Enerpac Americas president Jim McTaggart discusses the impact of Covid-19 and his company’s strategy for the future.
There is nothing like a global pandemic to change the pace of things. Enerpac Americas President Jim McTaggart compared it to “falling off a cliff.” Making the decision not to attend ConExpo in Las Vegas was Enerpac’s first “big Covid-19 decision.”
“We felt like the odd man out in some ways, but we didn’t want to expose our team,” McTaggart said. “Our booth was set up and our products were on display. We had invested a lot of money in the show.”
Instead the Enerpac team focused on the task of keeping employees safe and the company solvent.
“There was a time, early on, when I spent over 75 percent of my time dealing with the impact of Covid,” he said. “We had to develop policies for our facilities, safety, PPE equipment. It was boom, boom, boom. There were many meetings to discuss customer impact, facility impact, employee safety. It’s still ongoing.”
One of the first things McTaggart did was engage ITR Economics to create a short- and long-term economic model for the company during the crisis.
“We were anticipating a short, intense recessionary period of a few months and a V-shaped recovery that would be dramatic and steep,” he said. “At that time, order rates had started to decline but not so significantly. But since then they have declined more significantly.”
With the evolving crisis playing out in many ways depending on the industry, McTaggart and the Enerpac team are preparing for an extended economic downturn.
“There are two key issues, two black swans, affecting the economy,” he said. “It’s Covid and the OPEC Russia issue with oil prices. One would be significant enough but two would never be experienced before.”
McTaggart said another source of key information has been Enerpac’s Distributor Council, some 12 agents from around the country that represent the various vertical markets Enerpac serves in North America.
“Of course, the oil and gas sector, they are already struggling,” he said. “But we have other distributors working in construction and in equipment rental. I think they are a little more able to maneuver into their markets – shipyards, the paper industry and the rail yards. The companies with a more diverse footprint to begin with have not seen the downturn as dramatically, although everyone is impacted.”
McTaggart was pleased to see the U.S. government react quickly with a stimulus package, but more will be needed, including a comprehensive infrastructure spending package, he said.
“If there is ever a time in history to make a recovery happen quickly, it would be now,” he said. “The double black swan event is global, and many businesses are going to struggle. Some are not going to survive. An infrastructure bill is a way to put people back to work.”
He hopes Congress will not be slow to pull the trigger on another stimulus package. Many state DOTs have projects sitting on the shelf, ready to start.
“They are ‘shovel ready’ projects,” he said. “But it will take some time to get these projects launched. We don’t envision a lot of equipment purchases happening quickly.”
An optimist by nature, McTaggart realizes that the recovery will be a painful process.
“We are concerned with these developments, but we feel the business will rebound and return to a more normal state over the next 90 to 120 days,” he said. “We are expecting some increased activity due to government spending programs and pent up demand that has been created as of late. We will continue to innovate, developing unique solutions, and we look forward to the future development of smart connected products.”
Throughout his 18-year career at Enerpac, McTaggart has served in several strategic leadership roles, including global operations leader and heavy lifting technology business leader.
More recently McTaggart was responsible for the refocusing and restructuring of the North American service and product business that has led to greater profits and efficiencies and involved heavy investment in new product development.
“Refocusing and transforming businesses had been a familiar challenge throughout my career,” he said.
The Enerpac organization is now flatter and more responsive. Decisions get made faster and closer to the customer.
“This has helped build on top of an already strong brand and has separated us from our competition,” he said. “Enerpac has always been known for quality and technology leadership and this has been further solidified over the last two years.”
Prior to Enerpac, he held leadership positions in manufacturing and distribution at Krause’s Furniture and Stanley Works. He did his undergraduate work at Michigan State University and earned his MBA from Claremont Graduate School. Today, McTaggart oversees the Enerpac product and service business in the Americas and is responsible for delivering the sales and profit plan while prioritizing customer and employee needs. While we talked at length about Covid-19, McTaggart also shared much more. His answers are genuine, candid and interesting.
With so many product lines, brands and a global reach, what are your biggest challenges?
The overarching challenge is to set the stage for a team who understands the vision and mission of Enerpac and are excited to come to work every day to achieve that vision. Competition for resources is always a significant challenge. Be it employees, products, facilities, capital equipment, technology, there are never enough resources, and I have to constantly prioritize and re-prioritize to meet the requirements of today while keeping a close eye on the future. Given the multiple product categories, the broad geography and the constantly changing needs of our workforce and customers, it is often difficult to stay on top of everything. I must remind myself and my team regularly to stay focused on the tactical as well as the strategic elements of the business.
Being a part of Enerpac Tool Group makes it easier to focus. Even though we have a complex offering of products and services, we are organized and operate under Enerpac Tool Group. Staying focused on the needs of all our stakeholders is the ultimate balancing act. The good news is we have many opportunities in the marketplace, and we have many products and services to meet those needs. This is much better than the alternative.
What is it about the company and its products that keep you engaged?
The company is investing in the right places and we have streamlined our business to be a world-class brand of industrial tools and services to customers in a variety of markets. After divesting our components business, we are much more focused today and we are building on our most powerful brand – Enerpac. Enerpac has always been the strongest business in the portfolio, but we always had to compete with other businesses. This focus has allowed the company to invest as necessary in talent, products and processes that provide benefits to our customers, employees and shareholders. The team sees the benefit of this, and they are engaged in executing the strategy. I fit right into that engaged group that honors the past but is very excited about the present, and most importantly the future of Enerpac Tool Group.
Skilled labor has become a challenge for companies in the specialized lifting and rigging industry. How does Enerpac Americas address workforce development?
A qualified and trained workforce is one of the most important things we can provide to our customers and to the specialized lifting and rigging industry. Our team spends a significant amount of time involved in training, utilizing a number of venues for the training. We host factory training at our Heavy Lifting Technology (HLT) Center of Excellence in Hengelo, The Netherlands multiple times per year.
Our HLT team participates in SC&RA industry training and we are active with the SC&RA organization. Enerpac also operates an Enerpac Academy at locations in the U.S., Europe and Asia. These academies are focused on providing training for distributors, end-users and Enerpac employees. The Enerpac Academy conducts specific training courses for heavy lifting technology. These courses typically last a week and are focused on safety, products and applications. In addition, our team also provides hands-on training to the people that operate our equipment. This is included as a part of every sale we make.
New product development seems to be a hallmark at Enerpac. How do you approach product development?
Enerpac has a long history of innovation. Today, we are committed to innovation like never before. Over the past three years, we’ve more than doubled our investment in research and innovation. Our approach to product development is that we use an output-driven innovation model based on the job to be done. We give our customers innovative ways to solve their problems.
Enerpac is committed to helping customers address application challenges. Engaging with customers and listening to their needs provides Enerpac unique insights into what customers are looking for in new products.
What is the company’s route to market strategy?
Enerpac is a global company with partners in every corner of the world. We have the broadest and deepest distribution channel that touches most every geography and industry in the world. In some cases, we partner with our distribution channel to get to the numerous end users; in other cases we go direct when it makes sense for all parties involved. Often the project may be considered too complex or risky for the distributor’s appetite. The end user may be looking for more direct technical support that must be provided by Enerpac. In other cases, primarily with more standard products, we prefer to involve our channel partners as they have a value proposition that the end user appreciates. They can provide ancillary products and services locally, which is a benefit to the end user and is fully supported by Enerpac.
Unlike many OEMs, Enerpac also offers engineering and custom solutions. Can you please explain what this involves?
Despite having the broadest portfolio of high-force tools, we know that some situations require a solution not available in our standard offering. For these situations we work closely with customers and our engineering department to develop a solution to meet customers’ unique needs. Whether they need a simple modification to a standard cylinder or a complete one-off custom solution, Enerpac has the capabilities to deliver.
What is your best business advice?
Build the best team possible. Your team is your most important resource and they are the front-line associates who make a difference for the customer. Get them trained and continue to invest in them so they are considered the best and most trusted advisors in the heavy lifting space.
What’s your advice for achieving a good work/life balance?
Like everything it all comes down to balance and priorities. At different stages in any career and life, the balance shifts and priorities change. Know full well going in that you will never be able to meet all the needs of all the constituents that value your time. I go back to building the best team possible. If you have people you can trust, that are competent and have been given the opportunity to contribute and lead, they can help you manage that delicate balance I mentioned earlier.