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July 2009

Schneider dishes on organic growth, acquisitions

EDITOR’S NOTE: Greg Bodenhamer is the business director for Process and Machine End User Business at Schneider Electric Automation in Knightdale, N.C. He was at ISA Headquarters in Research Triangle Park to help construct the Automation Competency Model, a formal federal document defining the skills and competencies needed in the automation field, and he took time out to chat with InTech senior technical editor Nicholas Sheble.

InTech: In that the economy drives the health of all business and industry, what do you think of the U.S. government’s policies and the stimulus package?

Bodenhamer: I believe the saying is, “When the U.S. catches a cold, the World gets the flu.” I think that’s where the world and we stand now. In today’s world, with the speed and transparency of information and communication, the entire world has the flu. The government’s handling of this crisis is good. In tough times, I think the government can step in and take solid action, to be the employer of last resort, and provide stimulus to address interest rates, consumer confidence, and the like.

As far as Schneider Electric itself goes, we have a group dedicated to monitoring the government sector, and this includes understanding the stimulus package. They evaluate and disseminate this intelligence throughout our divisions and ultimately to our customers with suggestions on how to position solutions and services to best take advantage of potential incentives, tax breaks, and other governmental programs.

InTech: How is Schneider Electric business faring?

Bodenhamer: We’ve doubled the size of our company in the last three years through organic growth and acquisition. We’re launching 80 new automation and control products over the next year as part of our transition from a product-based company to a product and solution providing entity, organized by market.

Our business is not immune to the economy, but diversity and global reach are helping, and we’re positioned to come out of this recession stronger and better ready to meet the needs of a larger customer base.

InTech: We visited a company recently that stopped growing by acquisition … too many cultural problems. They liked the pace and control of organic growth.

Bodenhamer: We have a culture of growing by acquisition and do it very well. We have methodologies and strategies for taking on companies. We work on these methods all the time and each company Schneider Electric acquires gets different treatment ranging from “leaving them alone completely” to “immediate integration.” Each integration plan is directly linked to the strategy behind the acquisition and the “what” we are buying (product, capability, channel, or customer access, etc.)

An example of immediate integration might involve acquiring a company to fill a product offer gap, and buying the company to get that product may be less expensive and quicker than developing the product in-house. In this case, our existing Sales and Marketing resources can immediately begin promoting and selling this “gap filler” offer, and we can leverage the acquired entity’s resources to: (1) achieve their “stand alone” business objectives and (2) assist in the realization of synergies resulting from the acquisition.

A good example of “leaving them alone” might be our acquisition of Citect. This company had software offerings and, more importantly, capability sets we needed. Immediate integration of a company like that could destroy the very assets and culture we wanted to acquire. 

InTech: Back to business …

Bodenhamer: Large projects continue. The bigger projects have momentum. There’s a cycle to an automation project, perhaps two years or longer. When a company starts one, they don’t just stop if there’s a break in business. They’re not going to stop the process where there is a proven or desired Return on Investment. However, with a smaller project, say $200,000 or less, that project may not move forward, be delayed, or it may not get off the ground at all.

InTech: What are the indicators you watch that signal the recession has bottomed?

Bodenhamer: I think consumer confidence is an important indicator. Consumers are keeping an eye on the credit crisis. When they feel better about the prospects for the housing market and prospects for keeping jobs or finding new jobs, spending will resume. When the unemployment rate stops increasing that will be an indicator that we’ve hit or surpassed the bottom, too.

InTech: Unemployment in the U.S. is about 8.7% now. Do you think it will go to 9 or 9.5%?

Bodenhamer: Maybe higher … wasn’t it in double figures during past recessions—mid 1970s, early 1980s? 10%? (The Bureau of Labor Statistics shows a peak of 10.8% in November and December of 1982, and a 6.3% peak in June of 2003).