Barbara Ellington, Lifestyle Editor
Matthews: Monopolies everywhere are disliked. But you must achieve respect and customers must believe you work hard and have integrity.
IF 12-YEAR-OLD Charles Matthews had picked up his bag and returned home cowed by his teacher's racist remarks on his first day of junior high school, his life may have been different today. There were only two blacks in the class of 40, his knees were shaking and he did not want to be there.
And as if that were not enough, staring directly at the only two black children, the teacher said: "I know there has been talk in the newspaper about segregation, but this is my opinion. God created all of us and when he made us out of clay, He told everybody to go to the rivers and cleanse themselves. The smartest people went first, jumped in and washed off. By the time the dumb people got there, there was only enough water to clean the palms of their hands and the soles of their feet."
The words hit hard and young Charles thought it was going to be a long year, because the teacher also revealed that he was from Mississippi and a member of the feared Ku Klux Clan (KKK). Surprisingly, he did not bother the boys after that.
OPEN DOORS
Today, Charles Matthews, who is from Macon, Georgia, is the African American head of the Jamaica Public Service Company (JPS). He was sent here to head up Mirant Corporation's newly-acquired asset five years ago, and it has been a roller-coaster ride ever since.
He looks back on the childhood experience that helped to shape the man he is today. The incident came at a time when in the mid-60s the American Supreme Court ruled that no student could be denied the right to attend the school of his/her choice. It opened doors for many, and once that ruling came out, some people living in segregated neighbour-hoods volunteered to be bussed to schools in other communities.
The Matthews children did not have a choice - their father made them take the public bus to schools in white neighbourhoods where there were better schools. That happened for both junior and senior years. The experience taught the self-styled liberal corporate executive well.
Mr. Matthews is married, and the father of two sons; he relaxes by playing golf.
BE: When did you know that you wanted to follow a career path in business?
CM: I was influenced by my father, who was a civil servant with government after serving in the U.S. navy. He did everyone's taxes part-time. Seeing everyone come to him when they had business-related or numbers problems gave me an early interest. I went to Talladega College - a small black liberal arts college in Alabama.
There was no business programme, but they offered economics. I was torn between business and law, so I did the latter as a minor. I was a solid B+ but that's where I developed my social skills.
I went to Clark Atlanta University for graduate studies. It was the number one graduate school for black MBAs in the '70s. Bank of America came to recruit one black student to take to California for summer internship and I was chosen. I was recruited following the summer and got a good offer, but banking did not pay a lot and cost of living was high. I returned home and reviewed other offers.
OPPORTUNITY DURING EMBARGO
I went to work with Exxon in New Orleans, having made the decision to be close to family. Exxon was a hiring machine for black MBAs at the time. I started out doing oil and gas accounting; then financial analysis and got a chance to see how a big company was run. I learnt that systems are key to efficiency when you are that big. Good processes and controls were important at Exxon.
I went there in '81, oil prices were falling to the US$40s following the embargo; by '82-'83 it fell to the US$30 and 1985 it was US$11 per barrel. A massive redundancy programme started; anyone who wanted to walk and take a package could.
I had two weeks to make the second biggest decision of my life. I decided to move back to Atlanta without a job; I married Brunetta whom I had met in New Orleans and I identified a job in corporate finance because I had no interest in accounting. At the time in America, if you wanted to be on the fast track, it had to be corporate financing.
Southern Company finally called me; they needed someone with contract experience and wanted me to do auditing. The one-hour interview lasted for four, during which I talked myself into the corporate finance job. The problem is, there was no immediate opening. In my down time, I had acquired a stock-brokers' licence, but I got started in the public utility business. I fitted the profile of someone to groom to move up the ladder.
There I met and worked with the past president and CEO of Mirant Corporation. I met many others who moved up the ladder because we did all the economic analysis for all operating companies from Alabama Power to Georgia Power and I got to know everyone in the system.
BE: What year was this now?
CM: In 1992, I went to Georgia Power to work on a special project for six months, then moved up to the CFO's assistant, then I went to work at the regulatory affairs (equivalent of the Office of Utilities Regulation OUR). At that time I was the first black to work in corporate finance, regulatory affairs - and this was the '90s! After two years I moved back to Southern Company's unregulated division. I helped develop strategy, and a year later I became assistant to the senior vice-president for external affairs for eight months. All of my previous jobs lasted less than I have been at JPS.
BE: Why then have you stayed in Jamaica?
CM: I may be running out of places to go, but the further up you go, things will slow down. I had been approached to do interna-tional assignments before this one and I refused. I also said no to Jamaica, initially having been here on a cruise ship before. I saw it from a tourist's viewpoint and did not think I would like Kingston. Violence was a factor too. I spoke with a Jamaican friend in Atlanta who asked for my impression. I told him about crime, poverty, unemployment and other factors such as the ruthlessness of the Jamaican gangs I'd read about while in America.
BEST PLACE TO BE
On the cruise ship stop in Kingston, people were told not to get off, so I had formed an opinion based on what I had read and heard about Jamaica. My friend advised me to come, because having heard about the worst, he told me Jamaica was also the best place to be and with the right opportunity.
I came and saw that things were a lot more progressive than in the U.S. Virgin Islands where I'd also been offered a post. I looked at the housing market that was a lot better than theirs. It was small and quiet, Kingston was vibrant. My family was comfortable with it and we came.
BE: And now?
CM: I am very comfortable here, and comfortable with where JPS is now. I feel good about what it is now. My one disappointment is that we still have a lot to do in customer service, but we're on the right track. We have done some things over the last six months to improve and we will get there.
Jamaica is a lovely place, and my family loves it here, but the price of our product is still too high. I'm disappointed that we have added capacity and a reserve margin as well as improved reliability, but price is still too high to the consumer.
BE: But having worked in the industry in America, you know you have no control over oil prices?
CM: That's why it's a disappointment because I know that it will fix itself. The journey is not complete. The question is, do I want to be here to go the full journey? At some point I have to ask that because the five years have been intense and demanding. The pace started slow with everyone. The question manage-ment and staff should ask is whether they are giving it enough energy every day to effect necessary change. We're not there yet, but I've fulfilled my goal to put JPS on track to restore reliability, profitability to establish a new regulatory framework. Key decisions still have to be made.
One thing I have not done is take JPS public and intended to do so but the last two years have been hectic.
BE: Mirant Corporation has turned the corner from Chapter 11 status. Recent newspaper headlines say Government is willing to unload its stake in JPS. Is Mirant interested in buying it?
CM: We have not discussed it. When we acquired it we said we would wait for the right time to take JPS public. We began our review last year in earnest and decided it would be best strategically if we did some refinancing of some of our long-term debt. Right now the stock market is not very encouraging, but we are still committed to going public. We can benefit most by having the ownership spread to all Jamaicans. I believe that if JPS goes public it would do well. Our balance sheet is strong.
BE: Did any other U.S. company make overtures re partnering with Mirant, and have all parties agreed on a timetable for sale of the rest of the shares?
CM: Not since the initial stages. We would not encourage that. We had discussions last year and there is an understanding. The time has to be right, we have that obliga-tion. But there is a lot that could happen. The stock market is going to get better and we would prefer to wait for that. To see an IPO would be incentive for me to stay beyond my current contract period, but at the same time you sacrifice a lot making moves up the corporate ladder and then you wake up and realise you are in a position to capitalise on them. I feel almost obligated to pursue some of those opportunities as rewards.
We like Jamaica and there's more to be done at the JPS, but there are opportunities out there and I think I would be doing my family and others an injustice if I did not grasp them. I feel obligated to do that; it's bigger than Charles.
BE: All public utilities that are monopolies are seen by the average consumer as the enemy. You came in at a time when JPS was at a low, you had to effect the turnaround; you faced the challenges of Mirant's Chapter 11 woes and increasing oil prices. How have you weathered those challenges?
CM: I have put in lots of long hours and made sure I clearly understood what the challenge was and devoted the first two years trying to learn. Conceptually, I knew about running an electric utility company, but there were things I never knew about Government agencies at work or the mindset created by their entities, the psyche of the Jamaican consumer. I became a part of all the community and I learned. So I became comfortable that I knew what the challenge was.
That caused me to realise that my expectations and goals would have to be revised in the first five years because the worse mistake is to set unrealistic expectations. We had invested US$200 million on a new plant and trying to build a new cultural environment from the one that was not keen on accountability, it was heavily unionised, were involved and I changed my plan.
Then came Mirant's problems and fuel prices mounted. Fortunately, I had two years to start putting in a good support team. We did a gradual transformation and we weathered the challenges. I gathered a support team of smart productive people who bought the vision and worked together. My job has also seen me in the chief recruiting role and I have to be a delegator of all except the vision. Now we are encouraging these people to surround themselves with good teams.
BE: What have you found to be the main difference between a Jamaican and American attitude/approach to business?
CM: Discipline that comes with a strong system of internal controls. Stringent performance management systems tied to productivity and accountability. I am not saying it's better outside of JPS; I don't know that the gap is as wide for every business in Jamaica. Monopolies everywhere are disliked. I worked for monopolies before; a realistic expectation is not to be loved. But you must achieve respect and customers must believe you work hard and have integrity.
BE: I think that one of our problems is that we have not yet grasped the fact that the world will run out of oil and overconsumption will lead to high bills. As a responsible utility company owner, would Mirant assist Jamaica to aggressively move towards greater use of solar energy, for example?
CM: If there was one product I would push it would be solar water heaters. That makes dollars and sense.
Even at US$70 per barrel, that is still the most cost-effective versus wind and solar. Once you talk about wind and solar, it will be cost-efficient if you are willing to go without power as part of the remedy. When the wind stops blowing, there is no power. We now get 21 megawatts from the Wigton Windfarm but in the off-peak days you get six or none. To get 100 per cent reliability, you would need three windmills for every every megawatt of demand. No one tells that story. The wind is free, the windmills are not.
The payback for solar lights is about 15-20 years; for solar water heaters, it's about less than two years. In the long term it pays off. Green energy is not cheap, even though that would be perfect for environmentalists. What JPS or Mirant has to do as a legacy is to move JPS to lead in the area of fuel diversification. That will be expensive and require cooperation of private sector and other agencies. Coal or natural gas is a huge investment.
BE: Having lived here for five years, give me your take on the situation with crime and violence and what you think it will take to decrease it.
CM: I have been on a see-saw where my thoughts are concerned. I was up when I first arrived because it was not nearly as bad as I envisioned. Somehow the numbers did not reflect the mood, so I felt good and got comfortable because crime was concentrated to a few silos. Then I felt bad because I realise it was elsewhere too. I come from the United States and I know that crime may start at the bottom, but the best time to fight it is before it moves into other neighbourhoods. If crime is allowed to remain in any silo, there is no way to control it.
Once I realised it was not just in a few parts, I felt bad because I knew it would only be a matter of time before it spread. Then I felt good when I saw the initiatives and tough decisions of the Security Minister. The problem is that if you go back to the late '80s to early '90s when all the major U.S. cities were having massive problems with drugs and gangs, just before things got better it got worse. It gets that way once you take away some of the avenues available to criminals. I feel good; even though I don't like the numbers, things will eventually get better.
I tell people that same thing about JPS; things did not get to where it was overnight. It came from a lifetime of wrong work environments, expectations, controls, discipline and customer habits that were wrong. It is entrenched. To change things like that takes prolonged work. We just need to become united in the fight against crime, challenge each other.
BE: What's been your biggest career surprise?
CM: The international assignment, because when Mirant's people started calling me about my interests I told them no initially. Six months later someone told me the key to getting on the fast track in corporate America is with international exposure. The following week, I got another call from Mirant who wanted someone who fit my profile for the Caribbean. If someone had told me I'd go from New Orleans Exxon to Atlanta and then Jamaica, I would have said no.
BE: How would you advise the young business major who is contemplating a career path in the corporate world?
CM: Become knowledgeable and competent in technical subject matters, including engineering, medicine, accounting and finance; develop creativity - don't ignore the liberal arts or the humanities because without them you are just a cookie cutter in each category and most of those are at the bottom of the ladder; and, develop good social skills.
BE: How do you relax?
CM: I play 36 holes of golf weekly, go to church on Sundays and spend time with my family.
Send your feedback to barbara.ellington@gleanerjm.com.
