Company Interview: Gardner Denver, Inc. - Barry L. Pennypacker, President And CEO
January 15, 2010 - The Wall Street Transcript has just published Industrial Equipment, Robotics & Advanced Automation Report offering a timely review of the Manufacturing sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Barry L. Pennypacker was appointed President and Chief Executive Officer of Gardner Denver in January 2008, and as a Director in February 2008. He joined the company from Westinghouse Air Brake Technologies Corporation, a worldwide provider of technology-based equipment and services for the rail industry, where he held a series of Vice President positions with increasing responsibility from 1999 to 2008 - most recently as Vice President, Group Executive. Prior to that, Mr. Pennypacker was Director, Worldwide Operations, for Stanley Fastening Systems, an operating unit of Stanley Works, from 1997 to 1999. He also served in a number of senior management positions of increasing responsibility with Danaher Corporation from 1992 to 1997. Mr. Pennypacker holds a B.S. degree in operations management from the Pennsylvania State University and an MBA in operations research from St. Joseph's University.
TWST: Can you give us a brief history of Gardner Denver?
Mr. Pennypacker: This year we are celebrating our sesquicentennial. We have been in business for 150 years. The company was started by Robert Gardner when he refined the flyball governor that was used to control steam engines, such as steamships on the Mississippi River, to stop them from blowing up. That was a very important part of the industrial revolution in America. And the company has continued to grow over time. We have made substantial acquisitions. In fact, the company doubled its size back in 1927 as a result of a merger with its largest customer, the Denver Rock Drill Company, evolving from the Gardner Governor Company to the Gardner Denver Co. Cooper Industries acquired the business in 1979, and then in 1994 Cooper spun off its industrial machinery division as a publicly traded company, which became known as Gardner Denver, Inc. (GDI)
The business was loaded with a substantial amount of debt, and I don't think there were a lot of people who thought that Gardner Denver would survive. But I think due to the leadership team at the time and their vision, the company did in fact survive, substantially paid down its debt and then became a very acquisitive company to build the infrastructure that we have today. We have gone from a company with revenues of $175 million in 1993 to a $2 billion company in a matter of 15 years, and most of that has been through acquisition. And as we completed acquisitions, we continued to diversify our end markets as well as our geographic presence.
TWST: What are your major products?
Mr. Pennypacker: Our products are used to move air, liquids and gasses. The Gardner Denver¨ brand is well-known for compressor and blower products, as well as petroleum pumps. We also sell compressors under the brands CompAir¨ and Champion¨. We sell liquid ring pumps, which are low-pressure products used in severe-duty process applications, such as refining and petrochemical applications, and the power industry under the brand Nash¨, and fluid transfer products called loading arms under the brand Emco Wheaton¨.Depending on the product being moved and the application, different pressures and flow rates are required. For example, to convey dry bulk material, such as cement, does not require a lot of pressure, but it does require a certain amount of air flow. To blow plastic bottles, such as are used to hold beverages, requires much higher oil-free air pressure.
We describe products that are used to move gasses, including air, as "blowers" if the pressure is less than 50 pounds per square inch (PSI) and "compressors" if the pressure exceeds 50 PSI. We also manufacture pumps, which are primarily used in upstream petroleum applications, such as well drilling and servicing for oil and natural gas. We are organized into two groups, primarily based on each group's channels to market and therefore customer focus. For example, over 50% of Industrial Products Group revenues occur through independent distributors, while nearly 60% of the Engineered Products Group revenues are direct to the end customer.
TWST: How would you like to see things evolve for Gardner Denver?
Mr. Pennypacker: I would like to see 6,600 employees around the world coming in every day and figuring out a way to make the process in which they operate better today than it was yesterday. If we get 6,600 people around the world thinking that way, then my job becomes a lot easier because people by nature are good and processes are by nature bad. And if you take good people and they interact with good processes, you'll get fantastic results. And that's the Gardner Denver Way going forward.
TWST: Tell us about your background.
Mr. Pennypacker: I spent a lot of time early in my career at Danaher Corporation, where I got early exposure to what is now the Danaher Business System, which was modeled after the Toyota Production System. From there I went to Stanley and ran the Bostitch Division on a global basis. A friend who was running Wabtec Corporation at the time asked me if I would come and help him implement a business system, which I did.
And then I ran the largest part of that company for a number of years. When Gardner Denver's former Chairman and CEO, and the Board of Directors decided to begin an external search as a result of the CEO's planned retirement, they decided to look for someone that had a substantial amount of operational experience in their background. So they approached me because the skills that are my strengths, I think, were Gardner Denver's weaknesses. And the strengths of the Gardner Denver organization were in areas where I had less expertise. So it seems to have been a pretty good fit for both of us.
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