Ireland is an island of two halves when it comes to the response to coronavirus, says Maxol CEO
Starkly different approaches to tackling the coronavirus pandemic and contrasting measures of support for businesses in North and South means it is operating as an island of two halves, according to Maxol’s CEO Brian Donaldson.
Donaldson is well placed to comment. As well as heading up Ireland’s leading family-owned oil company and 116 company-owned licensed service stations nationwide, he’s also the chair of Retail Ireland, the leading voice of Irish retailers, which works to represent the sector’s interests to Government, media and all other stakeholders.
“The last few days have been very challenging in dealing with our response to Covid-19,” Donaldson states.
“The situation is changing daily, and our business has had to respond right across the board, which has had a huge impact on the operation and our business in the south. The initial economic response from government was modest, but that has changed, and we broadly welcome the measures they are taking to address the situation and safeguard and support businesses and their employees.”
For Donaldson and his team, as for others operating in an essential retail sector, it’s all hands on deck in unknown and continually unravelling and challenging times.
“It’s unprecedented for anyone of us in this generation,” he says. “It’s the largest national crisis that we’ve seen since the First World War in terms of its impact on family, businesses and everyday life.”
As a family business and one due to be celebrating its centenary year in 2020, the poignancy of the situation is further heightened at Maxol.
“We’ve been through some tough times but this stands above anything else that we’ve seen in the last 50 to 60 years,” Donaldson says.
As a NACS International Board member, Donaldson is open to sharing the impact of the crisis on its businesses across Ireland and the measures Maxol has put in place to help safeguard customers and employees from Covid-19, as well as the different Government responses.
According to Donaldson, it’s a significant movement of the dial. “It’s a recondition and focus into moving into survival mode, not just for the business but for the safety of our store staff and head office staff,” he says.
Monitoring and preparing
Donaldson reports the business began tracking the situation in China from January. “We felt Europe was far enough away not to get to the same kind of scale,” he recalls. “We were wrong in that view but even in the early to mid-part of February, everybody felt it was manageable and, if we had the right controls, that it would not spread.”
However, Italy escalated the crisis, becoming the most impacted country outside of China, and then the virus spread right across Europe.
“We had a watching brief on it and in the early part of March we hosted preparedness days,” says Donaldson.
On Friday 13 March, Maxol instigated remote working for all head office employees – those based out of its finance and purchasing hub in Dublin and at a satellite site in Belfast responsible for the company’s fuel cards and managing fuel deliveries for the island of Ireland; and it ensured employees were able to dial in from home.
Production teams at Maxol Lubricants in Santry, North Dublin, which supplies a range of lubricants and Ad Blue to customers in the North and South, were split into teams for separate shifts to ensure continuity of manufacture in the event of an outbreak.
Donaldson said the move “worked well’ and was extended to the following Monday (16 March and St Patrick’s Day), following Government guidance for people to operate remotely if they were able to do so.
Harnessing Microsoft Teams, Donaldson said the business was able to work as a cohesive management team. “We are great fans of technology and very slick in how we use that technology to facilitate meetings with people dialing in remotely. It’s kept us connected,” he says.
That’s been critical when the company has retailers in the front line and a requirement to interface with both business and local communities, Donaldson adds.
Island of two halves
While Maxol has endeavoured to adopt a plan of action for the island of Ireland, Covid-19 has created two lifecycles for business with the impacts more advanced in the South than the North.
This in part has been caused by the different approaches taken by the UK and Irish governments in controlling the spread of the disease, However, from Wednesday 25th March, similar controls in closing non-essential retail and businesses were introduced across the island.
“The UK Government is providing strong support for businesses – it’s an island of two halves,” Donaldson says.
While schools and colleges and bars, restaurants and hotels in the Republic were closed a week and a half ago, the economic impact has been felt much earlier than in the North, where the ban has just been introduced.
“We are able to gauge the impacts to business from that,” Donaldson says. “The Republic of Ireland has been hit fairly hard – there’s less traffic on the roads and people are working remotely. The Republic is effectively closed for business,” he says.
Operating in essential retail, however, Maxol is enabling key workers such as the police and ambulance service to fill up their vehicles as well as those in production, manufacturing and construction roles, who are still working, subject to safe practices.
However, fuel sales are still expected to reduce further as people travel less.
In store it’s a different story too. In the first full week of school closures, traditional convenience has grown but delis have been impacted and the in-store seating areas have been closed to manage social distancing, keeping customers and staff safe.
Coffee sales have dropped off but there’s been an uplift in everyday essentials – fresh and chilled, household cleaning products and health and beauty including toilet roll.
“The mix of sales is changing – we are moving from strong foodservice and hot beverages to traditional, everyday essentials,” Donaldson says.
Donaldson expects a similar sales pattern to emerge in Northern Ireland in the coming days, although stores are typically bigger so better positioned to cope with changing shopper behaviour and are less advanced on foodservice but not coffee.
Overall, he anticipates deli sale declines of 40% and fuel drops of between 10-30%, depending on location.
Retailer support
Maxol is supporting retailers through the crisis on a number of fronts. It is currently delivering Perspex sneeze screens to stores to protect customers and staff members and is providing social distancing floor graphics to ensure people maintain a safe distance from each other in store.
Both measures are important and will help instill confidence, Donaldson says. “I genuinely believe that those stores that don’t adopt it, will see a drop off in trade,” he says.
Further, when turnover is no longer viable at the retailer’s delis, licensees are expected to redirect staff to other roles in store.
“I take my hat off to all licensees,” he continues. “They’ve stepped up to the plate and recognised the importance of keeping staff and customers safe, while still providing much needed services. It’s a challenging environment and changing everyday but we have to be pro-active and move quickly to trade and trade in a responsible way,” he says.
Maxol is also considering trading hours. Some sites offer 24-hour opening, which may not be appropriate moving forward but will need relevant security measures such as roller shutters when they close to protect the premises.
Another proactive move is a new press and radio campaign, launched in Ireland on Saturday (21 March 2020) with advertisements in the national press with the objective of reassuring customers that Maxol is working hard to support them and their needs.
“It’s a rally call to say we are here to support your everyday requirements as a family,” Donaldson says. The campaign will roll out in Northern Ireland at the end of this week, urging customers “don’t panic, we will be here. We will trade in a slightly different way, but we need your support”.
Maxol has also written to all its retailers informing them of the measures it has undertaken to support their businesses and to provide links to Government assistant packages etc.
“The way we view this is that we are in it together and need to work openly and as best we can,” Donaldson says. “We have a tradition of working hand in glove with all our retailers and it’s more pertinent now than ever before.”
Varied response from Governments
Operating sites in both the North and South of Ireland, Donaldson says there’s been a something of a difference in timing between the UK and Irish Governments’ support for business.
“The UK Government has put in very good packages,” he states.
Firstly, there’s a rates holiday for March, April and May, providing complete rates relief to benefit cash flow. Conversely in the Republic, there’s a deferral system rather than a holiday.
Secondly, the UK has announced a generous Job Retention Scheme to protect jobs, paying 80% of wage costs for those employees that would otherwise have been laid off during the crisis, and capped at £2,500.00 per month.
“It gives businesses confidence if they are in a situation where they have to lay people off temporarily and is a very well thought through approach,” Donaldson says.
The South initially had been less generous with measures that offered €203 per week for those who had lost their jobs (permanently or temporarily) as a result of the crisis – although employers were allowed to top up that sum.
As a company and in his role as chair of Retail Ireland, Donaldson reports they have pushed hard for a similar scheme to the UK for Ireland. The Irish government has since announced a much-enhanced Covid-19 emergency scheme that now offers €350 to those who have lost their job. The government will also pay 70% of a workers’ salary – up to a maximum of €410 per week – where the company agrees to continue paying the remainder of the salary and where the company has lost 25% or more of its business.
Thirdly, in the UK, small businesses with a net asset value up to £15,000.00 will receive a grant of £10,000.00; while businesses with a ratable value above £15,000.00 will qualify for a grant of £25,000.00.According to Donaldson, that will greatly help businesses to meet their overheads while closed or experiencing a down turn in trade.
There are still stark differences between the UK and Ireland, he maintains. “Our business has been impacted and all of this assistance is much needed to give retailers the confidence to continue and have the cashflow to trade.
“The Irish Government came out and led but may have been outgunned by Boris Johnson who has done a very good job for businesses. He’s made some tough decisions in terms of closing non-essential businesses down but there are supports put in place – it’s been choreographed very well.”
Donaldson suggests the UK Government was well aware last week of the actions they would have to take. “They should be congratulated for putting those measures in place and to arrest the spike in the number of people having to visit the health service,” he says.
“We’ve never had to face anything so challenging in business, but it’s also crucially about lives and families and continuing to work and dealing in situations where staff or customers could be exposed to the virus,” he says.
“Going forward no one knows how it’s going to play out, but it will be tougher for business, families and Government.”
Community role
For now, Maxol plans to continue to play its part in continuing to provide fuel and everyday essentials in those communities where it has service stations.
And, it has put on hold a number of events including its annual retailer conference and a book launch, which was planned to commemorate its centenary year.
All capital expenditure is also on hold. Any projects underway will be finished, where possible, and any discretionary spend – recruitment, marketing campaigns and centenary celebrations etc – has been mothballed.
Aside from the measures to protect business and the business of its retailers, only emergency and essential repairs will be undertaken, Donaldson reports.
The business, however, remains in good stead, he adds.
“It’s a family business, founded by the McMullan family 100 years ago, which has been prudent over the years and is well financed. Every one of my colleagues has been superb and the Board of directors and the McMullan family have been available at the end of phone, supporting the senior management team to make the right directions for our business.
“The plan will continue to evolve with more measures in the coming weeks but for the betterment of everyone in the Maxol estate,” he says.
Donaldson credits the company’s suppliers – BWG Foods in the South and Henderson Wholesale in the North – for maintaining continuity of supply plus the contractors who are delivering fuel throughout Ireland.
The CBI (Confederation of British Industry), IBEC (Irish Business and Employers Confederation) and Irish Petroleum Industry Association are also praised for their behind the scenes work on the crisis and Maxol is actively involved with all three groups.
“There’s hard work going on to make sure Government is given the right information to make the right directions to support business,” Donaldson says.
And he calls for urgent action from Ireland’s ruling body. “The UK is ahead of where the Irish Government is at the moment,” he says, suggesting the Irish Government is concerned that offering a blanket guarantee to business, as it did in the 2008 financial crisis, is not the right thing to do.
“But it’s a global crisis not just an Irish crisis,” Donaldson says. “They need to step up to the mark because, if not, there will be a much slower return to economic recovery.”
