By Sanjiv Bhaskar, Global Director, Personal Protective Equipment
Mitch is a graduate of the University of Mississippi with a degree in Accounting. He began his career with Ernst & Young where he spent six years in the Consulting and Auditing practices. Mitch joined MCR Safety in 1993 as Vice President of Finance. He assumed additional managerial responsibilities before being appointed as MCR Safety's CEO in 2003. Mitch serves on various corporate and non-profit Boards as well as currently serving as Chair of the Board for the International Safety Equipment Association (ISEA).
SB: Based on your recent travels, how would you characterize the mood in the PPE industry from a customer's perspective?
ML: From the customers' perspectives, they are still seeing some growth. However, that growth is definitely slowing. If you track this activity along the supply chain, you can easily observe that this sluggishness has already occurred at the factory level. The European market is still very weak. Factories that have a large percentage of production tied up in that market have seen quite a substantial drop in orders and in volume. Still, the North American market is seeing growth. While it may not be quite as robust as we saw in 2011, this market continues to be quite resilient. Europe is suffering more than a little bit; I would say they are suffering terribly.
SB: Industry feedback is that 2012 sales in Europe might be down by as much as 25-30%. Comments?
ML: We haven't seen declines of that extreme, but, then again, our exposure to Europe is very small. We see the market in Europe as a good long term strategy but in the short term we have limited our exposure to this market.
SB: How do you define leadership from your perspective? And you have two perspectives - as the CEO of MCR and the Chairman of the board of ISEA.
ML: I don't have a textbook answer but, overall, I would define leadership as being able to have a vision and passion and the will to engage and encourage others to accomplish common goals and to be able to stretch your thinking beyond today. I am a firm believer that, although a company has to have a primary leader, to experience true success, the company has to have many people with leadership skills. And that's what makes an effective team.You have to have leadership skills because, at various points of your career, what you are doing is honing and developing your leadership skills within the various layers of your organization.
At MCR, I try to engage and encourage our team to make sure that they define, develop and execute our strategies. I tend to be more analytical in my approach perhaps due to my finance background. However, I try hard to create a culture that allows everyone in our company to have a voice and to make sure that they are challenging our leadership and stretching themselves. It is important to guard against lapsing into complacency. We are fortunate enough to have a company with a number of people who demonstrate great leadership skills, and we try to give them the opportunity to exercise those skills.
You may not always be in a leadership position, but you are always honing and developing your leadership skills. By doing that, you will be ready when the time comes for you to lead. Hopefully we are fostering an environment that promotes and rewards leadership and acts as an incubator for the development of leadership skills.
With regards to the ISEA, it's a different role. I have served more as a facilitator rather than a leader. The board serves the members and, in turn, I serve the board as Chairman. I just try to make sure that the board is listening and that the association is listening to our members as well as the stakeholders in the industry. I try to ensure that we are not operating inside a vacuum but, rather, we are listening to the industry overall and making sure that the board is moving the association forward in a manner that serves the common interests of all the stakeholders. I have been very blessed and fortunate to be able to serve the ISEA alongside a fantastic collection of leaders from our industry with years of experience and wisdom. Being able to engage and work and serve with these men and women in leadership positions within the ISEA has been a wonderful and enriching experience for me. What's always encouraging to me is that the leadership and membership within the ISEA all share common passion and motivation to make sure that we manufacture top quality products that protect men and women around the world from workplace hazards. What we believe as a whole and what I certainly believe is that these standards are of utmost importance because we have to be able to give those people the assurance that, every time they don a PPE, that it is going to work and will perform as intended.
Being involved in ISEA and serving in a leadership position in ISEA has reinforced that theme throughout our company as well.
SB: The next question is from the ISEA perspective. Based on the recent economic slowdown, which is continuing in some parts of the world even as we talk, what is the biggest challenge right now for the PPE industry?
ML: I don't believe that the PPE industry is that dissimilar to other industries. Most industries and companies face a number of challenges. The priority and hierarchy of the challenges vary from company to company, but I think the common thread that runs through the PPE industry and many other industries is how we as are leaders going to respond, plan and deploy resources in a climate of uncertainty. We have rebounded quite well since the recession, but there continues to be nervousness and uncertainty that permeates our channels whether from within the PPE industry or in other geographies around the world or in certain parts of the industry. There is a great deal of nervousness and uncertainty that makes planning for the short and intermediate term difficult. For the longer term, the strategies shouldn't change. It is like taking a long journey and finding detours and roadblocks along the way. The destination remains the same, but we may have to alter our routes and timetables periodically.
SB: Does the ISEA board ever discuss the economic slowdown and the challenges it throws also?
ML: We do. We address it from the standpoint of how it affects our members and how it may affect the association's ability to take on new projects. It does have a filtering effect, but the association stays true to its mission. We are constantly evaluating, updating, renewing and looking at new applicable standards for products in the PPE industry.
SB: With the economy in the state that it is right now, the end users, or the users of PPE, want to purchase the most economical products such as generics. How do branded products overcome the challenge of generic products?
ML: I think that it is a challenge to branded PPE products. Those companies that don't have a strategy to address generics will face significant pressure. I'm a firm believer that for every perceived threat there is an underlying opportunity. We just have to take the time to understand the purpose and what the generic stance is. I think the challenge to branded products is proving the equity of the brand to the industry. Branded products are respected and trusted because they are backed by companies that are known, respected and trusted and that stand behind their products. So the branded products are in an equity position and a meaningful position because there are companies that stand behind them and back them up; these same companies have earned trust and respect. The challenge is to make sure that the companies that manufacture branded products are continuing to drive innovation. For the most part, generics are just copies of branded products that have become commoditized. The challenge for us as manufacturers is to continue to pursue and invest in more innovation. We have to make our products more durable, more comfortable and more stylish for broader applications. If we can continue to do that, we will continue to push the envelope forward. It puts us in the position where we continue to maintain some brand equity. Over time, many more products will become commoditized. Generics have had and will continue to have a limited place in our market. Manufacturers who recognize where generic products fit in the market can design a strategy that incorporates continued investment in their own brand while pursuing the more innovative side of their products.
It comes back to the questions that we always ask our users,"What do you need?" "What can we do to make this more durable, comfortable and stylish? What can we do so that it has a broader (or more specific) application?" That's what we have to do as manufacturers; we have to continue to innovate and listen to the users of PPE. Those who don't do that are going to be forced into competing exclusively with generics and that is a dangerous place to be.
SB: Generics are often associated with being of suspect quality in the customer's mind. Sometimes this is true and sometimes it is not. What role does the ISEA play in making sure that the generics meet the required standards?
ML: That is one of the issues that has arisen from time to time. There is a perception that generics are suspect in quality. In some cases, that is true. As manufacturers we have seen a lot of products in the marketplace that have both failed to meet the standards or have little regard for the standards.
Our role as the ISEA is to design standards that help protect the users. Once the standards are set, in collaboration with the stakeholders and agreed upon by a consensus, the responsibility of policing the market is beyond ISEA domain. I believe that as workers become more educated they are going to have an increasingly larger role as they better understand what the standards are and expect the products to meet those standards. An educated user who understands the importance of product quality and standards will play an important role in the market. As manufacturers, we have a responsibility to make sure that we are educating users and workforces who are using our products.
SB: Is the PPE industry embracing advancements in material and manufacturing technologies?
ML: Today, more than ever, I believe the PPE industry is embracing advancements and new technologies. Despite tremendous strides, there is plenty of room to further embrace newer materials and technologies.
SB: What is unique about your leadership style? What skills do you believe are key to being a successful CEO in the PPE industry?
ML: I don't believe that I have a unique leadership style at all. I am very focused and passionate about what I do. I do believe in surrounding myself with motivated and passionate people who have complementary leadership skills but who also challenge me day in and day out. I don't think there is anything unique about that. I also don't believe there is a single recipe for successful CEOs. The skills and styles are going to be as varied as the individual personalities, companies and industries in which they serve. I do think that there are some common characteristics that you see among successful CEOs. These men and women have high integrity, are willing to delegate and are also willing to give credit to others, while accepting responsibility for failure when necessary. They should have the ability to take a high altitude view of the future of the business, looking past today and tomorrow with a much broader perspective. Further, I think that it is of utmost importance that CEOs exhibit a measure of humility. We must be reminded that we serve our companies, employees and stakeholders as well as the industries for which we work. Hopefully, we make decisions that are in the best interests of those we serve.
SB: Your vision must be communicated throughout the entire company. It has to be a two way communication where your vision is communicated to the company and their response or their support is communicated back to you. How do you encourage that and how does it work in your company?
ML: I think that is something that is extremely important. It is important that every member of our company embraces our vision and is involved with the realization of this vision. My role is to make sure that I'm listening to our team members and getting as much unfiltered feedback from our employees as possible. We listen to our team by holding a series of town hall meetings and small group meets that all our employees participate in. They are encouraged to share their ideas, problems and concerns in a completely unfiltered casual atmosphere. I do invest quite a bit of time every year in this process. I can tell you that some of our best corporate strategies have been born of these small group meetings and town hall events. It is important for our team to see how their ideas and concerns have actually shaped some of our company visions and strategies. I think that's how two-way communication has to be delivered – on a personal level and with an unfiltered approach that leaves us open to feedback - all of which must be done on a consistent basis. We must deliver a clear message that everyone understands, in a very concise manner, which tells our story, our vision and strategies that we must pursue.
SB: You have been the Chairman of the ISEA for two years now. So how has that position or that experience changed your perspective as it relates to leading MCR in the coming years? Has it added something?
ML: It has certainly added to what I do here at MCR. I have had the pleasure of serving on the board for several years and as Chairman for the last two years. It's not that it changed how or what we do at MCR, but it has helped me to better understand our industry in general and how important standards are to our industry. Additionally, I have garnered a tremendous amount of value by networking with my industry peers, by listening and talking to them. It has been of benefit to me both personally and professionally.
SB: It must have enriched your experience because you have been dealing with many different companies and people, correct?
ML: Correct, and these are men and women leaders from companies ranging from million dollar companies to much bigger billion dollar companies. I have been able to interact with leadership that spans the breadth of our industry, drawing great insight and experience by developing personal relationships with those men and women.
SB: Let's talk about mergers and acquisitions next. We know that M, C and R was the merger of three very successful brands. Has this union been a success in your opinion?
ML: In my opinion, it was a very successful union. As three separate companies, we had so many complementary overlaps that merging those brands made so much sense. Navigating this merger using a systematic approach created a much stronger and more customer centric company. We were able to bring these companies together in a way that better serves the customer while maintaining a focused and customer centric approach. The feedback we have received from our distributor partners has been very positive and has solidified us as one of their core partners. So, yes, it was a very good decision that we made. It is one that has allowed us to grow at a better, more effective and faster rate, far more than we would have as individual companies.
SB: Companies grow in two ways, either organically or through M&A. Companies, especially those in the PPE industry, have been using M&A as a strategy to become a 'head to toe' supplier. What are the pros and cons of either of these strategies? Do you see MCR veering towards the M&A strategy in the future?
ML: We have used both organic and M&A strategy, and I think that there is still room to effectively deploy both strategies within our company. On a periodic basis, we look for potential candidates that might complement our core lines and our strategies. However, I wouldn't say that we have an aggressive M&A strategy. Our company is basically three pillars, which are the three brands of Memphis Glove, Crews and River City. We do gloves, glasses and garments. That's what we do and that is our core. As we look at our core lines, we see tremendous bandwidth and opportunity for growth. There is still a significant amount of fragmentation within our industry, distribution channels and our core lines. We believe that if we can effectively execute our strategies, there is enough bandwidth and market share potential to grow our business substantially.That said; we do look at acquisition prospects from time to time.
Whether or not the industry is better served by a head to toe supplier or through single line suppliers, I think that's going to vary from customer to customer. One thing that I like about MCR Safety is that we do three core things - gloves, glasses and garments - and we believe that we do these very well. We are regarded as experts within these areas and we don't want to do anything that will dilute our expertise and knowledge base or our ability to expand within our core. There is still plenty of room for technological advancements - innovation that we can take advantage of and execute along those lines primarily.
SB: The three areas you play in account for almost 50 percent of the overall PPE market so it's a good place to be and a good place to grow.
ML: Right, there is tremendous opportunity there and we do not have to get out of our core competencies to grow.
SB: You are a multi-product company and then there are single product companies dealing in one category of PPE. How do these two types of companies differ in their approach to customers?
ML: We are a multi-product company, but really we are a core-based, customer-centric company. We are not head to toe. I think the difference between a core based company, a single line company and those that are head to toe goes back to expertise and knowledge base – basically, it's the ability to be a consultant as opposed to being a salesman. We are a consultant to our distributor partners, and to the end user market.We sell products, but we overlap that with a tremendous amount of consulting and training with our distributors and end users. We are out there doing assessments, providing training, solving problems. Those are the things that I think get lost the more multi-product you become. Some companies do it very well, but there is a risk of becoming diluted at your core. If you do become diluted in your product based knowledge, then that can work to the detriment of the actual services you provide to support your products and the end user markets. Those that stay true to their core competencies become companies that are known specifically for those products. When you think of a product, you begin to associate the company with that product. That's how we want to be regarded. We want to be the company that first comes to mind when a customer thinks of any of our three core product lines.
SB: DIY was always an attractive end-user segment but was never attended to seriously by the PPE manufacturers. Now, that the industrial segment is facing challenges, the PPE manufacturers are looking at DIY for opportunities. Recently you partnered with MSA to promote Safety Works. What is your vision for this end-user segment for PPE?
ML: DIYers are an attractive, underexposed market to PPE. There needs to be considerable education to these users, however, the potential universe of users is quite significant. If we are successful in educating backyard mechanics, gardeners, landscapers and home workshops on the importance of PPE at home, this brings potentially a new subset of users into the fold.
SB: What are the different functions that you would include in the DIY industry? What specific people are you targeting?
ML: I would include people who are doing behind-the-house gardening, garage mechanics, weekend carpenters, basically anyone engaged in household projects. If you think about anything that you are doing around the home, a few years ago you may not have considered PPE. Now you are more aware and you might consider wearing safety equipment for your task. I think the role for us to participate in that segment is to continue to educate and make users aware of the products that are available to them. Many of these people may or may not use PPE at work. Many of these people have white collar jobs and, when they get home, they are uneducated and need to understand the selection process of proper PPE.
SB: The DIY segment has mostly voluntary usage, as compared to the industrial segment where it's legislated and enforced. Would this impede growth of PPE in the DIY segment?
ML: I don't think it will actually impede growth. Rather, to spur growth, we need to rely on education. Do I think we'll get to a point where we are regulating consumer use outside the workplace? Honestly, I don't see that coming to fruition in the future. I believe that, as manufacturers, we do a better job protecting in the workplace. The perception is that if you are protected at work then you should also expect to be protected at home so we need to do a better job educating users of PPE both at work or at home no matter the media format. Even as there are numerous PPE products offering protection in the workplace, there should also be a robust segment of the PPE industry dedicated to protecting people in and around their homes.
SB: So do you see the big box stores or retailers playing a role of educating DIYers?
ML: I think that the manufacturers will have to lead in that area. We provide the content and expertise and partner with retail to deliver the content in an effective manner to DIYers.
SB: I would compare the DYI segment to the OTC segment in the pharmaceutical industry. Would that be a fair assessment?
ML: I think that is a very good analogy.
SB: In recent years, we have witnessed PPE manufacturers focusing on end-user verticals for growth. What are the key industry verticals that MCR sees as important for growth in the next three to five years?
ML: I certainly won't oppose the first part of your statement. One of our major strategies is end-user engagement. Engagement with the end user is an integral part of our strategy and we believe that this engagement at the end-user level complements and gives additional credibility to our distributor partners. We are constantly adding new products, many of which are application and end-user industry specific. So we have to educate and consult with users and distributors to make the best PPE choice for the applications and identify hazards that are out there. The verticals that may offer growth in the short and intermediate term are the oil, gas and mining industries. We are also seeing a resurgence of the automotive industry, so we are putting our resources behind that end-user vertical as well.
SB: Do you think that the Wind and Nuclear industries will also offer opportunities in the coming years?
ML: I think that alternative energy sources will continue to get a lot of attention. Investments at both private and public levels will likely increase significantly. As these industries grow and the infrastructure needed to support them increases, there will certainly be a need for PPE.
SB: As a major PPE player in the industry, how do you stay abreast of the rapidly evolving customer requirements?
ML: In my mind, there is absolutely no substitute for being in front of the customers or end users. They are the most valuable source for product innovation. We have to see the applications for which our products are being used and we need to hear directly from end users what their challenges are and why certain products do well while others fail. By extension, we have to identify and address any hazards. A big part of our strategy is to get back to end-user engagement by asking the end user directly, "What do we have to do to make our products better?" We have to make sure that there is a direct funnel or feedback loop among our R&D, product development and engineering functions and the end customer. We have a consulting and compliance team that spends considerable time working in the field, engaging users and finding out what they need and getting that information back to our R&D and product development teams.
We deploy our people into the field and go into the actual manufacturing environments in order to do our assessments there and collect information from databases around that. Our approach is to utilize our feet on the street and our resources so that our frontline people directly interact with people who are using PPE.
SB: Amongst customers what is MCR best known for: Product offerings? Product innovation? Customer service? Ability to listen and respond?
ML: I hope that all of these things come to our customers' minds when they think of us; we hope we're respected in each of these areas. That being said, what I want us to be known for foremost is- 'doing an exceptional job of listening to and responding to our customers'.
If we achieve this, we will also be doing an excellent job in all of the other areas. The customers will tell us what they need and what product offerings or innovations are important to them. The customer is the final judge of what we are known for. I hope that we are regarded as a company that listens and responds to the requirements of our customers and, by inference, that will translate into our ability to bring innovative products to market and ensure that we excel at customer service.
SB: Growth, it's the most important word in a CEO's vocabulary. Industry leaders focus on many areas like M&A, Geographic Expansion, New Products, Strategic Partnerships, Branding, Materials Innovation and Distribution Channel Optimization for growth. Which processes will best provide growth for you in the next three to five years?
ML: In our strategic plans, we have a plan around each of these areas in one way or another and in varying scope. They are not worded in the exact same way as you have stated, but they have all been incorporated into our plans. We recognize that each of these areas plays an important role, and we set priorities and strategies that cover the next three to five years.
SB: So how do you or ISEA go about dealing with foreign legislation and what regions are the most difficult to deal with and why?
ML: The "I" in ISEA does stand for international so we do try and become more international in our scope and reach. It varies from project to project. We are international in large part because our membership is international. We do not have the ability to dictate or greatly influence regulatory matters and standards from country to country. Each country may believe their standards and regulations best serve their markets so it becomes very difficult to bridge those gaps. Certainly, we would like to see a lot of these regulations and standards standardized across countries. As an association, we would like to find opportunities where we can collaborate with different countries and regulatory bodies to harmonize standards. Because our membership is global in nature, it has to comply with a specific standard in one country and then another standard in another country; it becomes very complicated and costly and, sometimes, the nuances are quite small. Even though these nuances can be minute, they still exist and we have to comply with them so, from an ISEA perspective, it is a challenge requiring us to work with our counterparts in other countries to find different opportunities that can affect some harmonization.
SB: All these countries are adopting European standards in large part because I think that the Europeans are more active in pushing their standards forward.
ML: I think that there is a perception that Europeans are more aggressive in pushing their standards forward. However, if you talk to those who are in the standards forming bodies, I believe they would tell you that they are not as progressive as they'd like to be.
SB: As countries adopt European standards, Europe based manufacturers are finding it easier to sell products manufactured in those countries as opposed to those manufactured in the U.S. Comments?
ML: That may be true, however, keep in mind that many of those companies are global companies and are, of course, selling across the globe. As a result, they have to adapt to the local, industry and country standards they are selling to.
SB: How do you want to be remembered as the CEO of MCR and the Chairman of ISEA?
ML: I don't work or serve to leave behind a legacy. If anything, I hope I can engage others to be proud of the company for which we work as well as the industry that we serve. I tell our team that we should be proud of what we do. We actually serve a very noble cause. We protect people. Our products and services protect men and women around the world from hazards at their workplaces. The products that we manufacture and sell give people the assurance that they will be protected from the multiple hazards that they may face at their workplace. I hope that every person in our company understands really what we do - more than just loading a box into a truck or shuffling a piece of paper across the hall - we actually work to help protect people - their hands, arms eyes, faces and body.
I really have no idea what my legacy will be; that will be for others to decide.