Bob Hund’s business card bears the legend “Integrity, commitment to stakeholders and passion for excellence”. This, says Hund, is a summary of Manitowoc’s business values and a nod to the firm’s 1902 foundation and the people of the midwestern US town the firm is named after.
“If you go to Wisconsin, see our company and meet our people, you’ll find a culture of honest, hardworking people. It’s that midwestern work ethic,” says Hund. “Manitowoc is a town of 35,000 people. People roll up their sleeves there. That’s the type of company we are. Our officers are from the midwest and have that midwestern way of working, where you can do business on a handshake and people stand by it. That permeates through the company even though we have 100 facilities around the world, both cranes and foodservice combined.”
The Manitowoc Company operates two global businesses producing market-leading products for the crane and foodservice industries. Manitowoc Foodservice is comprised of some of the world’s leading brands in food equipment, in many major categories.
Hot on the trail
Starting with the Kolpak/McCall acquisition in 1995, Manitowoc Foodservice began assembling industry-leading brands with the aim of becoming the dominant force for foodservice equipment needs on the “cold side” of the industry. Forging a reputation for superior customer service, cost efficiency, convenient distribution and a wealth of refrigeration expertise, the acquisition of Enodis plc for $2.7 billion in 2008 then allowed the firm to gain a major foothold into the “hot side” too.
With operations in the Americas, Europe and Asia, the company has a portfolio of best-in-class brands including Cleveland, Convotherm, Delfield, Fabristeel, Frymaster, Garland, Kolpak, Kysor Panel Systems, Lincoln, Manitowoc Ice, McCall, Multiplex, Merrychef, Servend and Manitowoc Beverage Systems. “We have just about everything in the kitchen today, except for coffee and ice-cream,” says Hund.
Hund had previously served as an executive vice president of Manitowoc’s Crane Care division, overseeing a global network of service and distribution centres for Manitowoc’s eight crane product lines across 19 countries. Prior to joining Manitowoc, Hund served in key leadership positions in the US, Europe and Asia for Caterpillar Inc. Hund believes that, having no previous experience in the foodservice sector, he brings a fundamentally fresh prospective to the business. This enables him to make strategic improvements. “I have the ability to ask the stupid questions, because I’m the new guy,” he laughs.
Hund’s impact in his first year has been notable. Overall Manitowoc Foodservice reported sales of $790m for the second quarter of 2014. “If you look at our new product development cycles and our investments in new products, I think it’s exemplary,” he says. “We’re not looking at little twitches here and there. We’re making major changes and improvements in the category for the good of our customers in the industry. The biggest thing I’ve done in the last six months is reorganise the company, away from the individual operating companies towards this global functional model that’s based on improving customer focus, taking advantage of synergies and solutions and setting up ourselves to take advantage of our scale.”
For Hund, it’s Manitowoc’s long legacy in engineering that sets it apart form the competition. “Elements of our company at one time were called Manitowoc Engineering Company. I’m an engineer myself. What we do first is make products. We support our products and after-market services, but don’t consider ourselves to be a service company. It’s our primary goal to develop great products that improve the return on investment for customers and improve their profitability.”
Off the scale
Foodservice may not necessarily seem an obvious bedfellow to the cranes division, so are there any synergies to be had across the group? “60% of our top line revenue is made in cranes, whereas about 60% of our operating earnings are made in foodservice,” says Hund. “So, from top line revenue, sales and operating earnings, they’re somewhat complimentary. But there are certain synergies between the two.
“They’re complimentary in terms of cyclicality. Cranes and construction equipment, where I spent most of my career, is a cyclical industry. It goes way up and it goes way down. When it goes down we have to hold onto the fort, invest in product development and ride it out. But, when it goes up it throws off cash. Foodservice is much more stable and, in the dark times, it helps sustain the whole company. And when the cranes division is going through the good times it helps foodservices grow by providing revenue or earnings for acquisitions.”
Manitowoc also make it their business to share some of that substantial engineering knowledge across the group, but only where it’s a natural fit. “The control systems, touch screen controllers and data control systems, all run on similar software. The development and testing of that software and those control systems we do in consort with one another across the company,” says Hund.
Another area of technical synergy is the standard Manitowoc sets for itself. “On quality, lean [manufacturing] and operating procedures, our operations excellence, our safety, we follow similar processes and systems. They’re completely different, but when it comes to utilisation of offshoring on the engineering side we share the same contracts and the same groups in India, because you need an IT infrastructure for that. They are two dissimilar industries, but when it comes to the systems – the engineering systems, the engineering processes, it’s the same for both,” says Hund.
The group is also well placed to pull upon the economies of scale afforded by having such a global presence. “Basically our strategy has three legs to it,” says Hund. “One is customer focus, one is synergies and solutions and the third one is scale. How can we take advantage of that? One way is that some of our major customers, who are growing into emerging markets, want to take us along with them.
“For example, in the Jebel Ali duty-free zone in Dubai we already had a crane branch. Our foodservice presence was previously relatively weak, but now we have foodservice offices and a demo kitchen in the same building. Was that hard for us to do? No, it was easy because the company was already there. It was just a matter of installing equipment and putting a couple of sales people and a chef in there. We can do that. We have the scale to produce the same product in multiple locations to be able to reduce freight.
That’s one side of scale, the other one is leveraging our scale to reduce our cost, because the more scale you have, the more you can afford robotics and automated machine tooling. So the scale provides volume, volume provides better absorption and that allows you to buy better machine tools.”
That aside, one of the organisational changes Hund was able to enforce in early January of this year was to move more away from the operating company organisational structure. “Prior to my coming here Manitowoc Foodservice behaved a little more like a holding company. If you wanted to buy a fryer, an ice machine, an oven and a Merrychef microwave, you had to get four different credit checks, four different orders, four different order fulfilment processes and four different invoices. Now we’re moving towards one [process] to make it much easier to do business with us. That ‘one-stop-shop’ bit we couldn’t do before.”
Manitowoc’s most recent acquisition was INDUCS in Switzerland in 2013, a purchase that has enabled the firm to integrate their advanced induction counter-top technology into our other products. “To own that technology means we can start leveraging and incorporating that across other types of products and product lines. We’re a bunch of technical nerds, I guess,” says Hund.
Manitowoc Foodservice’s global product development department is responsible for setting new product introduction programmes. Hund’s colleague Rick Caron is responsible for another group in the company called Create Demand, who are tasked with marketing innovation. “Rick’s group tries to create new demand. He’s always searching for new technologies. So one group acts like the ‘funnel’ and one is the ‘neck’.”
The innovation group, acting as the ‘funnel’ part of the operation, are tightly coupled with culinary, R&D and marketing departments. They are, says Hund, always looking at the competition, running innovation workshops for major customers, pulling in customers, assessing their requirements. “We did that because we don’t want technical people to innovate for innovation’s sake, saying: ‘Wow look at this new gizmo, it’s the greatest thing ever’, without thinking does anybody want it? You weed out all that stuff before it gets in the neck of the funnel. Rick says: ‘fail fast, fail cheap’. The earlier you rule out certain innovations, the more you can go on to do, because you have a limit on budgets.”
A great deal of the intelligence providing differentiated value for Manitowoc comes from their 20 chefs around the world, running innovation workshops and demonstrating equipment. Manitowoc’s headquarters for foodservice are in Tampa, Florida, where Hund is based. “We host about 750 visitors a year there,” says Hund. “Our ability to bring in major accounts, big chains and differentiate a menu offering for them is the thing we do the best. That’s where we thrive. It’s a fun thing to do that with our culinary, innovation and R&D people all in a room bouncing ideas off each other. That’s Manitowoc.”
So there you have it: fresh ideas and a new perspective married with integrity, commitment and passion. Just like it says on the business card.