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Drawing Goulds Pumps’ new blueprint

Thomas McDermott:
Drawing Goulds Pumps’ new blueprint

Sitting in the sparsely furnished conference room of Goulds Pumps Inc.’s new Fairport headquarters, Thomas McDermott scans the bare walls as if hoping to find on them the mot juste he seeks. The question–precisely what he will do differently than his predecessor did–is not easy to answer, he says.
Finally, he answers: not all that much.
The difference between his plan and Stephen Ardia’s lies not in the substance, McDermott says, but in the execution.
He considers the word, decides he likes it and says it again: “It’s in the execution.”
Eight months have passed since McDermott replaced Ardia, a 26-year Goulds Pumps veteran who had led the firm since 1985.
A former president and chief operating officer of Bausch & Lomb Inc., McDermott, 58, quit an early retirement to take the job. Becoming CEO of a major firm, he says, was an opportunity he could not pass up.
And then there was the challenge Goulds Pumps presented.
The firm, a 147-year-old maker of industrial and consumer pumps, in recent years has been a lackluster performer. Sales have hovered around $555 million, while net earnings fell from $31.3 million in 1991 to $21.8 million in 1992 before regaining ground–to $26.6 million–last year.
For much of his tenure, Ardia won accolades as a model, progressive CEO.
He took over at a time when Goulds Pumps’ sales and profits were sagging and the company was beset with labor ills. He instituted participatory management and total quality management programs, and brought sales and earnings to respectable levels.
As the firm’s earnings drifted down, however, Ardia’s star began to fade.
Other difficulties arose. The company had environmental problems with a consumer pump in California last year. It remains under state scrutiny on the matter and got hit with a shareholder suit, claiming that Ardia hid the problems to keep stock prices from falling.
In June, Ardia stepped down.
McDermott, a Goulds Pumps director since 1988, declines to speak of dissatisfaction the board may have had with Ardia. But he acknowledges his fellow directors tapped him to deliver more and to deliver it faster.
Still, he is making haste slowly, promising no quick fixes.
McDermott expects 1995 to be an “interesting” year, but not one of spectacular gains. Yet he adds: “I can’t take too long. I’ve got to find the middle ground.”
George Fisher, who became Eastman Kodak Co. CEO not long before McDermott took over at Goulds Pumps, has proceeded to shake his company from stem to stern. By contrast, McDermott is a preservationist.
“It’s not my style to make wholesale changes, and we’ve got a pretty good team,” McDermott says. Indeed, Ardia’s managers remain virtually untouched.
Under McDermott, Goulds Pumps is guided by a five-point plan: cut costs; increase inventory turns and otherwise use assets better; expand the firm’s global business; boost growth by acquiring related businesses and by expanding market share; and change corporate culture.
The program sounds sweeping. It also sounds much like Ardia’s agenda.
McDermott acknowledges the resemblance. In fact, it is deliberate.
“A lot of people might look at what I’m doing and say: “What the hell’s the difference?”’ McDermott says.
“When I knew I would be taking this job, I sat down and drew up a strategic plan. A lot of it was stuff we were already doing, so why not just do it better?”
Change is part of the equation, though.
Since McDermott took over, the firm has acquired an Austrian pump company and sold its 50 percent interest in Oil Dynamics Inc., a Tulsa outfit that makes pumps for oil rigs.
“Not really the same business as Goulds,” McDermott explains.
Such moves, he says, are first steps in the company’s drive to build global market share and to refocus domestic business.
One of McDermott’s first acts as CEO was to announce that Goulds Pumps would separate corporate from operations and move its headquarters from Seneca Falls to the Rochester area.
McDermott thinks the separation will spur changes in Goulds Pumps’ corporate culture. Managers were too close to operations; now, they will be able to better concentrate on honing the firm’s strategic edge.
To help them, McDermott is taking a page from his own book as a Bausch & Lomb executive, picking an area of corporate management on which to focus for a given period–for instance, return on net assets–and putting it under a microscope, demanding improvement.
“After you finish one, you go on to the next one but you keep looking at the ones you’ve done before,” he says.
At Bausch & Lomb, McDermott called such exercises “blueprints for success.” It was a simple but amazingly effective technique, says Daniel Gill, his friend and former boss.
Gill, president, chairman and CEO of Bausch & Lomb, still speaks with regret of McDermott’s 1993 departure from the firm.
The two men met when they started at Bausch & Lomb in the same month in 1978, McDermott as vice president of human resources and Gill as group vice president.
Gill says McDermott grew frustrated when he saw himself as stuck in a human resources ghetto from which he was unlikely to move into operational management.
McDermott says he left Bausch & Lomb in 1980 to become vice president of human resources at General Cinema Corp. in Brookline, Mass., because he thought the door to other opportunities there was open.
The job did not work out as expected. When Gill became Bausch & Lomb president and CEO in 1981, he started to woo McDermott back.
McDermott returned as senior vice president of human resources in 1981. Gill made him a group vice president in 1983, giving him the task of shedding Bausch & Lomb’s instrument businesses, then moved him through a series of jobs until making him president and COO in 1986.
“Tom is just so focused on the fundamentals,” Gill says. “When he’s focused on a goal, he gets it done.”
For his part, McDermott remains grateful to Gill for giving him the chance to prove his mettle.
“The instrument divisions was the first time I felt like I really achieved something,” he recalls. “I was 46 years old and I did it because Dan Gill took the risk.”
Despite the two friends’ mutual admiration, Gill says he always knew McDermott’s time at Bausch & Lomb was limited.
McDermott says Gill knew he planned to retire at 55 “to try something else.” Gill’s reading is the company was not big enough for both of them.
“He and I always had that one issue,” Gill notes. “Our birthdays are one day apart. Tom wanted to be CEO and he knew there wasn’t a chance of succession here.
“The amazing thing is that we got along so well. He is a strong personality and people say I’m not weak, either, but we always talked openly about it.”
After leaving Bausch & Lomb, McDermott played golf for six months and then started a one-man headhunting firm, intending to specialize in minority recruitment for major corporations. The venture evolved into a general business consulting firm whose clients mostly were other consultants.
When the Goulds Pumps job came up, McDermott says, “I jumped at it.”
Gill describes his friend’s executive genius as a sort of conventional non- conformity, that of a man who marches to the beat of his own drummer yet always stays in step.
McDermott grew up in a middle-class, Boston-area family, graduated from Providence College in Rhode Island with a bachelor’s degree in business administration in 1958, and then joined the U.S. Army as a first lieutenant.
The week he joined the Army, McDermott married his wife, Gloria, whom he had dated since high school.
McDermott spent three years in the service, first in the infantry but eventually in the military police.
His sights were set on becoming a career officer. But within a year of joining the military, the first of four sons–they now range in age from 36 to 24–came along, and McDermott rethought his career.
“I was sitting around with some guys at Fort Benning, Ga., and it was Christmas and everybody was talking about holidays they’d spent away from their families and I realized: “This is no way to raise a family.”’
As a child, McDermott had two ambitions. The first was to play for the Boston Red Sox. The second–a dream fostered by hours of listening to the old radio show, “G Men”–was to be an FBI agent.
So when McDermott mustered out of the Army in 1962, he joined the bureau.
Government service proved to be another false start. This was the FBI under J. Edgar Hoover in his long twilight, an agency far different from the corps of fictional lean-jawed crime fighters that enthralled a young McDermott.
By recent accounts, Hoover ran the bureau as a personal fief, using its resources to pursue sometimes dubious personal crusades and subjecting agents to whimsical directives.
McDermott admits to leaving the FBI in some disillusionment over bureaucratic ways, but shies from any direct criticism of the FBI or Hoover.
“From my view the FBI was honest and the integrity of agents was beyond reproach. When you’re focused on a major case …”
His voice trails off.
“People can stay too long on the job,” he concludes, closing the matter.
In 1964, the FBI sent McDermott to study Arabic for two years at the Defense Language Institute in Monterey, Calif., and then posted him to Little Rock, Ark.
A year later, he quit.
McDermott had a resume more suited to police work than business, but he aimed for a position in corporate management nonetheless and the resume landed him a job in corporate security with Bristol-Meyers Co. (now Bristol-Meyers Squibb Co.) in Manhattan.
He viewed the job as one of the few routes to corporate management open to a person with his background. But after six years he came to see it as a dead end.
Next came a move to a corporate security job at rival pharmaceuticals manufacturer E.R. Squibb & Sons Inc. in New Jersey. There, McDermott says, “I was hired with the understanding that there would be other opportunities.”
At Squibb, he moved into human resources, working at the firm until he left to join Bausch & Lomb.
Now, with two of three life ambitions realized, McDermott sees himself at an apex. Yet he also is painfully aware that many have tumbled from such heights.
“I’ve worked at four quality Fortune 500s and done pretty well,” he says. “If Goulds isn’t a lot better in a few years, if it hasn’t worked out, I’ll be the first to know.
“Or maybe not. Maybe I’ll be the last.”
[Rochester Business Journal Profile, 3/31/95]


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