The new chief executive officer of Owens-Illinois Inc. demonstrated early in his eight-year stay at chemical concern H.B. Fuller Co. that he wasn t afraid to take on sacred cows.
When Albert Stroucken became CEO of the suburban St. Paul company in 1998, the manufacturer of adhesives, sealants, and coatings was widely admired in Minnesota s Twin Cities.
H.B. Fuller was led for years by a legendary onetime governor and later, his son. It had attracted attention for liberal employment practices such as a policy on leaves that encouraged employees to go on extended vacations. It was among the first companies to give employees a day off on their birthday.
But by the late 1990s, the company had a bloated work force and unneeded factories. The new CEO acted quickly, closing a dozen plants and laying off hundreds. By the time he left, the workforce had been trimmed by a third to less than 4,000.
A review of his record paints a picture of a man who is decisive, bold, and frank.
He takes the helm tomorrow at O-I, the world s largest glass bottle maker. The new CEO and chairman has been a board member of the Perrysburg-based company for 15 months and replaces Steven McCracken, who stepped down last month after undergoing stomach cancer surgery three months ago.
Seeking a better way
Through an O-I spokesman, Mr. Stroucken, 59, declined to be interviewed for this story. But transcripts of past conference calls with financial analysts who cover H.B. Fuller show him to be a hands-on leader who is articulate and intimately familiar with the workings of his company.
At a meeting with O-I investors shortly after he agreed to lead metro Toledo s second-largest company, he said:
Rather than wishing to hold onto what we used to do, we have to be open to change. And within the company, we have to be willing to steal from each other those better models, those better ideas, those better processes.
But replacing Mr. McCracken could be the most difficult assignment of a career that began in 1969 at German pharmaceutical and chemical giant Bayer AG.
O-I, with $7.2 billion in annual sales, is nearly five times as large as H.B. Fuller, which had $1.5 billion in revenues last year. The local company s 120 plants worldwide and 28,200 employees dwarfs the other company.
The company is the world s largest bottle producer, supplying prescription drug manufacturers, pharmacies, brewers, vintners, and makers of distilled spirits.
Yet it faces many challenges, including earnings that have disappointed Wall Street, rising energy and raw material costs, and tens of thousands of lawsuits filed by people made sick from exposure to asbestos insulation once made by the company.
Born and raised in the Netherlands, Mr. Stroucken (pronounced Strew-kin) remains a Dutch citizen. While he speaks five languages, he possesses no formal college degree.
A surprising choice
His appointment at O-I came as a surprise to the public.
As it became clear Mr. McCracken likely wouldn t be able to quickly resume full responsibilities after surgery, a site selection consultant began identifying possible replacements, said Carol Gee, O-I spokesman.
The company did not believe it had a suitable internal candidate and it would have taken at least six months to find and hire a CEO from the outside, she said.
Given the uncertainty we were living with, I think the board saw the upside of this move, she explained. I think the board felt, We have the strongest candidate sitting in front of us.
She was uncertain if directors approached Mr. Stroucken or if he submitted his own name.
Robert Dineen, a retired mineral and natural gas-drilling executive and O-I s lead director, couldn t be reached for comment.
The new CEO spent nearly 30 years with Bayer in Germany and at its U.S. headquarters in Pittsburgh.
Details of the deal Mr. Stroucken negotiated a five-year employment contract with O-I that includes an annual salary of $950,000, a bonus of up to $2.9 million, and $6 million in restricted stock and stock options to be paid immediately or in 2007.
The company also agreed to give him additional stock and options worth $3.8 million to make up for compensation he lost by leaving H.B. Fuller four months before his employment contract expired.
Other benefits include life and health insurance, a car allowance of $24,000 a year, personal use of company aircraft for up to 50 hours a year, and access to O-I drivers.
The contract calls for Mr. Stroucken to buy $1 million in company stock on the open market. The stock has been trading at about $18 a share.
As part of his departure from H.B. Fuller, the company said it would take after-tax charges of $7.4 million as a result of payments to him under a departure agreement.
Wall Street analysts and investors praised his performance at the St. Paul company, where profits last year nearly doubled to $62 million, the firm gradually shifted its product mix to more profitable chemicals, and long-term debt was cut nearly in half over the past five years to $112 million.
Mr. Stroucken s strategies, which included wide use of the Internet to purchase raw materials and sell products, began to pay off Sept. 27 when the firm announced quarterly earnings that exceeded analyst expectations.
H.B. Fuller shares were the second-biggest gainers on Wall Street that day, rising $4.77, or 23 percent, to close at $25.12.
They blew through expectations, said Richard O Reilly, an analyst with Standard & Poor s.
Stroucken struggled for a few years, but the last few years the company improved.
Another H.B. Fuller analyst, who spoke on the condition he wasn t identified, predicted that Mr. Stroucken will be up to the job at O-I.
He stepped in at Fuller and really changed that company, the analyst said. He spent five years restructuring and pulling it into shape. He had a vision of where he wanted to go.
Forbes magazine said Fuller was among the 400 best-managed companies in America last year.
In his only public comments so far on O-I, Mr. Stroucken indicated that change is in store.
When we look at our performance over the last few years, we cannot be satisfied with the results that we have achieved in executing ... strategy, he told investors shortly after his appointment.
We can, and will, turn the situation around. We need to focus and take care of the most immediate needs first. ... We have to get our costs and our contractual commitments aligned to ensure that our customers will receive value, but that we, in turn, receive value as well.
The company must strive for exceptional performance, he said. A convoy only moves at the speed of its slowest ship. And sometimes you have to scuttle the slowest ship to be able to move the convoy further.
But it is unclear how Mr. Stroucken will achieve the improvements, although he suggested that some might come through new product introductions.
Ghansham Panjabi, an analyst with Wachovia Securities, predicts that cuts could come in European operations, where he said the company has a bloated cost structure and asset base.
A bottom-line guy
Investors and analysts who cover O-I were apparently pleased with Mr. Stroucken s selection.
We are becoming more encouraged by O-I s management changes, particularly with incoming new CEO Al Stroucken, George Staphos, a packaging analyst at Banc of America Securities, wrote last week.
Norman Bowie, a business professor at the University of Minnesota, describes Mr. Stroucken as a total bottom-line guy. Mr. Bowie, who holds a professorship endowed by the late Elmer Andersen, former Minnesota governor and H.B. Fuller CEO and onetime controlling shareholder, said, The company had been known as one of the most progressive companies in terms of environmental concerns and doing things for its employees.
Under Mr. Stroucken, emphasis shifted to improving shareholder value. It s not that it became a bad company, he said. It became a typical company.
At some point after Mr. Stroucken s arrival, Tony Andersen, Elmer s son, had a falling out with other directors and was forced off the board, Mr. Bowie recalled.
Under the new CEO, however, Fuller didn t shun civic involvement.
In St. Paul, Mr. Stroucken was chairman of the United Way board of directors and helped lead a school readiness program for children.
A career on the rise
Born in 1947, he moved from his native Holland to Germany as a youth. In 1969, he was hired for a Bayer apprenticeship program that included college-level courses and on-the-job training, according to press reports.
Over the next 29 years, he rose through the company ranks, eventually becoming an executive vice president for Bayer in the United States and president of its industrial chemicals division.
He left to become CEO of H.B. Fuller in April, 1998, and was given the additional title of chairman less than two years later. He resigned last month from his Fuller job.
Contact Gary T. Pakulski at: email@example.com or 419-724-6082.
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