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Lapp president aims to charge up growth globally

There is a reason Rob Johnson begins his mornings at his office in LeRoy, Genesee County, by speaking on the phone with colleagues in Europe and ends the day Skyping with co-workers in China.
 
To keep the business successful and maintain a locally based operation, his firm has to do business globally, he explains. Johnson, 49, is president of Lapp Insulators LLC.
 
Lapp manufactures high-voltage electric insulators for energy infrastructure. Its customers include utility companies such as Rochester Gas and Electric Corp. and original equipment manufacturers such as General Electric Co.
 
The firm has 1,200 employees worldwide, including roughly 130 workers locally.
 
Lapp logged annual sales of roughly $175 million in 2011, up from $160 million in 2010. The local operation is responsible for 25 percent of sales.
 
The company has encountered stumbling blocks over the past decade, as competing against cheaper labor overseas affected the business. Lapp has tweaked its business model, survived a local layoff a few years back and is expanding its geographic reach through acquisitions. It also has new company ownership.
 
Johnson, who owns a stake in the business and has been with the company since the mid-1990s, says it is heading in the right direction.
 
"We are building a sustainable, long-term model here, one that is focused on growth," he says.
 
A native of Jamestown in Chautauqua County, Johnson attended Alfred University and received a bachelor of science degree in ceramic engineering in 1981. It was a field he chose because of his abilities in math and science.

Career path
After graduation, Johnson went to work at Westinghouse Electric Corp. in Indiana. He started as an engineer but worked his way up to management positions such as product line manager, project manager and senior engineer. His duties included product line relocation, facilities site selection and plant startup activities abroad.
 
Johnson also worked as a senior financial analyst after the electric transmission and distribution business of Westinghouse was sold to the ABB Group in 1989. At the time, he was pursuing an MBA at Indiana University. He received that degree, with a focus in operations management, in 1993.
 
Johnson says that business training and the financial consulting role at ABB helped prepare him for his management roles at Lapp.
 
"It opened my mind to a career in business," Johnson says. "I realized not everything is dependent on electrons and molecules."
 
He continued at ABB after receiving his MBA and even moved back into the engineering side of the business as a manager before he was contacted by a headhunter for Lapp. Johnson joined Lapp in 1996 as an operations manager.
 
"It was an opportunity to really run a business," he says.
 
Since joining Lapp, Johnson has been in operations, engineering and general management roles. He holds four patents, has authored or co-authored several technical papers and is published in several periodicals and books.

The buyout
In 1999, Johnson was part of an executive management buyout of the company from a Chicago-based investment firm. Johnson was one of four managers who took part, along with former Lapp CEO John Hurshman.
 
Over the next couple of years, the business grew organically and through acquisitions. In 1999, Lapp had annual sales of about $40 million. By 2005, the business had grown to roughly $90 million in annual sales.
 
The company sold its bushings division in 2004 to PCore Electric Inc., a move that allowed Lapp to concentrate on its core business of insulators. Bushings are cylindrical linings used to insulate and reduce friction in equipment for power generators, transformers, circuit breakers and substations.
 
In 2005, Johnson says, the leadership team decided that to reach its goal of $200 million in annual revenue, it would need a partner. So the team sold a majority portion of the business to New York City-based Andlinger & Co., a private investment and management firm. The company made improvements to the local site, formed a joint venture in China and made an acquisition in Europe. In 2009, annual sales grew to $175 million.
 
Still, Lapp faced stiff competition overseas, where businesses could source products from areas of lower-cost labor. In 2010, sales dropped to roughly $160 million.
 
It hurt Lapp, Johnson says. The company reduced its local workforce from 190 to 127 in 2009 and re-evaluated its business plan.
 
In addition, Lapp closed its plant in Sandersville, Ga., where roughly 10 people had worked, and moved the product line manufacturing to LeRoy. It also sold its distribution products business to a longtime manufacturing partner, Electroporcelana Gamma S.A. of Medellin, Colombia.
 
Among the changes were new owners. Last fall, Lapp announced it had been acquired by its management team and a German investment firm for an undisclosed sum. Under the agreement, Frankfurt-based Quadriga Capital and Lapp’s management acquired all Lapp shares from Andlinger & Co.
 
Hurshman retired from the business, and Johnson became solely responsible for U.S. operations for Lapp, also serving as one of three managing directors of its global group.
 
Hurshman, who worked with Johnson for roughly 15 years, says Johnson is objective in his approach to understanding and solving problems. He describes Johnson as fact-driven and someone who does his homework thoroughly.
 
Johnson is open to ideas, critiques and recommendations from others, he adds.
 
"He listens and evaluates," Hurshman says. "I have never seen Rob have a ‘not invented here’ attitude."
 
Johnson is a team player, he adds.
 
"His attitude is that when things go right, the team gets credit; when things do not go right, he takes responsibility," Hursh-man says.
 
Johnson has the ability to think strategically and then implement the plans developed, he adds.
 
"During my 40-plus-year career in management, Rob is one of the best managers I have had the pleasure of working alongside," Hurshman says. "Much of Lapp’s successful growth and strategic repositioning is directly due to Rob’s involvement, commitment and dedication to the company."
 
Johnson refers to Hurshman as a business role model.
 
"He taught me facts are friends," Johnson says. "We can deal with the problems we know about; it’s the problems you don’t know about that will kill you."
 
Johnson’s office is sparse, with family pictures placed throughout and items from his travels on display in the corners. His desk is tidy, papers stacked and orderly. Johnson admits to being a neat freak.
 
"It’s the only way I can stay organized," he says.
 
His leadership style, Johnson says, is to take a supportive approach.
 
"I focus on hiring the best, most competent people who have a strong work ethic, and then I enable them to do the job," he says. "I try to get the roadblocks out of the way."

Growth plans
Johnson recently hired a general manager in LeRoy, which allows him to focus more on the European and Asian markets. He spends roughly 60 percent of his time traveling to other Lapp locations and to customer sites.
 
Lapp aims to grow its business both here and overseas, Johnson says. The goal is to double the business in the next five years. Expansion projects are in the works at its plant in Romania, and the company’s board of directors recently approved a $750,000 investment at the LeRoy facility that will make it more of a vertical manufacturer over the next six months.
 
Lapp recently added four local staffers and plans to add six more in 2013. More improvements to the local site and an acquisition announcement are expected, he says.
 
Johnson expects 2012 annual sales of $180 million. Contributing to that growth is a boost in U.S.-based business as equipment ages and must be replaced. Lapp is positioned to meet those needs, Johnson says.
 
"The U.S. power industry is a 90-year-old market, and Lapp has been in it the whole time," Johnson says.
 
Growth is also expected from the composite insulator business, another area where Lapp has an advantage because of an overseas acquisition a few years ago, he says.
 
Johnson says the best parts of his job include his interaction with Lapp’s workforce.
 
The team includes Lapp’s co-managing directors, Bernhard Kahl and Veronika Capek. In LeRoy, Lapp’s controller, Mary Merkel, plays a big role, as does Wayne Subject, the general manger of Lapp’s Chinese joint venture, Dalian Lapp Insulators Co. Ltd.
 
A challenge can be the customer base.
 
"We have a core group of customers that we have a great relationship with that is focused on outstanding customer service and high-quality products," Johnson says.
 
"Unfortunately, there is another (group) where price is the only consideration, and in many cases, they are forgoing quality and service for price only. It is the reason why (the LeRoy) site is a $25 million manufacturing site versus a $50 million manufacturing site."
 
Despite the challenge, Johnson says, Lapp continues to succeed and has a good relationship with the local workforce’s union.
 
He does admit, however, that it can be a balancing act.
 
"We provide our workers with a good lifestyle, but, like any other U.S.-based manufacturer, it’s a balance between providing that good wage and competing with those who earn a $2 wage overseas," he says.
 
John Bayley, chairman of a local chapter of Vistage International Inc., a CEO organization, met Johnson through the group roughly seven years ago.
 
Initially Bayley was leery of letting Johnson into the group, since his work schedule had him traveling much of the time. Johnson, however, quickly showed his commitment to the organization by making nearly all the meetings.
 
His dedication, along with Johnson’s openness to learning, impressed Bayley.
 
"He is very open and receptive to others’ ideas," Bayley says. "Rob doesn’t shut people down."
 
Bayley also spoke of Johnson’s down-to-earth demeanor and ability to fit in with all types of people.
 
"There is no ego," Bayley says. "If you met Rob on the street or at an event, he wouldn’t talk about his position leading a company; he’d simply say he worked at Lapp."
 
Johnson also is willing to help others. Bayley says that after Johnson left the group due to work responsibilities, he stepped in, when asked, to help another business leader who was about to shut down his company.
 
Johnson, along with other Vistage members, helped come up with actions that could be taken to save the business. Today it is open and growing, Bayley says.
 
"Rob had never even met the guy, but was willing to step in and help," Bayley says. "He’s a great guy."

Off the job
Johnson lives in Ogden with his wife, Gerri. They have two children, daughter Calli, 21, and son Adam, 19; both are in college.
 
Gerri also has been a business leader. She just sold her preschool business, A Time to Grow, which has three area locations, after running the venture for roughly six years.
 
When not working, Johnson enjoys spending time with his family. The group takes vacations to sunny locales and beaches.
 
A new hobby is car restoration and racing. Johnson, with help from a mechanic, recently rebuilt a 1995 Ford Mustang, which he will race this summer at Watkins Glen. The hobby sprang from his son’s interest in go-kart racing.
 
Johnson predicts the LeRoy site will continue to play an important role in Lapp’s growth. The business, founded in 1916, is looking forward to its centennial celebration in a few years.
 
"We have been a big part of the community for 96 years, and we are planning on growth here for the next 96 years," he says.

Rob Johnson
Position: President, Lapp Insulators LLC
Age: 49
Education: B.S. in ceramic engineering, Alfred University, 1981; MBA in operations management, Indiana University, 1993
Family: Wife Gerri; daughter Calli, 21; son Adam, 19
Residence: Ogden
Activities: Family activities, car racing and restoration
Quote: "We are building a sustainable, long-term model here, one that is focused on growth."

5/11/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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