An interview with Arnie Sallaberry, President and CEO, Clemco Industries Corp., Washington, Missouri, USA

(?) MFN: Since our last interview with you in 2007, the world economic tide has shifted dramatically. How has Clemco been affected globally and in the US in particular?

(!) A. S.: In the U.S., we only started really feeling the effects of the global economic downturn at the end of 2008. And like many other industrial companies, Clemco has been forced to right-size the company for current conditions. Although the current environment has placed a greater burden on our people, they have responded magnificently and there is no doubt we will weather this storm and come out stronger on the other side. Outside the U.S., the Clemco group, with longstanding operations in Germany, Hungary, Denmark, Spain, and Singapore, has expanded to include operations in the Baltics, Ukraine, and Russia. These companies have felt the effects as much as we have. Their growth over the past decade has been phenomenal; and they too are well positioned to weather the economic storm.

(?) MFN: Have Clemco’s strategies been adjusted for the economic downturn?

(!) A. S.: I believe the strategic initiatives we have been pursuing during the last several years continue to be valid even in the current economic climate. Strategies such as customer focus, lean manufacturing, and a quality-centric mind-set hold even greater value for our customers when times are tough. In addition we have been broadening our manufacturing and field service capabilities and pursuing niche markets that provide an expanded market base, all of which has cushioned the impact of the recession for Clemco.

(?) MFN: Clemco is well known for producing high-quality products for the industrial end user and for being customer-focused. To what degree do you feel these attributes help or hinder in this economy?

(!) A. S.: Some customers opt for low-quality solutions when resources are scarce and times are tough; but there is no question in my mind that Clemco’s commitment to quality and the customer are not only beneficial but also absolutely essential in any economic cycle. Those are principles that will never be compromised at Clemco. We serve customers who share our philosophy; we invest in quality to produce quality. Our group holds ASME, CE, NIOSH, and ISO-9001:2000 (soon to be 9000:2008) certifications.

(?) MFN: As President, I understand that your role at Clemco Industries involves North, Central, and South America primarily. How does Clemco serve those markets and how have those markets changed over the past few years?

(!) A. S.: Well, it goes without saying that geographic markets have changed dramatically in the last 10-20 years. But the most dramatic changes we have experienced in recent years have occurred in Latin America. Of course, we have had a presence in, and been seriously committed to, those markets for over thirty years so we have a strong presence there and great distribution in virtually all countries of the region. What we have seen in recent years is that the level of knowledge and sophistication concerning abrasive blasting, shot peening and surface finishing has grown exponentially. I believe that development plays directly into Clemco’s strength as a provider of high production, automated and environmentally and ergonomically friendly solutions to our customers’ surface finishing requirements.

(?) MFN: Clemco markets its products through a vast network of distributors throughout the world. How do you stay close to your end-user customers?

(!) A. S.: We are very fortunate to have great distributors with whom we enjoy wonderful relationships based on mutual trust and understanding. We have built great partnerships with them based on our common desire to exceed customer expectations in a quality product and attentive service. Our Territory Managers work closely with distributor sales personnel to keep them abreast of new products and applications, and together they work to support our mutual customers. Therefore, there is a free flow of information between us and the result is 360 degree feedback, providing us with valuable input about our end-users and their needs.
In addition, we utilize our web site as an important vehicle for communicating with our customers to keep them informed and provide easy access to product support materials and technical information. Our web site is a critical component of our service promise.

(?) MFN: With limited access to financing impacting customers’ ability to proceed with planned capital expenditures, how is Clemco reacting?

(!) A. S.: Financing is a serious issue facing our customers and the capital expenditure markets. Access to capital comes with higher cost and stricter requirements and that means the justification for most capital projects must be very compelling to make it through to approval and issuance of a purchase order. We are concentrating our efforts on those companies we feel pursue a business model that provides those types of justification. Additionally we are able to offer financing options such as equipment leasing and, in some cases, creative payment terms to ease the financing burden.

(?) MFN: The industrial cleaning and finishing markets historically have been extremely competitive. Do you observe any changes in the competitive scene and in the competitive situations in which you find yourselves?

(!) A. S.: We understand that it is a competitive market out there. So, particularly in this difficult economy, we have to constantly improve our processes and our productivity to maintain our competitive advantage. We try never to rest on our laurels when business is strong and we certainly are not doing that now. We know that compared with our closest competitors we have more feet on the street and are spending more time with our customers now than ever before in our history.

(?) MFN: I’m hearing you say that rather than put the brakes on new initiatives during this difficult time, Clemco is moving ahead and making improvements to service the economic picture of the future. Can you elaborate on that?

(!) A. S.: Sure. We are committed to continuous improvement and we always have several productivity- and quality-enhancement projects in the queue awaiting implementation. We have made heavy investments in plant equipment to streamline our processes and enhance throughput in order to better meet customer delivery requirements. As an example, before we began feeling the slowdown, we initiated efforts to further improve our ASME pressure vessel production. And despite having just completed one process improvement project in that area just a few years earlier, we found it again necessary to re-address process flow to adapt to the much higher volumes we had been experiencing for several years. We have not backed off of that project. In fact, we have accelerated that program because we now have more resources available to devote to the project; and we know that the improvements will serve us well when business returns to more normal levels.
Also, we are currently in the process of replacing our ERP software system. The functionality of available software and the needs of our business have changed over the years. Current economic conditions do not alter our plans to streamline our operations and grow our business. When business conditions improve, we will be ready.
We spoke earlier about being close to our customers. Our new software will include improvements to an already sophisticated tracking system, which we have had in place for decades. It’s important to us that the entire team, including our distributor, is knowledgeable about the customer. Enhancing access to information will help all parties respond quickly. As I’m sure you can appreciate from your vantage point, we live in an age when customers expect instant access to answers to their questions. We are committed to that degree of excellence and offering such enhanced service levels supports our value proposition..

(?) MFN: As a final question, can you describe this value proposition and the organizational strengths behind it?

(!) A. S.: As we articulate in our mission statement, Clemco, through its Clemco, ZERO, and AEROLYTE brands, designs and manufactures superior surface treatment technologies that deliver innovative, high-performance cleaning and finishing solutions to industry worldwide. We do that through our people. Following on comments made earlier in this interview, our people are our greatest organizational strength. Throughout the company, we have knowledgeable, experienced and devoted people. Their strengths represent our value proposition of service to the customer.
Our culture encourages listening, hearing, and translating needs into product and service. Our culture is also a very sociable one. We enjoy connecting with our customers, a trait we inherited from our company’s founder, Alfred J. Cleary, of San Francisco, California. Mr. Cleary used to say: "Business is people." I take that to mean that listening to people, customers, employees, vendors, whomever, and treating them fairly, and aligning our actions with their needs is a sure path to success. We are seriously committed to that legacy.
Another critical strength, and a very important one in difficult economic times, is our sixty-year history and the considerable financial strength of the organization. Our balance sheet is very strong and, particularly during this period when there is so much uncertainty in the marketplace, we take pride in reminding our customers that they’ll never have to worry about whether or not Clemco will be there to support them in the future. We have a long history and a very bright future.

MFN would like to thank Arnie Sallaberry for this interview!

For Information:
Clemco Industries Corp.
Washington, Missouri, USA
Tel. +1.636.239.0300
E-mail: info@clemcoindustries.com
www.clemcoindustries.com