91. The politician as entrepreneur

Dear Gerard

The answer to your question whether taking a break from work, going on holiday and experiencing what your passion is will lead to new successful entrepreneurs is probably no. Although this can be useful for some managers and entrepreneurs to rediscover themselves and find inspiration. However, this is not possible for everyone, as many cannot have a year on holiday. In addition, not everyone is the same and everyone has different needs. If you were born in say Syria or Iraq, you will have others things on your mind than getting inspired, i.e. survival. Survival is also what global companies such as Air France-KLM (AF) have to focus on. Competition is fierce from companies such as Ryanair, EasyJet, Turkish Airlines, Singapore Airlines and Middle Eastern airlines. Labor is much cheaper for competitors and modern aircraft are more efficient and therefore cheaper than the AF fleet. One-and-a-half years ago, former Dutch minister Eurlings was appointed as CEO of KLM Netherlands. The main reason was his knowledge and relationships with politicians in The Hague and Europe, which is certainly useful to obtain influence in this area. However, the major problem of Europe and of a company like AF is the incredible rigidity as regards working arrangements, severance, sick leave and retirement, particularly in France. This led to 250 pilots of the company going on strike and the company had to cancel flights for 14 days, which resulted in €500 million in losses. Mr. Eurlings first stated that these losses would have no consequence for the Dutch branch of the company. The reason for the strike was that Transavia, an AF subsidiary, was to be transformed into a competitor to Ryanair and EasyJet. The pilots of Air France immediately saw this as a danger to their own salaries and pensions and the strike began. In the end, the strike led to the reversal of the decision to turn Transavia into a low-cost airline and the strike ended. Less than 2 weeks later, Mr. Eurlings was fired and the decision was again taken to start a new budget airline to be launched under the Air France-KLM brand. How is this possible? Very easy: Ryanair is planning to operate from Schiphol and this change had to be made immediately, as they represent a major threat and this was made clear to the pilots and the whole organization. Keeping a company afloat requires a different approach: deep changes at every branch, salary and pension cuts, timely fleet renewal, flying more energy efficiently and lower margins. It’s a matter of survival.

As you may know, I act as an advisor to a family business – D.The father and founder wasa plumber in the 1930sand was proficient in the machining of aluminumpipes,boilersand parts forthe aircraft industry.Thanks to the enormousgrowth of this industryin the last century, D established a profitable business in supplyingkitchens, trolleys and food carts to airlines.Histhreesonsexpanded thecompany and supplied KLM, Fokker, Scandinavian Airlinesand many other majorairlines.Because of the cost of labor,they quicklyrelocatedproductionto countries such asMexico, Thailand and Romania.At onepoint, they had morethan 2,000employees andDhad 30% of the global market in aircraft trolleysandkitchens.Thegeneration after thethreesonsdid not have theability todevelop the businessfurther andit was decidedtosell the company.Now, it ispart of a largecompany in the airlines industry andthefamily is no longer active inthis sector.It is always importantto know where yourstrengthslieandto identifywhatyour limits are.

Sincerely,
Jan Stam