Monday, February 3, 2020

Mastering Manufacturing in North America

Against all odds, Trent Ogilvie Has Led Rockwool North America from Near Bust to a Booming 25 Years of Success

By Howard Pezim, Managing Director, Bedford Consulting Group

(Video Interview – Trent Ogilvie and Howard Pezim)

A quarter century ago, Trent Ogilvie walked into Rockwool North America’s manufacturing facility in Milton, Ont., and encountered a business on the brink of failure. “At that time, Rockwool and our kind of stone wool insulation had no brand awareness in North America,” recalls Trent, Rockwool North America’s President. “The facility in Milton just wasn’t working. As I later found out, I was their last kick at the can.”

Trent’s kick would turn out to be the beginning of a steady stream of goals. From starting with just 60 employees and one fledgling factory generating a meagre $20 million, Trent engineered the quintessential turnaround. Today, Rockwool boasts five factories throughout North America with 1,100 employees and is rocking sales revenue. It’s a rather remarkable feat, particularly for the manufacturing sector in North America.

Throughout his career, turning businesses from bust to boom has been Trent’s stock-in-trade. I recently spoke with Trent to learn more about his accomplishments, how to succeed in growing capital intensive manufacturing in North America and advice on the importance of being an authentic’ leader.

 

Talk about your formative years and how they shaped who you are?

I grew up watching my father work very hard as an engineer. I learned from him that work was more than 9-5, which motivated me to always work harder than the next guy.

When I went to university, he also had a significant influence on me because at that time, I thought I would become an architect, but my dad convinced me that I would likely thrive as an engineer who hired architects, so I chose the engineering path.

 

You spent the first 10 years of your career with Dow Chemical. Talk about the important role Dow played in your career and why you decided to leave?

I was recruited by Dow on campus at the University of Waterloo and I spent my first two years working for them in Toronto as a structural engineer.  When I realized that wasn’t for me, I got lucky, because there was an opportunity to move into project management. Dow had a huge petro chemical plant under construction in Alberta and I worked on the job site directly with all the contractors and other people as a project manager and realized that was what I really liked to do – working with people. I did well and had great mentors.

Over my 10 years at Dow, I advanced through five jobs in five different places in Canada. But over time, even though everything was going well, I saw that the cream didn’t always rise to the top and I decided I didn’t want to stay at a big company. I wanted a smaller, more entrepreneurial company. So I put myself out there. I called up head-hunters and let them know what I was looking for.

 

Your next role was vastly different; a small company in dire financial straits.  How did you help turn around the company?  

Within my first six weeks at The Sternson Group – a manufacturer of construction chemical products in Brantford – the owner fired the president and told me the company was essentially bankrupt. We had to make major changes. This was a real turning point in my career. The person who came in to run the company became a mentor. He taught me if you want to turn around a company, don’t just accept basic answers – see where the money is going.

After stabilizing the business we decided to make acquisitions. Within a few years, the company was profitable. I was promoted to be the Vice President and General Manager. I stayed at Sternson for five years and continued to grow the business. That’s why Rockwool came looking for me. They wanted someone to run their North American business, which was in trouble.

 

What were the obstacles you faced in scaling Rockwool’s business?  What was your vision and value proposition for the company and how did you realize it?

Here was another tiny business, practically bankrupt and with no brand awareness in North America. I didn’t know this at the time, but their major competitor in Europe had just closed up shop in North America. Following what my mentor taught me at Sternson, my eyes were focused on their financial situation.

I got in touch with a former Dow colleague who knew the company and it’s products. He told me Rockwool had a very special product, but they needed to get their sales and marketing figured out. This insight was essential in my decision to join Rockwool and shortly after starting, I decided to hire him as our Director of Sales and Marketing. I made some other changes and by 1998, only three years later, we were making money. That was quite a turnaround and success.

My vision was to price our product at a premium and not let it become a commodity because we believed we had the best product in the world. In order to sell the product to high profile customers who would pay substantially more than other types of insulation, we really needed to stick to our premium quality vision – and we did.

When we would go visit our clients, like Home Hardware, we would reinforce our value proposition – that this product is really special, which is why it costs more to produce and therefore, costs more for the customer.

Initially, we resisted selling in big box stores. Instead, we did “in-store “demonstrations in Home Hardware’s on Saturdays. We developed a following and this created consumer demand. Soon, we were selling in many lumberyards and that’s when Home Depot came calling. They were relentless, as they had people coming in their stores, asking for our product and then walking out because they didn’t have it. Home Depot and eventually Lowes became major clients for us in Canada.

 

Talk about your foray into the crowded U.S. market.

In 2007, as part of expanding into Home Depot in the United States, we recognized we needed to build a bigger facility in Milton. We also needed to hire a team to enter the U.S. market, which we did. This took time and patience. In Canada, there are 150 Home Depots, whereas in the U.S. there are 1,800 stores, so we couldn’t replicate the same approach we used in Canada.

We banged our heads against the wall for a while with Home Depot until we recognized we had to pivot. We again had to create consumer demand through smaller lumberyards until we could attract the attention of Home Depot and Lowes in the USA. We also had to change our supply chain set-up, because what worked in Canada was not working in the USA. These changes were keys to our success.

 

Many Canadian companies struggle in the U.S. market, particularly in manufacturing. What were key challenges you faced in your U.S. expansion? What important lessons were learned?

In 2014, we opened a manufacturing facility in Mississippi. This was a $200 million investment and marked our first production operation in the United States. In 2020, we will open another brand new site in West Virginia.

Everything we did in Mississippi was brand new for us – using the newest technology, operating in the south and building a greenfield factory. It was really quite a challenge. It took us a while to understand the culture. That’s why we hired a hands-on leader who spent a ton of time there. We had to develop different training and retention programs and we had to be patient. We won’t suffer something that is not right.

Our patience and integrity has served us well. We have found some really great talent down there. We learned that you need to expect the unexpected. Competing with big American companies takes time. Some companies might have given up after a year or two, but we didn’t. Today, half our business is in the U.S. and that’s where it is growing the fastest.

I would advise any company going into the U.S. to invest a great deal of time and resources in due diligence. Work hard on learning their local culture and have your new employees understand and adopt your company’s culture.

 

What is Rockwool’s culture and how has it evolved over your 25 years?  

To understand Rockwool, you need to know the origins of the business. It’s a family owned company that began in Denmark in 1937. The company has never wavered on its core values of integrity, ambition, responsibility, and efficiency. These values are real and deeply rooted – the company means it and lives it. There is also an understanding of the principle of being humble and not too extravagant.

What I’ve seen grow in our company culture over my 25 years is our realization of what our products do; what their purpose is in life. People now look at the natural power of stone to solve modern life challenges. It’s fire resistant and water repellent; it saves energy; it can help with acoustics by absorbing sound and it’s recyclable.

There’s an expression that says, ‘culture eats strategy for breakfast.’ I think culture can either kill or make a company great. If you want to attract young people, the culture can’t be all about sales growth and share price.  It has to be about real values, learning about the communities we work in, having good exchanges of ideas and having a positive impact on the environment.

A core belief in our culture is that the product will prevail no matter where it’s built or how long or even how much it costs to make it. And it does. Our competitors who produced different forms of insulation are now opening stone wool factories.  This shows we changed the market. Stone wool is growing double digits year after year and I believe a lot of that is because we stuck with it when things were tough.

And there were tough times. From 2005-09, we didn’t have the capacity to meet the demand. There were also some lean years in 2010-11. Our salespeople who we hired to expand into the U.S. faced a lot of disappointment. But the same team we hired in 2007 stuck with us and are still with us today. They believed in our culture of knowing that the product will always prevail, which was really a key to success.

The expanded Milton facility opened in 2009 and today, has both production lines and the recently installed confectioning line, operating at full capacity

 

Environmental stewardship is vital to Rockwool. Discuss how, under your leadership, Rockwool North America has been successful at lowering carbon emissions and speak about the company’s sustainability goals?

Saving energy is at the heart of a sustainable future and at the very heart of what we do. That’s why we aligned our sustainability goals with nine of the United Nations sustainability objectives. What this translates into is reducing our CO2 emissions, ensuring we use less water, recycling our products, looking after the wellbeing of our employees and making our buildings more energy efficient.

Stone wool insulation is unique when it comes to the environment. It’s completely recyclable. Our product can come off a building and be recycled into insulation. You can’t do that with foam plastics. One year’s production of stone wool insulation will save a tremendous amount of CO2 emissions from buildings and processes over its lifetime of use.

We are also making sure that when we melt rock, we have the technology to do it with the lowest impact on the environment. Some global indices have in fact recognized our sustainability and environmental stewardship efforts and we will always work very hard on lessening our carbon footprint.

 

What do you believe in as a leader and is there anything that is sacrosanct?

What I truly believe in as a leader is being authentic. What that means is working by example, making sure you are true to yourself and to the people you work with and also being interested in what other people are doing for the company. As a leader, while it’s important to be collaborative, you also need to create drive and focus in people.

Honesty, integrity, teamwork and trust are absolutely sacrosanct. We like our people to have drive and want to win, but do so in a way that is based on working together towards what we’ve agreed to accomplish.

 

What advice do you give young leaders in today’s disruptive environment?

Young leaders need to remember that it takes hard work and passion to be successful. In whatever endeavour you pursue, it’s going to take curiosity, getting along with people and communication. I always tell young people it’s not just about text messages and emails – you need to speak directly to groups of people and convey your messages. It’s also key for them to have trust that the people who work with them and the organizations, will do the right thing for them.

 

What do you take the most pride in as your legacy as a leader?

Some people say I have changed the industry because there was no stone wool category of insulation in North America when I started 25 years ago and I’m proud of that. I’m proud that we started with one little factory in Milton and now have five production lines in North America. Today, there is an entire stone wool insulation industry with competitors and so many people using our unique product.

I also think about our families. We started with 60 employees and today have 1,100 and that means we’ve brought a tremendous amount of economic benefit for these families and communities and have laid the foundation for a strong future.

 

More About Trent:

Born: Toronto, Ont.

Family: Trent and his wife Dawn have three grown children

Hobbies: Skiing, golf and fitness