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CLARCOR is a global
provider of filtration products and services with a worldwide customer base and the industry's
broadest product line
Industrial
Filtration
(CLC-NYSE)
CLARCOR Inc.
2323 Sixth Street
PO Box 7007
Rockford,
IL 61125
Phone: 815-962-8867
Norman Johnson
Chairman, President and CEO
Interview conducted by:
Lynn Fosse
Senior Editor
CEOCFOinterviews.com
March 10, 2005
BIO:
Norman E. Johnson
1213 Waterstone Blvd
Franklin, TN 37069
615-370-0773
1990 to Present –
CLARCOR
2000 – Present
Chairman,
President and CEO, CLARCOR
1995 – 2000
President
and COO, CLARCOR
1994 – 1995
Executive
Vice President Filtration,
CLARCOR
1994 – 1990
President,
Baldwin Filters
1978 to 1990 Donaldson
Company
1
Vice President and General Manager, High Purity
Products
2
Director of Manufacturing
1970 to 1978 – Perkins
Diesel/Massey Ferguson
3
Corporate General Planning Manager
4
North American Marketing Analysis Manager
Education
1970
BA,
University of Iowa
1972
MBA,
Drake University
1985
Executive
Management Program
University
of Minnesota
1987
Executive
Marketing Program
Stanford University
Member of Board of Trustees,
Manufacturers Alliance
Born 1948, Married, Two Grown
Children
Company
Profile:
CLARCOR is a global provider of filtration products and services with a worldwide customer
base, superb product quality, leading brands, an extensive distribution network, the
industry's broadest product line, and its largest sales force.
CEOCFOinterviews:
Mr. Johnson, how has CLARCOR changed under your leadership?
Mr. Johnson: “I do not know if we have really changed
that much; I would call it more of a progression. We have increased our leadership in the
filtration industry and continued our leadership in engine mobile filtration and have
become stronger in environmental air liquid process filtration.”
CEOCFOinterviews:
How does the business break down into segments and what do you see going forward?
Mr. Johnson: “We look at the filtration market
conservatively as a worldwide market of $25 billion dollars; some others might say $40
billion. It can be broken down into three segments. The first is engine mobile, which is
any filter used on an engine whether it be a heavy-duty truck, piece of construction
machinery or a car. That is about a $7 billion dollar market and we participate in the
heavy-duty segment. Second is environmental air, which is a $6 billion dollar
market. It is anywhere air is being filtered that does not go on an engine, such as an
industrial plant, hospital, semi-conductor manufacturing plant, etc. Third is process
liquid. It can be described as any application that filters a liquid, whether it is water,
pharmaceutical or aviation fuel, anything that is not used directly on an engine. That is
a $12 billion dollar market. We are the only company that is in all three. One of our
growth initiatives is total filtration, being able to provide a customer any type of
filter. The filtration industry has traditionally grown a few more points than GDP. The
primary reason for that is the world needs cleaner air and cleaner liquids; there are
thousands of needs for our products.”
CEOCFOinterviews:
Are there areas internationally where you would like to have a stronger presence?
Mr. Johnson: “A little over 20% of our sales are
international. We would like to have a stronger presence everywhere but the area that is
growing the fastest for us is China, where we have experienced an annual compounded 20%
growth rate. We have done manufacturing in China for nearly nine years. We have been
growing in Eastern Europe and in Western Europe as well and we are doing well in South
Africa and some of the Middle Eastern countries. The international portion of our business
is growing faster than the domestic.”
CEOCFOinterviews:
You have a large number of brand names. Does it make a difference that it is CLARCOR?
Mr. Johnson: “I would like to say that it makes a
difference but I do not think it does to most customers. Certainly, our brands are strong
brands. I think where CLARCOR does make a difference is when we go to a total filtration
account and we are cross selling the collection of all of our products to one company.
They know that they are dealing with a strong financial company that can support the
customer. It is important to some of our customers that they are dealing with a company
that is approaching a billion dollars in sales and has a strong balance sheet; they then
know that we have the money to invest in new capital projects whether it is R&D or new
machinery.”
CEOCFOinterviews:
What are you doing with new projects?
Mr. Johnson: “We are spending $20-$30 million in capital
projects each year. Most of that is growth projects or cost reductions. Two of our top
priorities are internal growth and being the low cost producer.”
CEOCFOinterviews:
How do you reach new accounts?
Mr. Johnson: “We are very fortunate that eighty percent
of our products are recurring revenue. Second, as I mentioned earlier, there is an
increasing demand for products, for cleaner air and cleaner liquids. New business and new
applications are always coming in. We have aggressive marketing programs, sales campaigns,
new product development and the ability to take advantage of the growth of the market and
increase our market share in those markets. We sell through numerous channels including
independent distributors, OEMs, and direct to end users.”
CEOCFOinterviews:
Why are your customers using CLARCOR products, and what sets you apart from the
competition?
Mr. Johnson: “We have the products they want and need.
Quality in today’s world is a given but our customers can always count on the fact
that our quality is second-to-none. In customer service, we pride ourselves in being able
to fill an order within twenty-four hours. One-stop-shopping is becoming much more
important to many of our customers, so that they can buy all of their filtration
requirements from us. We think we have the best distribution in the filter industry. There
are thousands of distributors selling to hundreds of thousands of customers.”
CEOCFOinterviews:
What is new in the filtration industry?
Mr. Johnson: “As I said before, there is an increasing
need for cleaner air and water, and it is not one single thing but a multitude of needs
where filtration is being used. We are always introducing new products but we are
fortunate most of our products have a long life cycle.”
CEOCFOinterviews:
Are you able to make use of new technologies?
Mr. Johnson: “We continually are upgrading our products
with new designs and materials as well as updating our facilities to be more effective.”
CEOCFOinterviews:
Is inventory a big factor for you?
Mr. Johnson: “Being an after-market company having the
inventory available when the customer wants to buy it is important. Compared to some other
industries, our inventories are higher, but that is what is required when you ship
hundreds of thousands of different filters to hundreds of thousands of customers.”
CEOCFOinterviews:
You have had your twelfth consecutive year of earnings growth; what is ahead?
Mr. Johnson: “Hopefully, the thirteenth! We are very
optimistic about our future. As I said before, we are fortunate we are in a good business
with growth opportunities but at the same time have repeat business to ensure our growth.
Three words really describe our company: consistency, sustainability, and growth.”
CEOCFOinterviews:
Why should investors be interested, and what should they know that may not be readily
apparent?
Mr. Johnson: “We have had twelve consecutive years of
earning increases and we are a predictable company. Our goal is to grow ten to fifteen
percent a year, which we have done for the last twelve years. We have significantly
increased our technical capabilities and I believe we will have more internal growth than
we have had before.”
CEOCFOinterviews:
In closing, is reaching the investment community important CLARCOR?
Mr. Johnson: “The more you share your story, the more
shareholders you get in your company. The more demand, the more interest. We think that if
people hear about us that a fair share will invest in us.”
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