Will Bachman 00:01
Welcome to Unleashed the show that explores how to thrive as an independent professional Unleashed is produced by Umbrex, which connects you with the world’s top independent management consultants. I’m your host Will Bachman. And I am so excited to be here today with Marvin Riley, the president of enpro Industries. Marvin, welcome to the show.
Marvin Riley 00:21
Hey, well, thank you for having me on the show, I really appreciate the opportunity.
Will Bachman 00:27
Maybe we could start with just an overview of enpro Industries. Tell us a bit about your company.
Marvin Riley 00:33
Okay, so intro is a diversified industrial company are the products that we make or, you know, ceiling products and engineered products primarily, with a material science component to them. You know, if you think about, you know, some of the products we make gaskets, seals, metal polymer bearings, and we go into end markets like automotive, aerospace, semiconductor, petrochemical, oil and gas, we’re headquartered in Charlotte, North Carolina, we have about 27 manufacturing facilities around the world 5000 plus employees and well over 50,000 customers that will give you a little bit of a profile, you know, if you talk a little bit about, you know, how, you know, it might be helpful to give a sense of the geography of the company. So, you know, roughly 62% of our sales are in North America, and another 25 in Europe, and we have the balance of our sales, you know, throughout Asia and the rest of the world, our business is pretty much split 5050 between, you know, O OE and aftermarket feeling products does, however, dominate the portfolio, so about 75% of our sales are in ceiling while the other 25% is in engineered products that gives you a sense of the business, the profile and etc.
Will Bachman 02:03
And where are most of your manufacturing plants.
Marvin Riley 02:09
So we’re fairly distributed throughout the world, the majority are in North America, but we’re in France, with a few manufacturing facilities in France, we have a few manufacturing facilities in Germany, with a few manufacturing facilities in China. We have a site in in Brazil. And then we have, you know, obviously we’re in Mexico, we’re in Canada as well. And we have sales offices distributed around the world as well.
Will Bachman 02:41
So, the coronavirus pandemic has been a business crisis like nothing in our lifetimes. Could you talk to me a bit about what the journey has been like for you and pro and, you know, as it’s evolved, the steps you’ve been taking to keep your employees safe and your your customer safe? And, you know, satisfied demand, you know, where possible and just sort of talk about what it’s been like leading a company like yours through this crisis?
Marvin Riley 03:14
Well, I think this has been, you know, definitely the most complex thing we’ve ever seen. And the most dynamic from a risk perspective that we’ve ever seen. And, you know, what we’ve done is, first and foremost, we didn’t occur, everyone, just in terms of how to think about this thing to not think about it, like the 2008 2009 crisis. And that’s really important because that, that really set the stage for how we thought about things. And what perspective we took as we thought about things, the risk environment here is very uncertain. The severity is very uncertain, the consequences for your actions are very uncertain. And never before have we been in an environment where we are thinking a lot about the safety and security of our employees, but also thinking a lot about the safety and security of ourselves and our families and our community. And so, you know, as we’ve thought things through, you know, we really taken a standard approach to things but we’ve approached it with an open mind. So first and foremost, as we think about the first phase of our work, it’s really been about the safety and security of our employees. And then we moved from the safety and security of our employees to thinking about, you know, business stabilization and, you know, what does progress look like? So sort of a phase two would be more like business stabilization, and then we would expect some sort of recovery. After that, and then we transition into a new normal. So we’ve thought about it their safety and security, business stabilization, and progression, recovery and new normal in the safety and security sort of bucket. We’ve thought about, first and foremost, how do we protect our people? How do we protect our business? And how do we protect our community? the communities that we do business and as you think about protecting our people, you know, they’re sort of, you know, first and foremost, you know, how do you reduce the density of people that are together? How do you ensure that everyone has adequate PP? How do we ensure that our employees are trained in terms of how to wear PP, how to properly cleaning up their hands, but also how to ensure that the work areas are consistently cleaned? How do we ensure that there is a robust and resilient supply chain to keep cleaning supplies? disinfectants of the swords, hand sanitizers, pp, etc? You know, robust, and in good order? How do we ensure that we’re communicating appropriately, not just communication from myself in terms of what the company is doing? And how to think about things? You know, but how do we make sure that we’re communicating information that we’re receiving from the who, or the CDC and ensuring that we’re educating the company as we go through this. So our first stage was, you know, all of our salaried employees obviously went to remote work, we stopped all non essential travel, we identified which of our businesses were essential, just about all of our businesses are essential. If you think about what we’re doing, we’re supporting the power infrastructure, we’re supporting food and pharma. In some cases, we’re supporting critical equipment, in other cases, so just about all of our facilities are up and running. So that’s really how we thought about it first, and then that sort of around people perspective. So you know, we developed a safe practices workbook to make sure we really knew how to be safe, how to maintain social distancing, proper visual management in our factory temperature checks before you come into the factory. How do we visual manage that people have actually been temperature checked? How do we create visual management to make sure that we don’t create density problems in different work areas? How do we put up physical barriers, whether it be Plexiglas, or or other types of physical barriers to make sure that people that are in close proximity to each other, don’t get impacted? And in some cases, we’ve had to move equipment. So that’s sort of the safety and security piece as it relates to our employees. But there’s also a safety and security dimension, of course, as it relates to our business where we’ve had to think about, you know, how do we make sure from a liquidity perspective, the business is in good shape, not for today, but really, for the long term. And, you know, we’re fortunate enough to be in a good liquidity position. And we’re also very, very focused still, you know, on, you know, things like working capital, things like spending, things like capex, and etc, etc. And we’re also, you know, thinking about, you know, how can we be good corporate citizens during this time. So, you know, as you think about corporate citizenship, it’s been important to us to be good corporate citizens. So we’ve distributed 1000s of medical grade in 95. Mass to hospitals in the US and in Europe. We’ve done a lot to connect institutions to our supply chain to make sure they had adequate supplies. And we’ve been very, you know, supportive of our employees, making sure they had supplies for their families as well. So that gives you a sense of how we’ve been thinking about it. Things are very dynamic, of course, and changing every day. We’re learning and adapting. But that’s, but that gives you a sense of how we’re thinking about it. Yeah, that’s
Will Bachman 09:31
amazing. Could you talk a little bit about supply chain and just what you’ve seen, both in terms of the reliability of being able to source the raw materials that you need, as well as the ability to get your finished products to your customers? What sorts of things if you had to adapt to or improvise, related to that?
Marvin Riley 09:55
Yeah, our supply chain has been relatively intact. You know, we We are, in some ways, a little fortunate or unfortunate, however you want to categorize it. But you know that the the the outbreak started in, in China in Wu Han, and lasted for about 76 days. But because we have employees that are in China, we have a factory in Shanghai and a factory and CEO, we actually have sales guys and move on. So we were pretty close to this thing when it started in China. And so we started developing safety protocol, safety processes, when this started in China. And we started to think about our supply chain as it relates to China, because there are there are products that we send into China, for example, and their products that obviously we export out of China. So we were thinking about the supply chain from then. So there were some things that we placed in advance, because we were worried about, you know, what would happen with our business in China. And once it started to spread to Europe, we accelerated a lot of those things. So you know, as an example, you know, there was this big crunch, for PE PE, and, you know, we ordered pp. I mean, very, very, very, very early in this thing, when people were still trying to figure out how serious it was going to be, we had already decided in that experience to know this was serious. And we had to get our orders in and we placed orders pretty early, which put us in a good position to help out some of the medical facilities that were struggling with with PBE. But it also put us in position to have supplies so that our employees could go to work with adequate BP, he also put us in position to make sure that our supply chain was in good shape as well. So our supply chain has been relatively intact, because we’re essential, most of our suppliers are considered essential. And our customers, for the most part are essential. So our supply chain to date has been intact, we’re staying very, very close to our supply chain to make sure that, you know, they’re able to operate, you know, in the environment, whether it be because of PvE, or because of their financial position.
Will Bachman 12:22
It sounds like you took early and decisive action on some of these things. Could you talk about organizationally? How you, you know, put together a response team? Was it kind of just you by yourself making decisions? Did you get your your entire C suite together to have, you know, daily, you know, like crisis discussions? Or just how did you coordinate the top team to, you know, draw information in and make decisions? Was it just a handful of people, the whole team? or How did you structure that that response?
Marvin Riley 13:00
Okay, so the way we’re organized for this specific effort is we have a small core team, which is made up of myself, our CFO, our general counsel and our chro. We call that our core team. And then we have a response and support team, that’s a broader team of executives and sort of specific leaders around the business that gives us a reach into every business around the world. And then obviously, we have pandemic response teams, at each physical location, where we are doing business and the way we think about it, or the way we’ve thought about it, at least is that, you know, our core team purpose is really to create space to hash out some difficult issues that may need some back and forth dialogue, to make sure we’re balanced and thoughtful in our approach. And and we’re dealing with things that that apply across the network, right. And so that’s how we’ve thought about it. And then our response and support teams really been dealing with, for example, we created a risk matrix, that the response and support team has really made a powerful tool, which is to identify what what level your plant or your facility is that for example, you know, level one, no exposure, no risk level two, no in house exposure, but you know, employee has a family member who’s exposed etc, etc. Level Three is you know, we have a an employee that’s been diagnosed with COVID level fours, we’ve got community spread and so that that response support team is managed During the dynamics of that, what do you do in each of those categories? Who does what, so they’re really doing a nice job of managing those kinds of things. And what what we learned in China was that the, the local teams need to have freedom within a framework, they cannot seek permission, they can’t be looking for direction, they need to be able to move on their own. And they need to be able to take decisions immediately because of how dynamic The situation has been. So that structure has really allowed us to move fast, and for that person on the ground to know that it’s their decision. And here’s the framework by which we’d like you to decide. And here is the actions that we’d like you to take once you’ve decided, but it’s really your call. So that’s given us, you know, a lot of freedom to operate. And that’s, but that gives you a sense of, of the structure, that structure has worked really well, quite frankly. And, you know, right now, we have about 30, we had certain cases since this thing has started. And we’ve responded very aggressively in each of those cases.
Will Bachman 16:23
That’s really fascinating how you’ve structured that. What about feeding information back up the chain? Do you have some kind of daily, hourly, weekly sort of reporting of status of what steps people have taken, what they’re seeing? How are you? Yeah,
Marvin Riley 16:41
yeah, so each of those teams meet daily. And each of us plug into one of those sort of levels, in order to keep things flowing. So, you know, our chro, for example, heads, the planning and response effort. I fit in with our supply chain support team. And our general counsel’s in a different team and our TFO is in a different set of teams. And we we meet daily, as a group, we were meeting twice a day, the beginning of the day, at the end of the day, when we first started, we’ve now dialed that back to once a day, the planning and support group meets daily and all the other groups meet daily, we’re going to ratchet the planning and support back from every day to three days a week. Now that we’re transitioning away from what we call safety and security into more of a business stabilization process, we’ve seen enough. We’ve had enough experience now to know that the organization is responding well, and we can dial that back. But you know, and we also had, you know, we have a broader staff meeting that involves all the division heads, etc, etc, that we we accelerated as well, we started doing that twice a week, just to make sure that we were getting information from all functional heads or business heads. So that that process worked exceptionally well, we also did zoom check ins. So every other day, we do a zoom check in with the leadership team out in the field, running one of our one of our plants. And you know, I participate in every one of those calls. And we’re asking them for what’s happening on the ground just to understand what’s happening in Italy, what’s happening in Singapore, you know, what’s happening in Austria, what’s happening in Germany, we what’s happening in Brazil. And so we’ve been talking to each of the teams on the ground just to make sure that we had a pulse check. And in last week, I visited eight of our sites, just to do another post check to this, make sure that first and foremost, our employees felt comfortable to do a check on my own to get a sense of what the procedures were, and see if we, you know, distributed with some level of standardization across the network, our processes and systems and methods that we were using. And so we’ve tried to make sure that we’ve had a good feedback loop in as many ways as we can. And obviously, we’ve been doing a lot of just day to day business meetings with just a mass group of folks. And quite frankly, one of the most beneficial things we started a couple weeks ago, is something we call midweek mindfulness, because the we sensed that the isolation and the remote working conditions were creating sort of a dynamic for some folks. So we thought that we needed to build some kind of Akin Unity, we thought that we should do that virtually. And so we do something called midweek mindfulness just to connect in with our broader employee base. And we get about, you know, 400 folks to show up to that every Wednesday where we got direct contact with everyone who chooses to dial in on that day and give us a sense of what’s going on, but also gives us a way to maintain a sense of community.
Will Bachman 20:31
Amazing. The sound is a sound very sophisticated, what you put together, did you come up with this whole structure on the fly? Or had you already kind of had a pandemic plan or some kind of crisis plan with this structure in mind with the top team of the four in the local response teams? Like, how did you evolve that structure?
Marvin Riley 20:54
So we did we do, we do have a standard crisis management team that that needs, has been meeting for a substantial period of time just to think about how we would organize ourselves in the event that we had a crisis. Obviously, I grew up in operations. So in Ops, you, you, you have to do this, we’re always doing, you know, you know, take shelter drills and tornado drills and active shooter drills. So we’re always thinking through how to behave in a crisis. And, you know, obviously, we started, this started for us in China. So we were able to tweak that a little bit to when we realized that, you know, this pandemic was so unique, and that when an area is locked down, it’s locked down, people aren’t moving back and forth, like they used to, and the whole idea of getting together is it’s not something you can do. So we were able to tweak it a little bit, to deal with more of a virtual environment and to deal with more of a distributed environment.
Will Bachman 22:08
Okay, any lessons learned that you’ve had you that you would adopt these for, for the next time that something like this happened?
Marvin Riley 22:19
Well, so we were not at the stage where we would, we do have a standard process in our company, where we do post accident review, where we deeply examine the way we acted, when we have an event, we haven’t gotten there yet. To really scrutinize, you know, some of, you know, what we would consider to be our best practices or things that we would take away. You know, obviously, the, the structure that we organize is a big takeaway. You know, having practicing subsidiarity where you’re allowing people to the autonomy to make decisions on their own in the field, was a big takeaway. The lessons learned around, we took a lot of lessons away from what happened when government started to shut down their borders, we would have never contemplated that before. But that was huge for us. And it’s really making us rethink a lot of things in terms of how we would approach things in the future and what needs to be on the ground and what locations in the future, and what and how to adapt to, to what happens when a government gets really involved in the flow of goods in a country. So there’s some takeaways from that, that we learned. And, you know, that’s, that’s just a high level. I don’t have anything concrete at this point. But that’s what comes to my mind initially.
Will Bachman 24:08
How do you see this next phase of your response? playing out with the I think you called it the business stability? phase? What are you what are your thoughts and plans for that? That phase?
Marvin Riley 24:21
Yeah, I mean, for this, it’s really around scenario analysis, to make sure that we understand what the business could look like in the future, what range of demand drop off, can we expect in aggregate, but also in acute markets around the world? You know, what is our plan for running first and foremost, sort of? Another thing is just how do you run and run and good levels, you know, in this adverse condition, I mean, you’re basically living with the virus right. So we now I need to conduct all of our business operations with with the virus, we have to manage liquidity with the virus, you know. So those are the kinds of things that we’re thinking about developing good procedures, taking away good ways of working around, you know, how can we, you know, what is the virtual world look like? How do you properly work in the virtual world? What are the kinds of things that we’ve never contemplated? before? So, you know, a simple thing like workman’s compensation, you know, what happens if someone gets hurt in their home office, which is in their basement, for example, the kinds of things that we’ve not we’ve not thought through in the past. So that’s how we’re thinking about it, you know, how do we size the business for the demand that we have? What businesses have the level of resiliency to make it through and to perform with the financial profile that we think a business needs to perform with? And what do we what kind of injection of resources and capital Do we need to put into some businesses to give them the ability to perform at a high level in this environment? So that’s, that’s how we’ve been thinking about this, the stabilization phase.
Will Bachman 26:19
Here, you hear a lot of talk about how people will get used to working from home and a lot of people will like it, and maybe, you know, when things, you know, move back to normal, or we have a vaccine a lot, maybe a lot of workers will continue to work from home. What what what he what he are your thoughts around that in terms of Do you expect to just bring everybody back to the office in the future when that’s possible? Or? Or do you see maybe some changes in the way work unstructured?
Marvin Riley 26:51
So I definitely see some changes, except I don’t have enough clarity at this point. You know, my sense is that corporations are going to feel comfortable with the footprint that they have. And some might shrink their footprint. Some might repurpose their footprint, very few will expand their footprint. Right. That’s how I think about it. I think employees love the flexibility of working from home, see the power and impact of working from home. What works well is when the majority of the people are working from home, if we go back to what’s considered normal, and people do transition, where a large amount of the workforce is in the office, a large amount of workforce is still at home, you’re still gonna have this social dynamic that’s playing out. So that’s something that I’ve been putting a lot of thought into. Because, you know, this is still a relationship world. And what’s working nicely now is everyone is home. And so, if I could convince myself that everyone could stay home, everyone would stay home. If we could replace that social element in some other way, I still think people need to get together, there are some things that are transmitted. When people get together, they’re collisions that take place that’s innovative in a lot of ways. When people are working together, we need to be able to bump into someone and have a conversation or be able to reach out to someone and ask for mentorship and support, we need to be able to have networks that are established that help people to navigate difficult things. So we need to find a way to do that in the virtual world. But there are huge benefits, huge benefits to being virtual, huge, huge, huge benefits. But we are social beings. And we would need to still be able to treat the social aspect of it. So as I’ve been thinking about it today, I’ve been trying to suspend judgment and not be too quick to rush to any conclusions and allow things to play out slowly and thoughtfully. So that we can understand what it could look like. I’m not opposed to any extreme as long as I’ve thought carefully through what it means I will tell you this the one thing I know for sure is selling will be different in our company forever. That I know for sure.
Will Bachman 29:46
So there is a huge say more about that
Marvin Riley 29:48
there is there is a huge difference between one outside salesperson talking to a customer and pick Seeing a product and its features, versus the salesperson, the engineer, inside sales, maybe someone from manufacturing, all coming together in a virtual conversation with the customer. So the customer is now you know, really getting deep into the technical aspects the performance and features of a product with not just the sales guy, but the person that designed the product maybe, or the person who deeply understands the product, maybe more than the salesperson, the person who will be responsible for the supply chain, the person who they will be interfacing with from a customer service perspective, plus the sales guy, I can’t see how a single salesperson going out to see a customer can be better than that. And so we’ve learned that the virtual world provides a huge opportunity for Team selling in a way that we could not perform before either from customer receptivity or from our outside sales. receptivity. The differences to me are, are far the gap is why. And so we need to take advantage of that.
Will Bachman 31:24
That’s really an amazing insight. So that the, the pandemic has kind of forced you to go in that direction. And it sounds like you’ve found that it works really well.
Marvin Riley 31:34
Yeah, it really does. I mean, it really does, I mean, to to get a product engineer, on a plane, with a sales guy is a bit of a big deal, it’s a lot of time consuming. It’s you know, it’s got its challenges, but to get him to dial in to call by video, you know, that requires no travel, that’s easy to pull off. That’s not hard to do, the amount of customers I can visit by video goes up 510 X, versus what I can do traveling around the scene that you know, and so now we still need to get them a product in their hand. And there’s still some things that relationships bring, but I think I think we’re learning and, and from this learning, we will we will, will be forced to change the way we work.
Will Bachman 32:34
Now I spoke to the CEO of mirion Technologies on a recent episode, and he talked about how one innovation they’ve had is customer acceptance. So they used to actually have customers fly from South Korea over to Connecticut, to visually personally inspect the products before signing off on them. And they’ve changed that to to videos. Beyond the sales aspect, any other business processes where you’ve seen innovation happening, that you think that you might have stick with it after the pandemic is over?
Marvin Riley 33:11
We’ve definitely seen it on the supply chain side, right, in the same way that you just mentioned, I mean, our supply chain, our supply quality folks would typically go into a site, do a walk of this site and and know through their process of, you know, qualification on site, we think there’s some of that, that still needs to happen. But we’re figuring out how to do that now. regionally, which before, we didn’t always do it regionally. And we’re able to do a lot of qualification by video where we wouldn’t do that before. I’m kicking off a process to think about internal audit. Because we do fly people all over the world to do internal audit. And, you know, I don’t see why we can’t do that virtually. So I think there is a lot of innovation happening that we will codify here pretty soon. But it’s it’s a game changer. If we could if we could stick with it, you know, the social challenge will be hard to stick with it. But I think we have to
Will Bachman 34:21
what advice Are you giving your local managers, the plant managers in terms of your expectations for them to communicate to the workers to be walking around to be visible? What sorts of expectations are you setting?
Marvin Riley 34:39
Well, that’s interesting. But I guess the way I’ve been communicating to our employees is to think about the behaviors that are most critical. Right now. Right behaviors now. Right, because, you know, people can’t see what you believe. But they can interpret from the way you behave. Right? And so, first and foremost, it needs to be clear in everyone’s mind that they’re excited safety and security is of utmost importance. There can be no doubt about that there can be no decision that’s made, where someone questions whether or not their safety and security is of paramount importance. So that’s first. Secondly, we need to be open minded right now, because we really have never seen this before. So this is this is the most, one very, very important characteristic that everyone needs to adopt right now is when when people are giving you ideas, about ways in which they want to work or ways in which we can improve things or ways in which we can keep people safe. We need to be open minded, very, very open minded, you know, suspending judgment, suspending cynicism, letting go of what we, our desire to be right, and just really, listen, listen deeply to what people are saying be empathic, right? Be clear about what you believe, but be empathic and, and have NBI. Dial and, and most important, I think, you know, being mindful, is really, really important right? Now people can, can tell when you’re being mindful, people can tell, especially in this environment, especially in our factory environment. When you’re being mindful when you’re paying attention, you know, purpose, you’re not being distracted, and you’re really locked in. And you’re following up exceptionally well. And so that’s the guidance I’ve been giving people is to really focus on their behaviors, because their behaviors, and this environment, your behavior says everything.
Will Bachman 37:16
Marvin, it’s a it’s inspiring, inspiring message that you’re giving out. I want to thank you for being on the show. Where should people go if they want to find out more about enpro?
Well, you can go to our website, of course, and pro industries calm, that would be the best place to take a look at in pro and you know, I’m happy if you will, with the head, someone that wanted to have a follow up conversation and to go a little bit deeper to just take that reference from you directly. But thank you so much for the time. It’s been a pleasure. Well, I
Will Bachman 37:52
really enjoyed speaking with you. It’s fascinating how you structured your response and about how you’re seeing innovation and sales and supply chain. Thanks so much for being on the show, Marvin. Thank you, you. Take care