Treasury gets worldly.

• Position: Treasury management at global corporations - Includes related article

Globalization of markets and competitive pressures are requiring treasurers to develop creative, cost-effective ways to do their jobs with smaller staffs. Here's how three treasurers cope with the demands of international competition.

TRADING IN THE REAR-VIEW MIRROR by James Haddad Treasurer Rich Products Buffalo, N.Y.

TREASURY STAFF: Five full-time treasury staff positions at headquarters. Other staff members provide part-time functional support domestically and internationally.

STRUCTURE: Centralized for funding, international business analysis, corporate finance, currency/interest rate risk management and insurance. Cash management is decentralized.

FIVE-YEAR GOAL: To become our service providers' first call when they discuss new products, services or ideas.

Rich Products is the largest family-owned frozen foods manufacturer in the United States and has been in business for over 50 years. The company has sales of more than $1 billion, with 6,000-plus associates and over 34 units in operation on a global basis. We sell about 3,000 kinds of products to more than 4,000 customers, accounting for some 45 million cases of product a year. The company also owns and manages a triple-A baseball team, a private golf resort, 11 restaurants and other investments.

We have 16 domestic manufacturing facilities, located mostly in the eastern half of the United States. On the international side, we are in 14 countries, selling to over 50 nations around the globe. Most of our international development occurred within the last seven years. Our double-digit growth drove the treasury department to re-engineer to support that global expansion.

When I joined the company about two years ago, the treasury staff members were capable but had little treasury experience and virtually no international experience. We asked ourselves how we could develop global business when the people who were overseeing the treasury function that supports this global development might not be in the best position to help us get there.

We took a look at the types of responsibilities for which the treasury group had been given authority. They included bank relationship management, cash management, debt placement, covenant compliance and lease financing. It was entirely domestic-focused. Yet, the company saw international expansion as in alignment with shareholder directives. The domestic market' was not going to consistently deliver the returns our investors wanted.

It became clear that treasury wasn't supporting the company's global development in an adequate way. To align ourselves with management's objectives, and to accomplish what our CFO challenged us to do, we had to trade in our rear-view mirror for binoculars.

We now have a broader band of responsibility, but more importantly, we're focused on supporting international development. We've established bank relationships with financial institutions around the world, which isn't easy to do as a private company. Also, we've interjected ourselves into the cash management process in all our international operations. Our goals are to coordinate the systems and the information flow and to become familiar with our new businesses, whether they're partnerships, joint ventures or acquisitions.

As we expanded overseas, we began to feel that we were not masters of our process because we needed to learn more about the host countries' business practices and risks. Treasury has begun to establish itself as a leader in helping the company set up a financial risk-management measurement process. We're now centered around this process to the point where we're looking at it from the standpoints of commodities risk; property and casualty risk; business analysis; and currency and interest rate risk.

The current treasury staffing is quite different today, too. In the past, there was only one year of common treasury experience among the three people in the department. Today, with five professionals in treasury, only one person in the department has less than one year's experience - someone who came to us from an international assignment and has been working with the company for about six years. We've put greater emphasis on treasury experience as well as international experience.

We also interface with the international field offices and plants, working on international business analysis, corporate finance, insurance management and foreign exchange management. We've centralized these functions because right now, we've not organized ourselves on an international basis enough to have full confidence in the decentralization of these functions. As we develop and refine our process and systems, we want to make sure the people in the field will follow in the same vein. We don't want to discover there's something going on in the field that doesn't support where we're headed. We want to set a lead that will eventually guide us toward potential decentralization.

For now, however, in the start-up phase, we're keeping it centralized, and so far it's been fairly successful. We coordinate our activities with the field...