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The Manitowoc Company is always looking to reinvent itself to
enhance its leadership position in cranes, commercial foodservice equipment, and mid-sized
shipbuilding
Industrial Goods
Farm & Construction Machinery
(MTW-NYSE)
The Manitowoc Company, Inc.
2400 South 44th Street
Manitowoc, WI 54221-0066
Phone: 920-684-4410
Terry D. Growcock
Chairman and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
March 23, 2006
BIO:
Terry D. Growcock
Chairman and chief executive officer
Terry D. Growcock, 60, chairman and chief executive officer (since 2002) of The Manitowoc
Company, Inc. Previously served as its president and chief executive officer from 1998 to
2002. Elected to Manitowoc’s board in 1998. Mr. Growcock also serves directorships
with Harris Corporation, Melbourne, FL, Bemis Manufacturing Company, Sheboygan Falls, WI,
and the National Association of Manufacturers. He is also vice chairman of the Wisconsin
Manufacturers and Commerce group.
Company Profile:
The Manitowoc Company (NYSE: MTW) is a creator of market-leading engineered capital goods
and support services for selected market segments, which include Cranes and related
products, Foodservice equipment, and Marine operations.
Manitowoc is one of the world’s largest
providers of lifting equipment for the global construction industry, including
lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading
manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration
equipment, the company offers the broadest line of cold-focused equipment in the
foodservice industry. In addition, Manitowoc is a leading provider of shipbuilding, ship
repair, and conversion services for government, military, and commercial customers
throughout the U.S. maritime industry.
CEOCFO: Mr. Growcock,
you added chairman onto your CEO role several years back; what was your vision at that
point?
Mr. Growcock: “Our vision simply has been a carryover
from the vision of my predecessor, Fred M. Butler, the retired president and CEO of Manitowoc.
In 1998, when I became CEO, I had worked with Fred for a number of years as president of
his Foodservice Group, and we had grown foodservice to the largest segment in the
corporation at that time. Since then, the Crane Group has become much larger. Fred’s
vision was to become the number-one brand in each of our niche markets. Our niche markets
at that time were basically lattice-boom crawler cranes in the Crane segment. In
foodservice, we had moved from ice machines to a full line of cold-side equipment that
included ice machines, beverage dispensers, walk-in coolers and freezers, reach-in coolers
and freezers and a distribution network to serve the beverage industry.
In our niche “cold-focused” foodservice market, we believe that Manitowoc is the
number-one provider of such equipment because we are number-one in North America and Asia,
excluding Japan, on ice machines. We have the number-two brand in beverage dispensing, the
number-one brand in walk-in refrigerators and freezers. In cranes, we moved from crawler
cranes to the global leader of lift solutions. In that category today, we are number-one
in crawler cranes, number-one in tower cranes, which is probably the most global of all
cranes, number-one in mobile telescopics, and number-one in boom trucks, which is a North
American product. Foodservice and cranes are global businesses. We build foodservice
equipment in China and in a number of plants in North America. We build cranes in two
plants in North America, we remain the only western manufacturer of cranes in China, and
we also build cranes at several plants in France, Germany, Italy, Portugal.
Our third segment is not one of our growth vehicles. We are the premiere mid-size
shipbuilder and ship repair facility on the Great Lakes. We have two major facilities on
the Great Lakes, both in Wisconsin. Marinette Marine is where we build government vessels,
the high security type projects for the Department of Defense, Homeland Security, etc.
Those are typically very complex vessels. We are currently building the Littoral Combat
Ship in that facility, which is a new project for the Department of the Navy. Sturgeon Bay
is where we perform commercial shipbuilding, as well as ship inspection and repair
activities. We are one of America’s leading producers of double-hull tank barges.
This form of transportation resulted from the OPA -90 legislation that requires any vessel
carrying petroleum products in North American waters to be double-hulled by 2015. The two
growth vehicles we have are Foodservice and Cranes and we are happy with the size of
marine. We do not see moving off the Great Lakes, so that is our niche in that
business.”
CEOCFO: You indicated that you made great strides in 2005 to
improve your performance and are on-track for 2006. What are some of the things that drive
performance?
Mr. Growcock: “We are always driving for operational
excellence. We have several tenets that we hold very dear that drive us. We have a
philosophy here to reinvent ourselves. Our products in both cranes and food service
continuously evolve; we want to have 80% of our products to be something we were not
building five years ago. That is one of our key drivers and it helps to reinvent ourselves
and always stay on the forefront of technology. I think we are the innovators, by far, in
both the foodservice and crane industries. We also drive our business using EVA (Economic
Value Added), which is our only incentive for the entire company. Everyone is measured on
EVA and that drives a lot of entreprenurialship throughout the organization. Then, we back
that up with such programs as Six Sigma. We have a strong commitment to that in training
of black belts. We also have red belt and green belt training for other employees.
By the year 2008, all salaried employees will have some level of training and recognition
through Six Sigma. We are training a few hundred employees each year. We also have our
various leadership programs led predominantly by our Advanced Leadership Development
Program, where we select typically about 15 high potential mid to senior-level managers a
year and put them through a rigorous program to develop the next level of effective
management for the corporation. I would say that on an annual basis, somewhere around half
of our advanced leadership graduates are promoted within in a year from the time that they
complete their participation in this program. All of these are commitments we are doing
for the corporation. Those are the kinds of things that drive our organization. We have
also set up six strategic imperatives that we believe drive us through 2010. Those six
strategic imperatives are growth, value creation, innovation, customer focus, excellence
in operations and people and organization.”
CEOCFO: Will you tell us
about the customer focus part of that?
Mr. Growcock: “If I look back, there were times that we
would develop products in a vacuum without talking to the customer. Today, we use a
concept called VOC (voice of the customer). With voice of the customer, that is part of
our ongoing development process that each of our three segments uses to develop a new
product. Getting a customer involved at various levels of the product development cycle,
allows us to make sure that we are designing a product that not only easy to manufacture
and features the latest technology, but is also something that meets the customers needs
and desires. It is obvious that without a process to get the customer involved in those
early stages, and keep them involved in the process as you are developing, fine-tuning,
and testing the product, is a powerful combination.”
CEOCFO: Are there
geographic areas where you would like to make in-roads, and how do you go about doing
that?
Mr. Growcock: “In cranes, we are very global across the
board. I am pleased with the fact that we have a leadership position in all areas of the
world, including Asia, South America, and the Middle East. We have two brand new
facilities in China. We opened an ice machine facility last year; that was a replacement
of a 50,000 square foot factory with a new 186,000 square foot factory in Hangzhou, China.
Right now, we are starting to occupy a new 600,000 square foot factory in Zhangjiagang, China,
which will allow us to build tower cranes, as well as components for our crawler cranes
and mobile telescopic cranes. We have also taken that same concept and we are now building
rough-terrain cranes in Niella, Italy. In the past, we were only building small
self-erecting tower cranes there. Two years ago, we also started building crawler cranes
in Wilhelmshaven, Germany.
What we are doing in cranes is taking the capabilities of all of our products and building
them where it makes the best sense for the customer and the application. In Foodservice,
we are strong in China and the rest of Asia, excluding Japan. We are a dominant player in North
America, but we have a lot of opportunity to become a stronger player in Europe. We
developed a line of new ice machines for the European market two years ago. We are growing
our market share in Europe, but it is growing from a relatively small base. We have looked
at other areas in which we could grow in Europe, and today we are growing in Europe by
organic growth. We will continue to look in Foodservice through acquisitions, alliances,
and joint ventures. We also use a process called product voids analysis where we look at
what our product voids and our geographic voids and try to match that with the
opportunities that we have. That way, we stay very focused and very dedicated to our
strategies and product categories to make sure we dominate them.”
CEOCFO: What challenges
to growth do you need to watch?
Mr. Growcock: “The good news is that most of the drivers
in the marketplace are very dominant, like the energy issues that are facing the world.
The energy industry requires cranes of all kinds and sizes. We think that is a solid
driver for the future. Add to that the new North American highway bill that was just
introduced last year to replace and rebuild some of the highways and bridges in the US.
The Gulf coast rebuilding resulting from last year’s hurricanes is going to be
another driver of cranes. Then, you have the cyclical construction market; peak demand for
cranes tends to lag the overall construction industry by about a year to two. We saw
cranes emerging from its cyclical trough in the latter part of 2004, so we believe that
this cyclical characteristic will be a strong driver. You also have the emerging countries
of the world, such as China and India, playing a key role in the current cycle.
In Foodservice, obviously the metrics we watch most closely is GDP growth and restaurant
construction. The one unique thing about foodservice that I should point out to you is
that because we are focused on the cold side, approximately 80% of our sales are not
driven by new construction, but are driven by the renovation and replacement market.
Overall, it is a very stable market for us. It is never up or down by a great percentage
simply because of that phenomenon of the replacement cycle. We have made a commitment
because of our new product development and the breadth of product offering that we will
constantly double the industry performance, and we have a track-record of 11 years being
able to do that in foodservice. We are the leader in China on ice machines. We believe
that China’s use of ice in the next ten years or so will rival that of the US. China
is a big consumer of ice. We are well positioned there, and we’re growing our share
of that key market very effectively.”
CEOCFO: Why should
potential investors be interested and what should they realize about the Manitowoc that
does not jump off the page?
Mr. Growcock: “We are very focused on our niche markets,
so we can continue to grow our market leadership. We continue to innovate to enhance our
market share positions even further. We are an EVA company, so we are a solid cash
generator as a result of that commitment. We have a disciplined approach to our growth by
using a product and geographic voids matrix, which drives us to focus on the proper growth
initiatives within in our core businesses. We are virtually number-one in nearly all of
our product lines. We are already global in cranes, we are moving to a more global
position in foodservice, and we have positioned ourselves to be a very strong player in
our defined niche market for our shipbuilding and ship-repair operations.
One other element that I should mention is our commitment to service; we give unparallel
service to our product. We do not sell products where we cannot provide outstanding
service in the field. Perhaps the best example I can give you is Crane CARE. We go to
market in cranes on a regional basis, and we support our cranes on a global basis with
Crane CARE. This provides our customers with 250 service centers and three call centers
that assure they are going to get the best in service and support for their Manitowoc,
Potain, and Grove cranes anywhere in the world on a true 365/24/7 basis. We believe that
Crane CARE is a key differentiator, and as a result, our crane products typically command
the highest resale values in the industry.
That commitment to service is also going out in Foodservice where we train some 13,000
technicians a year in how to service the refrigeration equipment, the ice machines, and
the beverage dispensers that we build. That not only allows us to provide on-the-spot
service and warranty fulfillment, but also motivates our service technicians to be strong
advocates for Manitowoc when a product needs to be replaced. It is heavily driven by the
renovation and replacement market that I spoke about earlier. It’s my belief that
none of our competition comes close to matching our level of aftermarket product support
and service.”
CEOCFO: You are a
diverse company, both in products and geography; how do you keep it all together?
Mr. Growcock: “We have a very strong management team.
Each segment is run by a segment president who serves as chief operating officer out for
his group. We do strategic planning at the corporate level for each segment and then
charge each segment to develop their own business plan, which must support the corporate
strategy. Of all the companies I’ve worked for, Manitowoc does an excellent job of
executing the core strategies that it develops. I think because of the company’s
growth, and because of our position, we have been able to recruit some of the best people
in the industry. We have been able to retain those folks because we have programs such as
EVA and Six Sigma. Then, we add to that the opportunities of a company that is growing as
we are, on a global basis. It is an exciting place to come to work and set a career path.
That is probably the thing that makes us able to succeed as a global company, because of
the fine people that we have.”
CEOCFO: Finally, what
would you like readers to remember about Manitowoc?
Mr. Growcock: “The basic philosophy that we operate
under is three-fold. The first two are: no surprises and know your costs. If you know your
costs and you are not making bad decisions, then there will be no surprises. If you
encounter a problem, address it as early as possible. In that way, we can all work on the
best solution to resolve the issue. The third item is do what we do best. We do not try to
do things where we don’t have expertise. I believe that we are the best in lifting
solutions, in cold-focused foodservice equipment, and in mid-size shipbuilding. We’ve
been proving this on a daily basis for more than 100 years.”
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