Don Brennan, Managing Director of Morgan Stanley
Don Brennan could find himself cast as villain or savior over the next few years as the fate of Waterford Crystal, one of the best known brand names in the world, is decided. Brennan likes the odds, though a halo would ill-fit the direct, tough-talking managing director of Morgan Stanley.
When Brennan and Heinz chief executive Tony O’Reilly put together a partnership vehicle in March 1990 and paid $158.9 million for a 29.9 percent share to bail out the troubled Waterford brand, they quickly realized they would need all their considerable management skills to rescue the troubled company.
How bad were things looking when Brennan and company look over? “I think if we had not made the investment when we did it is problematic that the company would exist today,” Brennan says flatly.
At the time of their purchase Waterford had a massive debt of $233.7 million.
Beset by previous labor and management problems and facing a depressed U.S. consumer market for high-end crystal, the new investors and chief executive Paddy Galvin had to move smartly to shore up the brand.
This included the launching of the Marquis brand, aimed at young and first-time buyers, now an unqualified success. Marquis, however, is manufactured outside Ireland, a cost-cutting move that did not sit well with the existing work force who already felt their livelihoods threatened by management-initiated cutbacks.
Things got so heated that a prominent union official publicly threatened Waterford management, stating that they were no longer safe walking the streets of the southeastern Irish city, which is very much a company town.
Brennan, as the chairman of the company and the man in the hot seat, has kept a cool demeanor, restating some basic business principles that would seem old hat to Americans, but which evidently need to be re-emphasized in Ireland.
“I believe very strongly in the brand, first and foremost,” he says.
“Waterford has to adjust itself to the marketplace. Demand is now one half in the premium crystal market of what it was five years ago. Our revenues are about equal, but prices had to be doubled.” Brennan says a big part of the solution is to be a viable business for a full range of products, not just the top-end premium market. “Virtually every other luxury item is in at more than one price range,” he points out.
He is firm that everyone involved with Waterford wants the company to remain in Ireland. “What shape it takes is dependent on the marketplace for the product and the behavior of the organization at all levels,” he says.
Brennan wants to make clear that his sentiments are not anti-union. “It’s going to take pulling together, from the chairman down to the rank and file level, if we are to be successful,” he says.
More than any other company in Ireland, Waterford is constantly under a microscope. Every union problem, every management move, is reported widely in the national press. Brennan is keenly aware of the scrutiny, but is also keen to point out that amid the media speculation, Waterford is clearly on the way to solving its problems, and to becoming the major global brand its boosters always believed it could be.
If that were to happen, nothing would please Brennan, the son of a Waterford emigrant, more. He says that sentiment played no part in the original investment, but it is clear that Waterford’s success would be a personal triumph too.
Waterford, of course, is only one of 40 investments that Brennan heads for the merchant banking arm of Morgan Stanley.
Those companies range from natural gas firms, to shipping, to railroads, even, for a time, to a baseball team, the Seattle Mariners. The combined assets are over $25 billion, employee numbers are 167,000 and, if the firms were folded into one company, it would stand at number 19 in the Fortune 500.
Brennan brings an eclectic background to his position at Morgan Stanley, far removed from the white-shoe orthodoxy that the firm was once famous for.
His father was a veteran of the Irish War of Independence who fled the Troubles, originally to Canada and later to Connecticut where he found work as a horse groom before moving to New York and becoming a steamfitter. His mother emigrated from Carlow, and found work in a rectory and later as a nanny.
Brennan was born in Manhattan, and while he and his brother may not have been raised in luxury, he attributes 90 percent of the success he has enjoyed “to the values my parents taught me.” His success, and that of his brother, a nuclear physicist now a businessman, speaks volumes.
Don Brennan spent six years in the Navy, went to Maritime College, and later took an MBA in 1966 from City University in New York, specializing in operational planning.
After a spell with Corning Glass, he joined International Paper and worked his way to vice chairman before caving to join Morgan Stanley. The metamorphosis of Morgan Stanley from 200 investment bankers to an organization with 7,200 people from various background was just underway. Brennan quickly established the merchant banking division as a bright star.
“I came from industry. I was not a bond trader or investment banker, so there were not too many of us around to manage the new portfolios. It was a wonderful oppor-tunity,” he says now.
Two of the clients he has handled successful deals with were the Irish-based Jefferson Smurfit group who took over Container Corporation of America from Mobil Oil, and Tony O’Reilly’s company Fitzwilton who became involved in the Waterford deal.
He believes there are three very positive factors about Ireland which could lead to greater investment there: a universal language, English; a great time zone; and a very high educational level. However, he believes that the brain drain which has hit Ireland in recent times because of emigration could cost the country dear in the long run.
Married to Patricia Callaghan and with six children, all of whom have spent extensive periods in Ireland, Don Brennan has already put back more than most into the land of his parents. Turning around Waterford Crystal, however, would easily be his most valued contribution.
Editor’s Note: This article was originally published in the October 1992 issue of Irish America. ♦
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