Gary Tubridy: I’m with Roger Miller, Vice President of Global Engine OEM Sales for Donaldson. Roger, welcome to the forum.
Roger Miller: Thanks, Gary.
GT: I think a good place to start, Roger, would be to give us some background in Donaldson about your business and your customers, little bit about the sales organization.
RM: Donaldson’s a filtration company, so we’ve been around for about 101 years now. Publically held, based out of Minneapolis, and we sell a pretty wide variety of filtration, both first-fit systems, as well as service parts. So we do have kind of a production side and then a consumable side of our business. And then we sell to wide variety of industries, but business — the engine business that I work in primarily supports those that make heavy equipment, so mining, agriculture, construction, as well as over-the-road trucks.
GT: And can you talk a little bit about how your products and services have evolved over this period of time to match some of their needs and challenges?
RM: We are a technology company, so we have been able to deliver either the same or better filtration in a smaller package, so that helps them in terms of first-fit costs on their vehicles. They have also seen, at the same time, significant regulation changes from an emissions standpoint, so that’s put additional pressure on what used to be a very large engine compartment. We’ve been able to use our technology to package filtration to fit in the space envelopes that they give us. And then on the intellectual property side, you know, we placed a lot of emphasis on delivering innovative products that drive that part business back through their channel.
GT: So you started out telling me that you’re a filtration company, but you amended that to say we’re actually a technology company.
RM: We like to believe that we’re a technology leader in the filtration markets that we play in.
GT: That evolution has probably changed the role of the sales organization, too, hasn’t it?
RM: It has to a great extent, and I think one of the other things that we’ve seen over the years is — and we’ve spoken about it at prior sales forums — is the decision by committee. So our sales people have to be now a little bit more versatile in terms of who they engage with at the customer from procurement to product management, field service organizations, the aftermarket businesses. So, yeah, the dynamics of our sales roles have changed.
GT: Can you talk a little bit about what sort of feedback you’re getting from the market? The products have evolved, the salesforce has evolved, they’re challenged. What are your customers telling you?
RM: I think, you know, in some cases — you know, Donaldson always prided itself on our global footprint. And so we’ve seen some consolidation in the industry, which has allowed a number of major players to be present in a lot of geographies. We also, from an operational excellence, in terms of quality delivery and cost, you know, those were — used to be differentiators. I’d say now they’re more of table stakes. And so, you know, we have had to look at the whole value proposition in terms of what do we bring that organization, in some cases providing, you know, greater engineering support and testing capability than we have in the past.
GT: Interesting. And do you have any anecdotes about things you’ve delivered to customers that have added value that you might be able to share?
RM: I think if we look at some of the products that we were able to — and this was innovation that we achieved through some of our technology — was putting packaging in an air intake system for, say, a heavy-duty truck. In a place that was very convenient for them with emissions regulations that were coming in, and also such a unique design that it’s driven significant value back to their dealer network and their parts organization.
GT: So the economy may or may not cooperate with us in 2017. What do your tea leaves say? How are you looking at that year?
RM: You know, it depends on what you’re looking at. From a market standpoint, you know, mining and agriculture may be at a trough, so hopefully, they’re at the bottom. You know, on a geopolitical side, we still see some issues in Brazil. China has been a challenge with their construction industry the past several years for Donaldson specifically. We think we’ve been doing the right things to either gain share or solidify our position with those customers. Some of it is just a matter of waiting until the business comes back on the first-fit side. You know, the beauty of our filtration business is that we do have growing after-markets parts business to offset some of the weakness on the equipment side.
GT: Are you working on some things in anticipation of 2017 and beyond to tune the sales organization still further?
RM: At last year’s forum, there were a couple of breakouts that spoke specifically to sales operations. I was able to do some networking with some of the other folks that attended the conference. And it took me a little bit longer than I wanted, but we just formalized kind of sales operations for the first time. We’ve done a lot of this work on an ad hoc basis people putting it on top of their day job. We were reasonably effective, but not, you know, best practice that we want. So I’m pretty excited about that for 2017.
GT: Excellent. Well, I know your fiscal ’17 has only just started, so thanks for joining us right here and best of luck in 2017.
RM: Great. Thanks Gary.
GT: Thanks, Roger.