Gregory Kenny considers himself and General Cable Corp. fortunate to have made it through the past three years of the recession. When the fourth quarter of 2008 came about, the president and CEO had the challenge of leading a business operating in an industry that had a 30 percent decline in global demand.
General Cable Corp. is a Fortune 500 manufacturer and distributor of copper, aluminum and fiber optic wire and cable products. The company employs 12,000 people and Kenny had to make sure every one of them was focused on the task at hand to remain culturally aligned and focused on opportunities in global markets.
“We saw global demand fall in this industry, excluding China, by 30 percent, which is a big number,” Kenny says. “Some regions fell more than that. Managing with a 30 percent reduction in demand across the board as well as compression pricing, caused us to take extensive steps and redouble our efforts around lean manufacturing.”
Those steps and efforts weren’t easy tasks, but Kenny has made sure he constantly looks for ways to keep the $4.86 billion organization moving forward.
“Clearly the recovery is long when you have a financially induced recession,” he says.
Stay motivated and focused
When you experience a drop in demand like General Cable did, you have to make sure your company culture can handle that type of shake up. You have to be prepared for ups and downs in demand.
“Keeping people motivated and focused was not hard,” Kenny says. “We have a very good team here that’s been through cycles and we’re looking forward strongly.”
The change in demand the company saw wasn’t the only challenge Kenny had to deal with.
“I think the tremendous changes in our long-term material costs up and down has also been difficult,” he says. “We buy a lot of aluminum, copper, petrochemicals and steel and they both fell dramatically and then accelerated dramatically and then fell again. Managing tremendous changes in input costs in a weak overall market is challenging.”
Since General Cable is used to operating in an industry that goes through cycles, it didn’t have to make drastic changes to handle the new pressures.
“We already had a culture that had been in place since about 2000 around lean manufacturing,” Kenny says. “What we did is continue to look very hard on the cost side, but that’s really a continuous part of our culture. We did have salary freezes and hiring freezes. We didn’t have any major layoffs, but as different countries struggled with demand, we had to adjust our crew counts, so we were a smaller company than we were in 2007. While a global financially-driven recession wasn’t well seen, we were in a sense prepared for it because our mission has been clear, our costs were already in excellent shape and we didn’t have one of those moments where we had to reinvent the company.”
What Kenny did have to do was continue to drive the culture forward and look for new ways to help in that effort.
“We are always looking to do more with less culturally and we have expanded the company globally to many product areas and countries and not every country suffered in exactly the same way,” he says. “Being good at our business and the diversity helped us get through this in quite a different way than 2001 to 2003, which was much less severe, but was actually a more difficult time for the company.”
Getting through unforeseen challenges such as these, comes down to the people you have in your organization.
“You have to have the best team you can have on the field and pay great attention to recruiting the great athletes,” he says. “You have to also keep your culture together in terms of everybody fighting as a team and that’s critical. Those cultures aren’t easy to invent overnight. You have to be mindful of who you are and also take a longer view in the business.”
When the economy takes a hit like it has, you have to remain calm, but act appropriately.
“Things don’t go down forever and they don’t go up forever,” Kenny says. “We try to prepare for what if demand picks up 30 percent or what if the world goes into a double-dip recession. We’re constantly looking forward and stressing our own balance sheet and organizational capabilities to be sure we’re ready for it. Clearly, the world isn’t smooth and linear and keeping that access to capital markets and being able to borrow money remains critical. Don’t lose your nerve about the business because sometimes the best opportunities are when lots of people are fearful.”
While General Cable’s culture was already equipped to handle the decline in demand, Kenny did create councils to help align the company and keep it operating as one.
“What we’ve done is said, ‘What if we could take a breakthrough from one place and carry it to the next in five minutes or one minute? If we could know everything we know in our facilities all around instantaneously, wouldn’t that be a powerful weapon?’” he says. “What we did, without creating corporate bureaucracy, was created councils around safety, which is our paramount concern.”
These global councils helped keep alignment and also opened eyes to potential new opportunities and ways to improve the business.
“If we can act as one and really compete as one company, not as 20 or 30 separate companies that are simply affiliated with General Cable, we’d have a powerful idea,” Kenny says. “That has helped get us through because we share heavily a lot of the new products we launch in one place in the world or another that are maybe developed and thought about somewhere else and then leveraged into that market. I think it’s a big idea and we get better at it every day, and it’s a powerful part of our success.”
The councils were so successful that the company didn’t just form them around safety, but created some for certain product families as well.
“You have to be good at both cross-utilizing assets, meaning seeing a market opportunity and looking inside to see what you have to meet that, or helping to create it,” he says. “That work around focusing on key customers and unmet needs and running that through our technology group to see if we can actually do it has been really important. You have to think about which disciplines are decisive in your company. You have to think about what things are core to your DNA.”
Expand your business
While General Cable’s culture played a big role in the company’s ability to overcome recessionary challenges, it was Kenny’s global outlook that really set the stage for growth and new opportunities.
We know that in the developed world, there’s both a recovery that has been underway and we believe it will continue as well as a need to rebuild the infrastructure that was built many years ago,” Kenny says. “In the developing world, the population growth is quite a bit higher and the infrastructure clearly lags. One of our ideas was if we can take the free cash and know-how and the business model of lean culture into the developing world, that’s a powerful set of opportunities.”
While the business had certain global markets underway prior to 2007, the real jump came from buying Phelps Dodge International Corp., a $1.4 billion cable maker principally in South America, Central America, Sub-Saharan Africa, and Asia.
“They had 50 some odd years of experience really thinking across trading regions, geographic cultural regions, freight regions, and they really took a model of high knowledge of distant cultures and got very good at it,” he says. “They brought local know-how and a tremendous record in lean and safety and what we brought was access to the products that those societies would need in the future as they develop.”
Kenny took Phelps Dodge’s know-how and General Cable’s expertise and entered Mexico, Peru, South Africa and India.
“We have largely increased our position in these markets,” he says. “We looked at other global opportunities so we acquired a business that made cables for wind farms and we also acquired in North Africa in Egypt and Algeria. I think when you identify opportunities you have to think about what you do well and where you want to be.”
Before entering new markets you have to consider certain aspects of doing business there to determine whether it is a good move.
“We look at what are the demographics, what is the civility of the country, if it’s not stable can we tolerate the instability, and then getting local ownership and buy-in as well as expertise here to get it done,” he says. “We have to look at every market and see, can we be successful there? Do people make products of good quality and does the country have laws and how are they enforced?”
Aside from understanding whether a market is a good fit, you have to begin to think in terms of your global markets if you truly want to build a global company.
“You can build to an extent yourself, but until you become multicultural as a company and really think as much in French and Spanish as you do in Mandarin, it’s hard to spot the opportunities because you don’t know what you don’t know,” he says. “I think Phelps Dodge helped tip us over to some critical mass of know-how and then we continue to build behind it.”
What Phelps Dodge brought to General Cable was a better understanding of the new markets the company wanted to get involved in. You have to be able to grasp critical elements of entering new geographies to be successful.
“You have to look at demographics,” Kenny says. “Look at whether it is a young population and growing. Is it a level playing field? Do they want quality products or is it a market that doesn’t appreciate making products to standards and making it correctly? Look at transparency and whether people pay taxes. Can you sell in a transparent way and be successful?”
Understanding those aspects of new geography you are preparing to enter is critically helpful. Once you have made a decision on where to go, start slow and get familiar with the area.
“If you have a product that can be exported, start with a small office and hire locals,” Kenny says. “What we generally do is look for people who share our values, but are from that country or that region and get to know them and how they think. Let them educate you on local mores. Learn the turf. Look at the experiences of other companies in the country. I think you can engage the chamber of commerce which will have international companies in it and they are generally very hospitable in terms of telling you what the pros and cons of the market are there. Usually there’s a foreign commercial office in the embassy, which is also a useful call.
“You have to build a case around that country and then look at the competitors and see how you want to start and where you’re going long term. It’s hard to do from Cincinnati. You need feet on the street. Linguistically, it’s a must to have someone who speaks the language fluently, both English and the local language.”
The company’s geographic diversity and product diversity have been two big factors to its success and growth recently.
Net sales increased from $4.38 billion in 2009 to $4.86 billion in 2010, with gross profit increasing from 519.5 million to 554 million in the same time period.
“Even in a down market, if you keep getting better and smarter and things turnaround, you can have a really strong rebound,” Kenny says. “Leveraging 12,000 people and the 48 or 49 factories we have has been really, really helpful in getting us through this, as well as spotting new markets and opportunities and not being afraid to enter them.”
HOW TO REACH: General Cable Corp., (859) 572-8000 or www.generalcable.com
Takeaways
– Align your culture for the greater good of the company
– Create company councils to improve best practices
– Search for new opportunities during a downturn to grow business
The Kenny File
Gregory Kenny
President and CEO
General Cable Corp.
Born: Long Island, N.Y.
Education: Attended Georgetown University in Washington D.C. and received his MBA from George Washington University and a Masters in public administration from Harvard.
What was the very first job you ever had, and what did that experience teach you?
I had my own lawn business because I like working outdoors. My first full-time job was in the grocery industry, which is a tough business and they work you hard. So I grew up working, and feeling not entitled comes from a long history of working and making things happen.
Whom do you admire in business?
I admire the folks who get stuff done on the floor every day. When you find them turned on and excited it drives General Cable forward and that’s the most exciting part for me.
What is one of your favorite countries you do business in outside of the U.S.?
I can’t answer that because we’re in many countries, but I would say that I do enjoy getting far off the track. I avoid classically touristic places. I like smaller villages and getting in with the people and understanding more about that society.
What is a place you aren’t doing business that you’d like to break in to?
I see opportunity in Southeast Asia and also I think we could do a bigger job in South America than we’re currently doing. We are also looking at sub-Saharan Africa.
