reorganized and the business of Grace Agricultural Company, which had been attached to it after the takeover, was relocated as part of a new subsidiary, Grace Agricultural and Industrial Co., Ltd.
George and Branday, Ltd. was a large importing and exporting establishment with its own wharves. It held the agencies of shipping lines, insurance firms, and trading companies; but in the early 1960s, George & Branday was indebted. In mid-May 1964, the Directors of Grace, Kennedy & Co., Ltd.:
…. resolved that the guarantee to the Bank of Nova Scotia presented to the meeting, under which the Company guarantees to secure to the extent of £14,800 the indebtedness of George & Branday, Limited, to the Bank from time to time, be executed on behalf of the Company and that the Seal of the Company be affixed thereto.
And in the same year, Grace, Kennedy & Co., Ltd. purchased the entire shareholding in George & Branday. There was some immediate reorganization. The new subsidiary’s business was now restricted to shipping, produce (George & Branday had been considerable exporters of minor produce such as pimento, ginger, honey and dyewoods) and insurance, with the insurance operations of Grace, Kennedy being transferred to it. But indebtedness to the Bank remained for some time. In July 1965, the guarantee was increased to £18,684; by October 1968 it had been slightly reduced to £17,000.
The business strategy was clear and by no means unique to Grace, Kennedy & Co., Ltd. The aim of Luis Fred Kennedy was to expand and diversify the operations of the firm. The obvious way to do this was to acquire other companies which, though they might be in financial or other difficulties, were nonetheless judged to be basically sound, needing only financial and perhaps managerial assistance to restore a satisfactory measure of profitability. There were, however, two main sources of possible future difficulty; one
was misjudgment in the acquisition of what appeared to be a recoverable business; the other, the acquisition of a business with operations different from those traditionally carried on by the Company.
Grace, Kennedy had also established National Processors Ltd. in the mid-1960s. This was a subsidiary Company engaged in the production of non- food items, mostly cosmetic, prepared and packaged for foreign firms such as Cheeseborough-Ponds. By the mid-1970s, licences had been acquired to import raw materials and packaging for the production of Holiday Magic goods, and negotiations were under way for the manufacture of Bellrose products in Jamaica.
In March 1967, the Directors of Grace, Kennedy & Co., Ltd. and its subsidiaries were:
Grace, Kennedy & Co., Ltd.
- L.F. Kennedy, J.S. Moss-Solomon, S.C. Alexander, J. A. Kennedy, Simon Soutar, G.E.Dodd, and J. R. Bovell
Jamaica Rums, Ltd
- L.F. Kennedy, J.S. Moss-Solomon and S.C. Alexander
Grace, Kennedy & Co. (Shipping) Ltd.
- L.F. Kennedy, J. A. Kennedy, L. P. Scott, Ronald Rickards and F.X. Kennedy
George & Branday Ltd.
- S.C. Alexander, Simon Soutar, L.G. Bourke, E.G. Muschett, and H.M. Aarons
Cecil de Cordova & Co., Ltd.
- S.C. Alexander, Aubrey Grant (who had previously been a Director of Cecil de Cordova), Simon Soutar, H.M. Aarons, D.F. Figueroa, F.X. Kennedy, E. G. Muschett and P.J. Ayling.
Sheffield & Co., Ltd.
- S.C. Alexander, D. A. Moss-Solomon, E.G. Muschett, Bruce Rickards, D.F. Figueroa and H. M. Aarons
National Processors Ltd.
- L.F. Kennedy, S.C. Alexander, Simon Soutar, D.F. Figueroa, F.X. Kennedy, P.J. Ayling and H.M. Aarons.
In the processing of foods, Grace, Kennedy & Co., Ltd. were dependent on local
producers who canned produce to be marketed under the Grace label. In February 1967 Luis Fred Kennedy proposed to his Board that the Company take a financial interest in Jamaica Canners, a factory operated by Mr. Ian Sturdy:
…. who is producing canned goods for us. Such an investment would give this Company a better control over products bearing the Grace Brand and would also provide for the continuity of production.
Following discussions with Ian Sturdy, a proposal was made that Grace, Kennedy & Co., Ltd. should join with Bryden & Evelyn, Ltd. in a negotiation to purchase another local canning business, Quality Foods Ltd. If the deal went through, that operation would be transferred to Sturdy in return for shares in his company. As a result, Grace, Kennedy would acquire the desired financial interest in Jamaica Canners and also a second factory to produce canned gods. This proposal, however, made no headway.
Discussions with Ian Sturdy continued until, in mid-January 1972, Kennedy informed his Board that Sturdy wanted a decision about the purchase of his business by the end of the month. The auditors had reported that a price of $1million would be acceptable, and the Directors agreed that, subject to Ian Sturdy providing a satisfactory balance sheet for 1971, the deal would go through. Jamaica Canners, Ltd. was finally acquired by Grace, Kennedy at the beginning of April 1972. Luis Fred Kennedy’s view that the acquisition would provide continuity of production would now be tested against conditions over
which Grace, Kennedy & Co., Ltd. had no control, namely, a continuing sufficiency of supplies of raw produce to be canned, and of the cans into which it would be put.
In January 1968, Mr. O. Simpson of Western Meat Packers, Ltd. in Westmoreland,
enquired whether Grace, Kennedy & Co., Ltd. would be interested in investing in his meat-processing plant. After prolonged investigations and negotiation, the business was finally acquired in January 1970. Mr. Simpson’s shares were bought for $20,000, and the shares of small holders who wished to sell were also acquired. The new subsidiary’s Board of Directors included L.F. Kennedy, S.C. Alexander, L. P. Scott, F.X. Kennedy and E. Nelson. Appointed, as Secretary of that Company was Rafael Diaz.
Processing meat products was an enterprise, which presented more problems than canning garden and orchard produce. In September the Company was showing a loss of $270,000 on operations since the beginning of 1969. The management was reorganized. A technical expert was to be sent out by Zwanenberg Fabrikien in Europe to take charge of manufacturing and to train local personnel. Labour problems followed as unionized workers opposed certain managerial changes. In January 1971 the factory was to be reopened after an annual vacation closure which had begun before Christmas; new employees had replaced the previous work force; and there was to be another managerial change. Losses for 1970 were said to be about $400,000. By early March, production had been recommenced with newly overhauled machinery; two Irishmen had been brought in as Factory Manager and Supervisor of the slaughter-room where it was aimed to reach a daily slaughter of one hundred pigs. A new labour contract to expire at the end of the year was signed with the Union. However, in November there were still problems. F. X. Kennedy, who had been sent as Manager in January, was ill and a replacement had to be found for 1972. The business was still operating at a loss. A labour strike of three weeks
had resulted in considerable spoilage. Apart from that, production of some lines had been unsatisfactory in quality and had therefore been withdrawn from the trade; and the Jamaica Congress of Labour was said to be making ‘excessive’ demands for 1972. At the end of 1972, the factory still showed losses, but in September of that year Western Meat Packers had become Grace Food Processors Ltd. (Meat Division) to distinguish it from its associate, Grace Food Processors Ltd. (Canning Division).
Imports and exports touch on shipping, wharves, port services, warehousing and cold storage. In 1956, Grace, Kennedy & Co., Ltd. had acquired the entire shareholding of the agency, Messrs. Grace Shipping Co., Ltd. In 1963, the share capital of the Company was increased to £31,000, the name was changed to Grace, Kennedy & Co, (Shipping) Ltd., the Steamship Agency Department was transferred to this Company, and Barclays bank was requested to open an account in its name. Also in 1963, Grace, Kennedy & Co., Ltd. took shares in Port Services Ltd., a company formed to undertake stevedoring operations,
and were appointed to manage that business. A year later, in July 1964, a Grace Line Ship, the Santa Paula, brought in the largest shipment of television sets yet to arrive in Jamaica for the island’s television service which was to begin on the fourth of August.
On October 10, 1966, the Gleaner reported:
Business in domestic food crops worth about £250,000 a year is to be done between the British West Indies Produce Inc. of New York and the local Agricultural Marketing Corporation, beginning Saturday. Agreements have been entered into by which the A.M.C. is to supply the U.S. corporation with 20,000 crates of yams from now to April next, some 400 crates of sweet peppers weekly, hundreds of cases of pumpkins, as also cocoas, plantains, breadfruits, mangoes, and other items. The first of the shipments was made on Saturday when the S.S. Santa Rosa, one of the Grace Line ships calling at Jamaica regularly, loaded 400 crates of yams, among other produce items, for delivery to
the B.W.I Produce firm in New York.
It was a glorious pipe dream, one of the kind which perhaps prompted Bruce Rickards to remark four years later in Montreal:
It is a waste of time for Bruce to go down to the Islands and get orders for various things and then we can’t supply. I think eventually when he goes down to the Islands the people will run him out of the business.
It may also have prompted Grace, Kennedy later to try what others had yet failed to do, namely, produce winter fruits and vegetables in quantity for export to colder climes.
In early 1967, Grace, Kennedy & Co., Ltd. were appointed Managers of Harbour Cold Stores Ltd. and of dairy Industries (Jamaica) Ltd., a joint enterprise in which they were associated with the New Zealand Dairy Board, Adolph Levy & Bros., Bryden & Evelyn Ltd. and T. Geddes Grant Ltd. for the packaging and marketing of dairy products in Jamaica. In February 1970, Grace, Kennedy purchased the land occupied by the Boulevard Theatre, something over six acres, with the intention of moving two of its subsidiaries (Cecil de Cordova and Sheffield) there; but eventually they sold the site to Dairy Industries (JA.) Ltd. The need to find new locations for the subsidiaries was brought about by the 1968 Government purchase, of the Princess Street, Orange Street, and South Street wharves from Kingston Wharves Ltd.
Wharves were among Luis Fred Kennedy’s main business interests. In 1967, as managingDirector of Kingston Wharves Ltd., he appeared before the Port Authority to substantiate a request for higher wharfage rates. The request was supported by Mr. Charles DaCosta, Managing Director of Western Terminals Ltd. Luis Fred Kennedy dealt first with the labour situation on the wharves. He described the much- improved conditions of employment, which now included vacation and sick leave benefits and a proposed pension fund to replace the existing superannuation scheme. These, he said, together with other improvements arising out of a new labour contract signed in October 1966, had put the port workers on a ‘human basis’, giving them a security they had not previously enjoyed, and leading to far better performance on the job. There was now, he claimed, mutual confidence between labour and management. Nonetheless, severe congestion on the wharves, a long-standing condition, caused inefficiency in moving cargo and difficulty in locating individual consignments; it also reduced the tonnage, which could be handled.
Facilities at the newly constructed Newport West now allowed Kingston Wharves to operate nine berths; six at Hanover Street, Royal Mail, and No. 1 Pier, and three at Newport West. However, before Newport West had been established, Kingston Wharves had used twelve berths with a much greater total of wharf area. He argued that on the reduced tonnage handled, wharfage rates should be increased so as to allow operations to produce sufficient revenue to provide a reasonable profit. While congestion reduced earnings, higher wages and salaries increased costs. Kingston Wharves, he testified, in
terms, which as reported by the Gleaner were at best imprecise, ‘had showed a loss for the last financial year as its anticipated profits had not been realized’. He argued that wharfage rates should be based on the true costs of handling the various commodities.
In addition to the various enterprises already mentioned, Grace, Kennedy & Co., Ltd. in this period held other managerial and distribution agencies and was extending its insurance business. In August 1967 the Board of Directors was reminded that Mr. E.G. Muschett had previously suggested that Grace, Kennedy & Co., Ltd should set up its own insurance company. Luis Fred Kennedy had, since then, discussed the matter with the Provincial Insurance Co. in London, and it had been decided to do a feasibility study. In May of the following year, a move began for the formation of Insurance Holdings Ltd. This would be a parent company, holding George & Branday Ltd. and United Reliance Co., Ltd., a firm owned by Messrs. Bolton and Muschett. United Reliance shares held by them would be purchased for £5,000, and they would be given an option to buy shares in Insurance Holdings Ltd at par within five years and not exceeding 10 per cent each of the equity. Then, in January 1969, it was decided to form a third company under the aegis of Insurance Holdings Ltd. This would be Allied Insurance Brokers Ltd., and the advantage would be that, as a brokerage company, they would be able to place insurance with any other company. Moreover:
Thought was still being given to the formation of our own Insurance Company as soon as our premium income reached a sufficiently high level.
Finally, in this period, another company, Gamble & Davidson, Insurance Brokers Ltd. was established to take over the insurance of R.S. Gamble & Son Ltd. and Davidson Insurance Brokers Ltd., the latter being a member of Grace, Kennedy’s Insurance group. Through Insurance Holdings Ltd., this new company would be a subsidiary of Grace, Kennedy & Co., Ltd.
Expansion Overseas – 1952 to 1972
Luis Fred Kennedy announced to his Board of Directors in February 1952, his intention to open a branch in Canada. The wholly owned subsidiary, first sited at 437 St. James Street West in Montreal, would be known as Grace, Kennedy & Co. (Canada) Ltd., and its total capital of $50,000 would be entirely provided by the parent company in Kingston. The manager would be Mr. James Wolfe, of German origin. He had been resident in Jamaica in the 1930s until he had moved to Canada on the outbreak of World War II. Luis Fred Kennedy anticipated a profitable business growing out of the Commonwealth connection, preferential tariff agreements, and the post-war return to normal trading patterns. His hopes were not immediately realized. In April 1956 he reported trading losses of $20,000, a substantial figure in view of the $50,000 shareholding. At that time, the manager was a Mr. Skelton who had taken over following the death of James Wolfe. His assistant was a Mr. Berries Terfloth who had been appointed
in 1955. Boerries Terfloth, whose family had been in the food import business in
Germany since 1774, had migrated to Canada in 1953 and was in Edmonton when Grace, Kennedy & Co. (Canada) had advertised the post of Assistant Manager. His trading abilities were soon recognized and, following a visit to Montreal by Mr. G. L. Kamicka of the parent company, he was invited to Jamaica for discussions. There followed a familiarization tour of British Honduras (as Belize then was) and the Caribbean, during which there were many meetings and some new trading agreements such as that for a supply of Welch’s Grape Juice to customers in Montserrat. The financial condition of the Canadian subsidiary soon improved as a consequence of Boerries Terfloth’s indefatigable
search for business. By April 1957, shortly after his appointment as Manager, the
company was paying its way by meeting all its running costs.
There was little moving through the subsidiary between Jamaica and Canada. The subsidiary held the agency for Pickapepper Sauce and a brand of guava jelly. Its first Canadian exports to Jamaica were maraschino cherries, canned Vienna sausages, bacon, tomato ketchup, and apple juice. Grace Kennedy & Co. (Canada) looked elsewhere for trade: shirts from Hong Kong for the Canadian Market; Canadian produce for the European market; anything, anywhere to build the business of the new trading company.Meantime, of course, Grace, Kennedy & Co., Ltd. in Jamaica maintained their long established trading links with other Canadian suppliers.
Following a meeting in Montreal in 1958, Luis Fred Kennedy agreed to open a branch of Grace, Kennedy & Co. Ltd. in Europe. Boerries Terfloth went immediately to find the most suitable location, and the new subsidiary was launched in that year in Rotterdam. The pace of business was exemplified in the first order placed from a telephone booth (because no offices had yet been secured) for supplies of Canadian counter flour obtainable at lower prices than those prevailing at that time in Rotterdam. In 1962, Grace, Kennedy & Co. (U.K.) was opened in London. As had been the case in Rotterdam, business was brisk from the start. A long spell of cold weather affected the harvesting of vegetable crops in Britain. The new subsidiary brought in canned carrots and potatoes
Early in 1965, the Gleaner carried a report of plans by Grace, Kennedy & Co., Ltd. to expand exports of canned vegetables, fruit and fruit juices to Britain and continental Europe. At the annual meeting of local and overseas managers, there had been much discussion of the ways by which sufficient quantities of such products might be secured. (Not until February 1967 would discussions with Ian Sturdy of Jamaica Canners begin). Among those present at the meeting were Richard Kuhne, Manager of Grace, Kennedy & Co. (Europe), N. V. Rotterdam; Mr. Claude Hesseltine, Manager of Grace, Kennedy & Co. (U.K.) Ltd; Boerries Terfloth, Vice-President and Manager of Grace, Kennedy & Co., (Canada) Ltd; and Carlton Alexander and James Moss-Solomon, managing
Directors of the parent company. There can be little doubt that even at that early meeting Boerries Terfloth’s guiding precepts were enunciated. Opportunities for mutually advantageous trading exist everywhere. However:
- all such opportunities must be researched and investigated;
- any transaction must be negotiated to the satisfaction of each party as to quality,payment terms, and delivery;
- all financial arrangements must be secure;
- goods must be supplied in the expected quantity, quality and condition, and with all the necessary documentation to ensure movement and the transfer of ownership.
These precepts, as we shall see, have not always been observed.
In February 1967, it was decided to open yet another subsidiary, this time in Trinidad, as a means of establishing the Grace Brand in the other West Indian territories. The estimated capital required was about £25,000. The prospective manager was sent from Trinidad to Montreal to observe the operation of that subsidiary and to have discussions with Boerries Terfloth. This venture was soon abandoned ‘as a result of certain information’ having been brought to the attention of the Board of Directors of Grace, Kennedy & Co., Ltd.; but it brought to the fore a matter of great importance, namely the use of the Grace trademark.
Following the February 1922 take-over of the local W.R. Grace branch by Grace,
Kennedy & Co., Ltd., the new company had been permitted to use the Grace trademark in Jamaica. This permission, however, did not include the overseas subsidiaries whose businesses by the mid-1960s was becoming increasingly substantial and in need of the protection of a registered trademark. Boerries Terfloth sought a suitable brand name and decided to use ‘Grace’ for two major but quite different reasons: it carried the association with Grace, Kennedy & Co., Ltd., the parent company in Jamaica; and, where that would be of small significance to distant consumer populations, the name could well conjure up a vision of the then widely popular and delectable film star, Grace Kelly. Later, the design of the Grace brand, like Miss Kelly, carries a small crown. The first use of the Grace label overseas was on a shipment of cherries from Canada to Germany. The later logotype bearing the crown was first used on supplies of lobster, also from Canada to Germany where the label became well known. People the re still refer to ‘Crown Lobster’. In Jamaica, Mr. Arnold ‘Junior’ Foote was much involved in the creation of successive logo designs and advertising slogans.
In the meantime, W.R. Grace in New York had raised objections over the use of the Grace label in territories other than Jamaica. Early in 1967, Luis Fred Kennedy arrived at a tentative agreement with W.R. Grace for the continuing use of the trademark by the overseas subsidiaries. Discussions went on for many months until finally, in December 1969, the Grace trademark was registered in the United States.
The Corporate Structure and the Staff
At an Extraordinary General Meeting in late 1967, Grace, Kennedy shareholders were informed that, following the passage of a new Companies Act, the Articles of Association of Grace, Kennedy & Co., Ltd. would have to be amended. Under the new Act, no privately owned company could have more than twenty shareholders who were not employees of the company and still retain its status as a private company, under no obligation to publish its accounts. Consequently, company directors could now refuse to register a shareholder if by so doing the number of non-employee shareholders would exceed the permitted limit. At the same time, Luis Fred Kennedy introduced three further
amendments particular to his Company. They were:
a) To abolish the post of Governing Director whenever the then holder of the post should vacate it, by resignation or by death. At that time, the shareholders would proceed to elect a new Board of Directors, consisting of ten members. Five of these were to be elected by the preference shareholders, and five by the ordinary and employee shareholders. (the distinction was, however, clouded by the fact that preference shareholders also had ordinary and in some cases, employee shares as well). No Managing Director, however, would be required to relinquish his post before the operative contractual arrangement expired.
b) A Trust would be set up to acquire employee shares as they became available. These would then be sold as directed by the Board of Directors.
c) On any issue of bonus shares, preference and ordinary shareholders would receive only ordinary shares: employee shareholders would receive only employee shares.
By the end of that year, the Trust dealing with employee shares had been established. Its first Trustees were Luis Fred Kennedy, Carlton Alexander, James Moss-Solomon, José Kennedy and Eric Chin. Before another year had passed, the possibility of Grace, Kennedy & Co., Ltd. going public at some future date had been raise by Luis Fred Kennedy.
The first real sign of concern about the problems of corporate structure and managerial control which developed as the Company extended its range of operations appeared in June 1969 when in an attempt to deal with such problems, Luis Fred Kennedy formed a special Committee to manage the operations of the Grace Group of Companies and to submit recommendations to the Board of Directors for approval. Its members were L.F. Kennedy himself, S.C. Alexander, H.M. Aarons (who in August 1960 had succeeded G. L. Kamicka as Secretary to the Board), L .P. Scott (who would take over from Kennedy in 1970 as Chairman of the Board of Port Services Ltd.), F. X. Kennedy, E.G. Mordecai
and B. Rickards.
Less than a year later, Luis Fred Kennedy introduced another managerial arrangement. A Director was made responsible for each of the six divisions of the Grace Group, which now were identified as:
a) Trading Companies
b) Insurance and Real Estate
c) Shipping and Wharf Operations
e) Overseas Operations
f) Financial Operations
In order to facilitate this arrangement, Kennedy invited four new members to join the Board and appointed Carlton Alexander to be Deputy Chairman. The new members were L. P. Scott, E.G. Muschett, F.X. Kennedy, and Boerries Terfloth. The latter had asked to be allowed to purchase shares in Grace, Kennedy & Co. (Canada) Ltd., for which it was necessary to appoint a Board of Directors meeting in Canada. However, Kennedy rejected Boerries Terfloth’s request to purchase shares in the Canadian subsidiary and offered him instead an opportunity to acquire shares in Grace, Kennedy & Co., Ltd. Terfloth refused the offer and restated his preference to hold shares in the Canadian
Company. There seems to have been nothing personal in Kennedy’s early unwillingness to yield to Terfloth’s request for he was, at the same time, refusing a similar request from his recently appointed Board member and Director of Insurance, E.G. Muschett. Terfloth’s insistence was based very simply on the fact that his main efforts had been directed to the development of the Canadian and other overseas subsidiaries, and that was where his first interests lay.
In January 1971, Kennedy yielded a little. He proposed that Terfloth should hold 10 percent and Grace, Kennedy & Co., Ltd. 90 per cent of the equity of the Canadian Company. Terfloth refused and in September 1971 he announced that he had no further interest in acquiring shares in Grace, Kennedy & Co., (Canada) Ltd. Earlier in that year his father had died and, after the settlement of his affairs, Boerries Terfloth found himself with the means to set up his own business if he chose. It was not that he wished to leave the Company he had built up; but he would continue in it only as an equal shareholder. The balance of pros and cons clearly lay in his favour. In the event of his leaving, Grace, Kennedy & Co., Ltd. would lose in him a skilled and highly successful trader and meet certain delay and failure in the search for a successor of equal competence and proven loyalty. In the likely consequence of declining business they might also have to face a resourceful and energetic competitor in Canada. By December 1971, Carlton Alexander and J.L.R. Bovell had met Boerries Terfloth in London and had drafted a Shareholders’ Agreement giving equal participation to Terfloth and Grace, Kennedy & Co., Ltd. in the Canadian Company and in the ancillary Employment and Trademark Agreements. It had been the only sensible thing to do.
Like other enterprises in the 1970s, Grace, Kennedy & Co., Ltd. would meet new and serious problems but one old one, which would be much aggravated, was that of efficient managerial controls in a rapidly expanding organization. Grace, Kennedy & Co., Ltd. had no great experience in the export business. Bruce Rickards, addressing a Grace Conference in Canada in 1970, remarked:
I understand that we are probably looking for an export manager. We have been looking for years, but this is not a bird that is very handy in Jamaica, because Jamaica never has really done too much serious export, and any other Companies that are exporting and have been exporting for years, have external export managers…. So we will have to develop from our side a proper export business, have prices and products and information ready and available at all times before we can hope to go any further.
There had, of course, been a good deal of very serious export from Jamaica of traditional agricultural staples, but, as Bruce Rickards stressed, Jamaican merchant-houses had not been much involved. Their experience was in import and local distribution. Three years before, Grace, Kennedy & Co., Ltd. had noted the need to have an Export Department with a manager in charge of export business. They had not yet succeeded, but in May 1970, as part of a general corporate restructuring, an Overseas Operations section was established with a Director responsible for it.
Another problem arising from expanding business began to show clearly at about this time. This was the need to find an effective relationship between the Merchandising Division, responsible for putting Grace products and other distributed goods on the market, and the Divisions responsible for producing and preparing suc h goods and products for marketing. The figures arrived at in working on budget control for the Merchandising Division in April 1970, and put before the Board of Directors indicated that a ‘relatively small number of items were responsible for the bulk of sales’.
In announcing managerial changes in the following July, Luis Fred Kennedy noted that the Merchandising Division then needed both a General Manger and an Assistant Accountant. He asked his fellow Directors to give some thought to the filling of these posts. There were other more lasting and important problems of management and as early as 1967 Grace, Kennedy & Co., Ltd. had begun to send employees on training courses in Jamaica and, later, abroad. At first, such opportunities were given to people in, or being prepared for, managerial positions. In 1967, Peter Moss-Solomon had been articled to Price, Waterhouse, the Company’s auditors, and F.X. Kennedy was sent to the Canadian Imperial Bank of Commerce for six months. Both continued on full salary and remained
on the Grace, Kennedy & Co., Ltd. payroll. The later plan was to broaden the training scheme to include other categories of staff and a Canadian firm was engaged to send representatives to carry out aptitude tests. In general, the Company’s staff policies were formulated to win the loyalty and long service of employees. Luis Fred Kennedy, who was said to be a demanding but considerate employer, had from time to time authorized salary increases all round to meet rising costs of living. Since 1952, a non-contributory Group Life Insurance Scheme had been implemented based on an insurance cover of
approximately one year’s basic salary within an approved graduated scale; free medical attention had been introduced soon after. Later the system of Employee Shares and the Employee Investment Trust were established.
By 1972 it was time for a fête. Grace, Kennedy & Co., Ltd. would be a half a century old on February 14, and growing rapidly. Celebrations on February 19 and 27 were reported in detail in the Gleaner. Monday, February 14 was marked by a cocktail party at the Terra Nova Hotel where, at a large gathering headed by H.E. the Governor General, Sir Clifford Campbell, the Directors of the Company and members of their families welcomed guests from overseas including Mr. John Grace and the Countess Alicia DeBrosses, son and daughter of Dr. John Grace, as well as Managers of the overseas subsidiaries, and leading members of Government and the private sector. The Jamaica Military band provided the musical background.
At an even larger gathering at the National Arena on the evening of Saturday, February 12, forty-six employees of Grace, Kennedy & Co., Ltd. had received long-service awards for periods ranging from fifteen to fifty years. The Governing Director, Luis Fred Kennedy, was the main speaker. There was additional reason for celebration, he announced, for in 1971 Grace, Kennedy & Co., Ltd. had achieved a record sales figure of $85 million. He spoke of the founding of the Company by ‘two men who had complete confidence and mutual respect for each other’, and their dependence on all the workers involved who were expected to establish a tradition of ‘complete integrity’. Special mention was made of the recipients of awards, among them was James Moss-Solomon
(50 years), Carlton Alexander (39 years), Geoffrey Dodd (38 years), and, though only 12 years with Grace, Kennedy & Co., Ltd., Mr. Aubrey Grant who had given 37 years, including his long service in Cecil de Cordova & Co., Ltd. before it was acquired by Grace, Kennedy & Co., Ltd. in 1960. Not far from the top of the list in length of service were Mrs. Rita Espeut (20 years), Mrs. Hyacinth Hill and Mrs. Marian Paisley (28 years each) and Mrs. Faustine Sharp (27 years). Mrs. Kennedy, wife of the Governing Director, presented awards. Mr. Arnold Foote was the Master of Ceremonies.
At the end of February, James Moss-Solomon retired from the firm. So too did Geoffrey Dodd and Aubrey Grant. At the beginning of December, Luis Fred Kennedy announced that for reasons of ill–health he was giving up the Chairmanship of the Company’s Executive Committee, and the Chairmanship of any Subsidiary or Managed Company held by him. Carlton Alexander was to take over as Chairman of the Executive Committee and report to Luis Fred Kennedy who would still be Chairman of the Board and Governing Director. The structure of the Executive Committee would be revised early in 1973 following the advice of an expected Management Consultant.
The celebrations marked the beginning of the end of an era. The retirement of James Moss-Solomon, who had been a bulwark of the Company since its inception, and the beginning of Luis Fred Kennedy’s withdrawal from his place of supreme command for over twenty years were to bring fundamental change. There is a clear distinction between a ‘family- firm’ in the sense in which Grace, Kennedy & Co., Ltd. had been established and carried through its fifty years; and, as was now developing, a firm in which all employees would be encouraged to feel that they were members of the ‘firm- family’. The transition had indeed already begun, for while Luis Fred Kennedy was, and, for some
years yet would remain, the indisputable head of the ‘family-firm’. James Moss-Solomon had for some time past found implicit recognition as the head of the embryonic ‘firmfamily’.