Succeeding in Today's Economy - Top Executives Examine the State of the Industry 2010


Written by:
Michelle Segrest

To state that 2009 was a turbulent year for the pump industry is a substantial understatement. The economy and its impact on business became a daily discussion while the industry struggled throughout the year to find sources of optimism and creative survival strategies. The focus has evolved into finding practical solutions to embrace and conquer the effects of the worst global economy since The Great Depression.

Dennis Wierzbicki, president of Grundfos Pumps, USA, says the first half of 2009 confirmed that "the industry would no longer be the same. It was not going to be a dip with a rebound right around the corner. A new base line was established, and with it also came the requirements to look at business differently."

Wierzbicki explains that while free cash flow and balance investments were a requirement for all companies-whether U.S., European or Asian-the economics of our industry required more focus on managing cash smarter. But that was not enough. The markets also changed.

With that change, specific questions surfaced that required action from all companies, no matter the size.

"How business is done and the overall changes as a result of this recession are still to be seen," Wierzbicki says. "With reductions in people across the industry, where will specifications and applications come from? Who will be the service providers? Where will energy savings and Lean principles need to be applied? And, of course, the involvement of the U.S. government has to be considered, whether providing stimulus for projects or taxes on business. We will have to manage our government in our industry.

"Regulation will be more present in the standards for our products. Whether it is energy efficiency, safe materials or contributions to a more energy efficient, sustainable U.S., the government will be active in setting our directions."

Other key solutions, according to Wierzbicki and other industry executives, include talent management, managing supply chains, improving process efficiency, and of course, listening to the needs of the customer.

"In the end, it is the customers' perception that matters," Wierzbicki says. "They are the key decision makers. Key users will let us know where to go. We need to continually listen to the markets and understand the needs of the customer. Interestingly enough, the customers' needs are what always seem to provide the compass to develop plans."

Gretchen McClain, president of ITT Fluid and Motion Control, agrees that keeping the customers' needs at the forefront makes a difference. "To succeed in today's market, you must keep your customer central to everything you do," she says. "Especially now, each member of my leadership team and I maintain close contact with our key customers and distributors to let them know we are there for them regardless of the market. Most important, successful companies make sure the team is aligned with their strategy and do not lose sight of long-term goals."

Business in 2009. . . Forecast for 2010

Many companies are identifying clear strategies for survival and growth when examining business in 2009 and looking ahead to the possibilities of 2010.

Randy Breaux, Baldor Electric Company's vice president of marketing, says he believes our industry has seen the worst of the recession. "Looking back, our distributors were first to react with inventory reductions, and then OEM customers suspended projects for an indefinite period of time," he says. "I believe we have weathered the full brunt of the storm, and conditions should gradually improve during the next six months or so.

"For 2010, we are not expecting a rapid increase in business, but a modest increase throughout the year. Our internal tracking of incoming orders has produced a positive trend line for the past couple of months. If that trend holds, we are confident that 2010 will be better than 2009."

For A.W. Chesterton Company, 2009 was a year of significant challenges-especially in the industrial process markets. "It was also a year to rethink overall business models and the future needs of our industry," explains President and CEO Brian O'Donnell. "Lower overall market demand caused sales reductions of 20 to 30 percent for many suppliers in contrast to their robust performance in 2008. That caused a large number of them to scramble to find expense offsets to try to minimize the impacts on their profitability.

"However, due to the increased competition between process plants for a smaller volume of business due to the recession, the driving need for supplier support to help improve productivity and efficiency became even more of a business imperative."

Many domestic and global industries slowed significantly, which led to quickly depleting inventory levels, according to Garlock Sealing Technologies President Dale Herold. "The reduced inventory levels changed how manufacturers supported the users with quicker responses required and reduced quantities ordered. Manufacturers were forced to change how they do business or allow market share loss. 2010 will be an interesting year. The general consensus is that economic recovery will be slow but stable, and the outlook for our business should mirror these trends."

Continued growth in the international market with some recovery of domestic industrial spending should be experienced in 2010, according to Kim M. Arnold, vice president sales, marketing and production engineering for Weir Specialty Pumps. "WSP reacted in advance of the crash with proactive focus internationally. Municipal projects have blessed us with larger than 2008 input. We will continue to increase our focus internationally and municipally while preparing for the inevitable industrial rebound."

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