The opening session included insights from the leaders of three of the industry’s most recognizable companies, Amway, Clorox and Ecolab, who shared their thoughts on how to succeed in an increasingly complex world. First up, Ecolab chairman and CEO Douglas Baker said that with the recent addition of Nalco, his company is well suited to take advantage of several key trends:
- Safe food;
- Healthy environment;
- Clean water; and
- Abundant energy.
“Food production is the No. 1 user of water,” explained Baker. “Just growing one cucumber requires eight gallons of water!”
ACI president and CEO Ernie Rosenberg and ACI board chair Catherine Ehrenberger, Amway, assemble hygiene kits to assist Clean the World. All photos courtesy of ACI
“We’re all thinking in a somewhat common direction without crushing innovation,” said Baker. “And innovation will get us out of the economic malaise that we’re in.”
Donald Knauss, chairman and CEO of Clorox, had his own list of megatrends that are impacting his business. They are:
- Health and wellness;
- Multicultural shift; and
- Affordable convenience.
Participants in the ACI Executive Leadership Panel (l-r):
Douglas Baker, chairman and CEO, Ecolab, Inc.; Clorox chairman and CEO Donald Knauss and Amway chairman Steve Van Andel.
“As a result (of focusing on sustainability) we are running much more efficiently,” observed Knauss. “Sustainability is a consumer, cost-savings and engagement tool.”
For Steve Van Andel, chairman and CEO of Amway, the company’s mission has remained the same since it was founded in 1959: helping others go into business for themselves.
“We still focus on people and building entrepreneurs in every country that we go into,” explained Van Andel, who noted that 90% of Amway’s $11.3 billion in sales come from outside the US. “No matter where they live, people want to help themselves. We were the social network before there was a Social Network.”
Ways to Grow
Regardless of the product category, innovation will grow business, insisted Knauss, who noted that two years ago the categories in which Clorox competes were declining 2% a year. In 2012, the same categories rose 1% and the key to that success is to develop elegant, value-added solutions.
ACI board member John Venegoni (left), Stepan Co., and ACI Convention Committee chair Tom Nelson, P&G Chemicals.
For his part, VanAndel noted that Amway’s business is countercyclical and the company posted record sales of $11.3 billion in 2012.
“As the economy falls, we grow,” he explained. “We’ve grown for the past seven years.”
Baker warned, however, that economic conditions will, once again, challenge even the best of businesses.
“We’ve been told that business will get stronger in the second half for three years in a row,” recalled Baker. “It hasn’t happened. I expect slow growth for quite a while.”
To compete in this slow growth environment, Knauss said successful companies look for tailwinds. For example, bleach sales may be flat, but natural personal care is growing 6-8%. Similarly, retailers such as Walmart and Target are posting good results and Clorox’s sales in Latin America are strong.
“If you can’t find growth, you buy it or invent it,” he asserted.
Places to Go
As one might suspect, all three leaders of these multinational companies are bullish on overseas markets. Van Andel noted that Amway has operated in China for years and is eager to help consumers there build their own businesses as the ranks of China’s middle class continues to swell.
“We’re full in on China—water will be critical for them,” agreed Baker. “In Brazil, we like energy and food and broadly speaking, Latin America is doing very well,” he added.
Knauss said that while Clorox has a presence in China, for the most part, the company has stayed out of the BRICs. Instead it has been focusing on Peru, the Middle East and Southeast Asia. Although, most recently, the company has been eyeing India.
Things to See
At the end of the day, companies must win on-shelf, regardless if the store is a Kroger’s in Kansas City or a mom-and-pop shop in Mumbai. For example, after studying its data, Amway researchers realized the company is selling a lot of protein in China and is using that knowledge to finesse its product lineup.
To achieve more victories on shelf, Clorox is partnering with retailers, bringing them into the R&D process, showing them the new product pipeline and getting their input. Knauss noted that retailers possess much better sales data than their suppliers, so Clorox is bundling that knowledge to create successful products and deliver solutions that shoppers have never even considered.
“Consumers can’t tell you what they want,” he reminded the audience. “But they are really good at bitching!”
Follow the Leader
All three company leaders said having the right vision is critical for a business’s success.
“How do you rally people to a better future?” asked Knauss. “You need a vision.”
Developing the Clorox Vision required the efforts of 300 people, he recalled. That way, there’s buy-in throughout the organization.
But while company executives are hammering out that vision, they can’t neglect passion, insisted Van Andel.
“You need theheart to buy into it,” he said. “Freedom, family, hope and reward—that’s what captures their hearts.”
Baker noted that a great team makes things a lot easier. At the end of the day, it’s not about metrics, it’s about outcome.
“We’re (Ecolab) great at execution, but lousy at the process and I wouldn’t have it the other way around,” he told the audience. “When you say ‘yes’ to a leadership position, you have to make their jobs easier.”
Words on Washington
Running a business is one thing. Running a country is quite another. Former Homeland Security Secretary Tom Ridge (R-Pennsylvania) and former New Mexico Governor Bill Richardson (D) agreed that bipartisanship is a thing of the past in Washington, DC, but Richardson said compromise on issues such as immigration and even the Fiscal Cliff deadline extension, give him hope that olive branches will be extended from both sides of the aisle. At the same time, President Barack Obama must reach out to Republicans, according to Richardson.
Laurie Jackson, ACI board member Jim Jackson, DeSoto LLC, and Jim Crump, Shell Chemical LP.
On the issue of immigration, Ridge said illegal immigrants must be given a path to legitimacy, insisting it was critical for the economy. For his part, Richardson noted that George W. Bush captured 44% of the Hispanic vote during the 2004 Presidential election, but those votes vanished in the past two elections as Republicans refused to compromise on immigration and other issues of importance to Hispanic Americans.
“I was afraid (Florida Senator Marco) Rubio would be on the (Republican Presidential) ticket. That would have been trouble (for Democrats),” said Richardson. “Now Republicans realize that the Hispanic vote is growing and they need a sensible view on immigration.”
ACI at Work
Washington may be broken, but industry must still find ways to work with legislators. During an issues briefing session, the American Cleaning Institute gave attendees an overview of the issues that are impacting the industry. Donna Hillebold, AkzoNobel Surface Chemistry, commenting on developments in research, technology and regulation (RTR), noted that the ingredient inventory was completed in September, 2012 and the group is compiling hazard information. In the future, RTR will develop exposure and screening level risk assessments.
Jason Grev of Ecolab noted that Maine, Washington and Minnesota enacted chemical management programs. This year, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Oregon, New York and Vermont are considering similar legislation.
Martin Wolf of Seventh Generation provided an update on ACI’s sustainability efforts. In 2012, 24 member companies, representing 82% of ACI’s dues base, took part in the sustainability metrics program. The committee reviewed the preliminary report and was expected to issue a full report after Happi went to press.
Brian Del Buono of Sun Products noted there is widespread effort by federal and state governments and NGOs to force companies to reveal confidential business information. Industry, he said, has been proactive regarding CBI via the Consumer Voluntary Ingredient Communication Initiative.
ACI International Committee chair Catharine de Lacy, The Clorox Company, speaks at ACI’s Issues Briefing.
Finally, Catharine de Lacy of The Clorox Company provided an overview of international activity at ACI. The Institute led the development of industry positions advanced by the US Council for International Business at the UN’s International Conference on Chemicals Management.
Peiros Honored with Spillane Award
• Larry Peiros, the retiring executive vice president and chief operating officer for The Clorox Company, received the Elva Walker Spillane Award, the distinguished service award of the American Cleaning Institute, during the annual meeting. Unable to attend the event due to illness in his family, Peiros, accepted the award via video.
“I worked with Elva on the ACI board. She was a terrific business person,” Peiros recalled. “It is humbling to get the award named in her honor.”
Peiros was active in the work of ACI for more than 15 years. He served on ACI’s board of directors for 12 years, as chair of the finance committee and treasurer from 2008-2009, contributing to ACI’s strong financial position. He further provided leadership, serving on the board’s executive committee from 2008-2010.
“Larry Peiros has been a tremendous asset to ACI and to the cleaning products industry at-large,” said Ernie Rosenberg, ACI president and CEO. “Those of us on the staff who have worked with him directly have deep respect and affection.
“A mere recitation of the positions he’s held does not capture how much of a contribution he has made and how important his leadership has been to the development of the Institute and its staff. I am personally deeply grateful that I had the opportunity to work with and learn from Larry,” Rosenberg added.
Peiros joined Clorox in 1980 as a summer intern, was appointed a member of the company’s executive committee in 1999 and elevated to the COO role in 2007.
Most recently, he had overall responsibility for all of the company’s businesses, and oversaw the marketing, sales, research and development and product supply functions, as well as Clorox’s Eco office, which is responsible for implementing the company’s global environmental sustainability strategy. He is retiring on April 1, 2013.
ACI’s Distinguished Service Award is named in honor of the late Elva Walker Spillane, the former National Purity LLC chief executive who served on the association’s board for 20 years. The award honors an individual for extensive or exceptional service to ACI, who promoted the growth and interests of the Institute and the industries it represents; and who exercised outstanding leadership within the Institute.