By: Adam Burroughs
What we want people to fear is fear.
President and CEO, The Philpott Rubber Co.
“In business, if there’s a global economic crisis, a U.S. economic crisis, you can’t control what’s going on in industry, but you can control how you react to it,” says Mike Baach, president and CEO of The Philpott Rubber Co.
This philosophy of self-determination has been guiding how the company navigates market challenges throughout its 125-year history. And its longevity comes from the basic premise that the company can’t be fearful of what it can’t control.
“What we are going to be doing is figuring out how best to react to what’s going on around us,” he says.
Following that principle, Baach has moved the once risk-averse company into new and developing markets, ensured its training program is robust and has continued to chip away at the advantages of foreign competition. It’s the latter that has required a particularly innovative rethinking of workforce utilization.
“One of the smartest things the company did for certain products was to go out and find partners to help both companies reduce their cost of labor,” Baach says.
He’s referring to a program in which Philpott took some of its equipment that manufactures higher volume products and placed it with “host partners” so the equipment actually resides at partners’ facilities.
“Rather than our having labor sitting there, maybe waiting for the job that may never come, we rent the labor from the host company,” he says.
That results in an incremental utilization of the host companies’ employees on Philpott machines, spreading the companies’ overhead over bigger numbers and leading to near 100 percent utilization of labor for Philpott.
Improving workforce utilization is one way to stay competitive. Another is to expand into new areas of business. For Philpott, that’s the shale oil and gas business.
“We identified the oil and gas area as being one that would help us resist the downturns in the economy,” Baach says. “Cars don’t come off the road, there are fewer that are out there, but demand for gasoline isn’t going to go away.”
The equipment Philpott utilizes in the shale fields is specific to the company, which means training people to use it falls on its shoulders.
“There’s no college on the planet that will teach our people how to operate this specialized equipment that we have,” Baach says.
“Philosophically we can’t wait for government to do things; companies have to come together and work together in order to do similar things,” he says. “The answers are within our economy, within entrepreneurs, within capitalists. We can’t just complain about the present; we have to do something.”
Training in the shale fields is accomplished through competent management, Baach says, and that manager is Jeff Rog, vice president of Philpott Energy and Transportation, a subsidiary of Philpott Co., where he serves as the company’s corporate vice president of sales and marketing. Working with field crews is his responsibility.
“We daisy-chain, if you will, through our management team — our field management — as well as the hands that are on the site in order to train the people as to what they need to do on the site when they’re there,” Baach says. “We don’t let them out there by themselves until we are confident that they’re trained.”
Philpott’s growth in the shale gas area now accounts for more than a third of the company, and the field can only expand.
“It’s one that we believe is going to be one of the foundations of the company to make us recession resistant.”
Fear of fear
When Baach took the helm of Philpott in 2007, he saw a company that was profitable, but risk averse. That fear of failure was something that had to be addressed.
“Fear of failure is absolutely, positively one of the worst things that can happen. It’s paralyzing to a company. So what we want people to fear is fear,” Baach says.
“And you know what happens when you do that? If you give them confidence, they become creative. And then success breeds success. And it gets easier for management over time on that side of things because people start motivating each other.”
Baach says the company has always had great potential, but its employees had to understand that they had the creativity to take Philpott to the next level. He has made it his responsibility to motivate employees, finding the right mix of incentives to ensure employees are helping the company achieve its strategic objectives.
“It’s in the people, they just have to have the confidence in themselves to make new things happen,” he says.