Interview with Roddy Macdonald of General Cable

Thursday, Apr 30, 2009

TCD: What makes General Cable unique within the wire and cable industry?

RM: General Cable has evolved into a truly global Company that respects and celebrates many cultures and traditions, united in a common purpose. All opinions and points of view are considered equally. We don’t view recent acquisitions simply as overseas assets and we don’t think of our Company as having a traditional world headquarters. Headquarters is wherever we are because wire and cable has always been a local business. The Operating Committee that runs the Company consists of individuals from a variety of cultural backgrounds. This highlights the importance placed on the diversity of culture that flows from our CEO, Gregory Kenny. Mr. Kenny began his career in the U.S. Department of State as a Foreign Service Officer focused on international economics and trade and served abroad. Under his leadership, the Company has become comfortable operating in difficult places of the world and has embraced the fact that the best ideas and practices do not always originate in a corporate center. The General Cable culture respects and enjoys how associates from different ethnicities view the world.

TCD: What targets does General Cable have in place to counter the current financial climate?

RM: We have been preparing for this environment since the last wire and cable economic down-turn. All markets have cycles and historically the U.S. wire and cable cycle (excluding building wire) has an average cycle of six and a half years from trough to trough. So this downturn has arrived pretty much on cue and we were ready. What surprised us was the severity and global scale of the meltdown. But, at least we had been preparing for nearly a decade! We are now balancing investment opportunities in an economic environment that values liquidity due to tight global credit markets. We are continuing our Lean continuous improvement journey to be the low-cost producer. With the cash flow this generates, and our available borrowing capacity, we continue to expand into new geographies and markets at a time when the expected value for potential targeted companies continues to fall. These actions must be constantly weighed against adequate liquidity to fund ongoing operations, counter increasing copper and aluminum prices or prepare for a long period of economic downturn and credit tightness. This balance of liquidity against investment opportunities and the unknown future environment is the critical issue we consider in planning our goals in 2009 and beyond.

TCD: Do you see General Cable’s market base expanding into new markets in the future, i.e., opening production plants in areas such as China, West Africa and Asia?

RM: We already operate in these countries and regions. We have 46 plants manufacturing in 23 countries and sell into over 100 countries. We plan to continue expanding into developing regions where we believe there will be relatively better growth opportunities than in developed economies.  This expansion may be in the form of acquisition, greenfield or brownfield projects, or thru joint venture.  We have a toolset that works well for us and we try to improve with every deal. Each company that has joined us has brought knowledge, experience and/or skills that enhance our own strengths. For example, PDIC brought tremendous experience in the areas of managing joint ventures in developing economies, increasing our ability to create value for our shareholders.

TCD: Are there any new products and technology developments in the pipeline?

RM: We are constantly seeking to improve our products to meet the needs of our customers along with the ever changing market. A good example is our new patented GenSPEED® 10 MTP™ Category 6A Cable. It is a 10 Gig unshielded twisted pair (UTP) cable that performs like a shielded or foiled twisted pair (STP/FTP) that we jointly developed with our strategic partner, Panduit. Its Mosaic Crossblock™ feature eliminates Alien Crosstalk with no grounding needed. In the area of local area networking, we have redesigned eight product groups and launched three new products in the last year to provide greater value for our customers. Our product development efforts are focused on the needs of the customer and the market. Much of this effort is currently concentrated on the needs of the renewable energy market including linking remote renewable generating sites with high-voltage and extra-high-voltage (HV/EHV) overhead and underground cables to the population they serve.

TCD: With climate change becoming an issue, how does General Cable see this affecting the energy sectors?

RM: This is an area that we have long felt passionately about, which is one of the reasons I am speaking on solar energy in June at the CRU Conference in Rome. There are a unique series of factors coming together that we have not seen before—climate change including global warming, depletion of natural resources, along with energy security and independence. If you add to this leadership from the new administration in the United States (which has the largest concentration of sun on the planet – the second is North Africa), then it is reasonable to assume we may see changes in the way we generate and transmit energy that have not been seen for many years. General Cable is developing new products not just for renewable energy generation such as wind and solar, but also looking into ways to transmit power over long distances via both AC and DC cable systems. We are able to provide the most reliable and technologically advanced turnkey underground extra-high-voltage (EHV) solutions in the world with the capability of transmitting up to 800kV of AC power. We also continuing to invest in NSW, our global submarine power cable and submarine fiber optic cable company located in Nordenham, Germany, in order to address the undersea energy cable demand for offshore wind farms. While the long-term prospects for renewable energy remains bright, the global credit meltdown indicates the next two years may still be a bumpy ride.

TCD: Has it been a good year for General Cable and are there any particular projects that re-iterate the strength of the company?

RM: Our ability to operate with the speed and agility of a small company while at the same time leveraging the strength of a large company to service our local and global customers is important. Additionally, we believe our ability to continue to eliminate waste and apply Lean principles throughout our entire Company, along with managing our capital structure, has been critical in remaining solid through this downturn. We are proud that five of our plants have won INDUSTRYWEEK’s “Top 10 Best Plants in North America” award. Also, joining with PDIC was a transformational event. They had so much expertise with their own efficient Lean systems that we are learning from each other every day. All our associates realize we need to be the low-cost producer to manage our destiny. Once associates begin to experience the benefits of Lean, the culture of continuous improvement begins to accelerate.

TCD: How does General Cable view on-line media, advertising and promotion, and how can this help a company as big as General Cable?

RM: At the end of the day we believe our reputation is in the hands of our customers and that depends on how we work with them in every transaction every day to help them and us grow our business together. This work is 90% local, based on close relationships and understanding―from the customer to the sales associate in the field, directly back to the manufacturing plant. However, when you are evolving and changing like General Cable, it is easy for customers, as well as investors, to not understand how the Company has changed and what services and products we can now provide all over the globe. In this regard, the Cable Directory is important to us in helping these and other communities find information about how we are changing, what customers and markets we are serving and where we are going.

TCD: Are there any new acquisitions that will see General Cable move into further sectors?

RM: We are certainly a long way from being done. We have the capital structure to continue to grow. We have a track record of growing strategically in products and markets as well as new geographies. We bought Silec Cable in France because they were the technology leader in the HV/EHV underground market; NSW because we saw opportunities in sub-sea cable; and PDIC because they are a really well-run company that brought tremendous insight into other opportunities in developing markets. We have a CEO with a clear vision of where we are going along with superb people, and a supportive board and investor base. We will continue to build our business. We have plenty of ideas.

TCD: What have been the key factors behind the success of General Cable?

RM: It’s probably the culture that’s been built by Gregory Kenny, the Board, his Leadership Team and our associates to seek to understand tomorrow’s markets and serve today’s customers. Our business journey involves groups of people with a common view and a set of values that are consistent. We like to give people responsibility to make things happen. We would rather use speed to our advantage and make the right decision eight out of 10 times rather than be burdened by a bureaucratic decision making process and go two for two. You learn both from your mistakes and successes and go forward. I think the fact that we enjoy what we do each day, see opportunities and potential everyway, quietly celebrate successes and learn from mistakes as part of our culture, is what enables us to keep going and be successful.

TCD: Are there any other recent developments by General Cable that our readers should be interested in?

RM: You have covered pretty much everything I wanted to share in the questions you have asked. We will continue to strive to understand our customers’ needs and serve them better than before. We listen, we have much to learn and many areas to improve in. In this respect, the journey feels like it has only just started. We look forward to the future with our customers, associates and investors with considerable hope, passion and enthusiasm. Thank you for spending time with me.

Source: General Cable