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BHP’s New CEO Has Lessons From Japan To Beat China Slowdown

David Stringer

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Mike Henry, the incoming CEO of BHP Group, could take a lesson straight out of Japan’s corporate playbook when he faces the challenge of slower growth in the top commodities consumer China.

The 53-year-old led a group of BHP executives last year on a tour of U.S. manufacturing plants that have implemented principles of kaizen -- the philosophy of continual improvement famously championed in Japan by Toyota Motor Corp.

Henry, who previously worked at Mitsubishi Corp., has been an advocate within BHP for standardizing procedures and encouraging front-line workers to devise better methods of improving their own work.

After being named on Thursday to replace Andrew Mackenzie as head of the world’s biggest miner from the start of 2020, he made it clear productivity would be a major plank of his leadership.

“I am all about performance and improvement,” Henry told reporters Thursday at the miner’s Melbourne headquarters. “That discipline, that performance, is what will insulate us and allow us to navigate an uncertain world in the right way, where we can continue to grow value.”

Uncertain Outlook

With a darkening long-term demand outlook for key commodities such as iron ore, and the need to balance spending on new projects against continued returns to investors, Henry will look to new productivity gains as a tool to help defend margins.

“As a concept, this is what shareholders want -- efficiencies and improvements,” said Craig Evans, a Sydney-based portfolio manager at Tribeca Investments Partners Pty. “It’s going to be a big focus for everybody, and it would be good to see how he thinks that can be implemented.”

Winning new gains from better performance may not be an easy task. Even as BHP cut costs at its Australian iron ore mines in the last fiscal year, some coal assets failed to meet company cost guidance. There have also been operational missteps at BHP sites since late 2018, including the dramatic derailment of an iron ore train in Australia’s vast Outback.

BHP and its rivals are also facing the slowest pace of growth in China since the early 1990s, a factor that threatens to propel the industry into its most challenging decade in generations, according to RBC Capital Markets.

Henry, a guitar-player with two adult daughters, joined BHP from Mitsubishi in 2003 and had earlier been seconded to a coal joint venture between the two companies. Known by investors and staff as polite, forensic and a key champion of gender equality, the Canadian national previously carried out an audit to make sure mines and offices had enough sanitary bins for female staff.

The new leader will tour BHP’s global operations for the rest of the year before setting out proposals for strategy shifts, or changes to the miner’s team of top executives, he told reporters.

To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net

To contact the editors responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net, Keith Gosman

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