Sharpening Our Choices
Strengthening Our Game
With a simplified organizational structure, an increased international focus and a reallocation of resources to support accelerated growth, Newell Rubbermaid has adopted an aggressive game plan to win in the marketplace.
(Shown left to right) Juan Figuereo, Chief Financial Officer; Bill Burke, President, Newell Professional Group; Michael Polk, President and Chief Executive Officer; and Penny McIntyre, President, Newell Consumer Group discuss the opportunities to leverage the Company's growth agenda.
What were the core principles and priorities that framed the Growth Game Plan?
Michael Polk:As leaders we have to make choices — where the best growth opportunities are, and what are the key projects and capabilities we will build. Once those choices are made, we must resource them decisively. Opportunities are not equal, in benefit or cost, and too often organizations simply leave resources where they were allocated in the past. The Growth Game Plan is about making choices with the future in mind — and aligning resources toward future growth. We will achieve our ambition only if we focus on the best opportunities.
How will the Company benefit from Project Renewal and the new organizational structure it creates?
Michael Polk:Project Renewal will unlock Newell Rubbermaid's full growth potential. By reallocating resources to higher-growth-potential businesses and initiatives, we can more effectively commercialize our products and innovation, more completely deploy our portfolio across our existing geographic footprint, and aggressively expand into the faster-growing emerging markets. We're building a more focused, stronger and nimbler organization for sustained, profitable growth.
Explain the new alignment into two operating groups. What are the important benefits?
Penny McIntyre:The simplified structure makes the organization more effective because we'll be able to drive commonality of approach to both the customer and the shopper. It will create more consistency in the fundamentals of how we approach what really sets us apart: winning at the point of decision through excellence in product performance, design and innovation.
Our growth model is brand-led, with the goal of delivering growth ahead of our markets in every business. Our new alignment has unlocked the opportunity to build a new sales structure in the U.S. that will help us create more commercial value from the ideas we're bringing to market.
Bill Burke:On the professional side, the core of who we market and sell to is what we call the "chooser" and the "user." In education, the chooser might be the school board, while the user is the teacher. There is a similar model with a cleaning and maintenance firm and a custodian. Although the products and the brands are different, how we approach that market is very similar. Across Newell Professional, our businesses share those characteristics, so there's a real unity of purpose.
There are also benefits on the process side. For example, in Rubbermaid Medical, which is one of our fastest-growing businesses, our sales team is working hard to generate leads and find opportunities in an emerging healthcare market. That's very similar to targeting opportunities to sell Lenox® industrial band saws. The competencies and tactics we develop can be applied across the landscape of our professional portfolio.
Up to $100 million in savings will be realized from Project Renewal within the first 18 months. How will those resources be directed?
Juan Figuereo:Renewal is not about cost cutting. It's not about cost savings. Project Renewal is about resource redeployment. And we are reallocating resources where they will achieve a higher return for shareholders. For most of the businesses that are expected to grow more quickly, that growth will come from outside North America. So there will be a disproportionate share of the investment focused outside North America, but there will be significant investments in North America as well, including, for example, strengthening our e-commerce capabilities.
Bill Burke:For our professional business, an important priority is putting more feet on the street. A key area of investment will be providing more sales consultants within our Rubbermaid Medical business to help provide solutions for healthcare institutions. Another area is our emerging markets in both Brazil and China with our industrial products business, Lenox, and our Rubbermaid Commercial Products business.
One of the most compelling stories within Newell Professional is Lenox. Ten years ago this brand had no traction in China. Today, with products manufactured in the U.S. and shipped to China, Lenox has nearly 100 people on the ground there selling our band saw blades, and we have established a very strong business that's growing 50 percent a year in that region. That's the sort of opportunity that warrants continued investment.
Mike, you're working directly with the Baby & Parenting business to strengthen its performance. What's the outlook?
Michael Polk:Baby & Parenting should be one of the most exciting businesses in our portfolio, given world population growth and our global leadership position. Today, we generate about 85 percent of our revenue in markets where only 7 percent of the world's babies are born. We will address the strategic opportunities in our business by becoming more of an innovation leader, by more broadly deploying our unique three-brand portfolio, and by partnering more collaboratively with our key retail partners to develop the category. We are making good progress.
What are some of the emerging global trends you're seeing that align with the Company's product portfolio?
Penny McIntyre:The rapid growth of the middle class in emerging markets offers great opportunity. With economic and social development comes access to education. Our writing portfolio, from Paper Mate® to Sharpie®, can draft on the back of this mega trend as an education tool. Our Fine Writing business can also benefit, as Parker® and Waterman® are badges of success and achievement in life.
Irwin and Rubbermaid Commercial Products have achieved rapid growth in Brazil. Is there more opportunity ahead?
Bill Burke:We have tremendous momentum in Brazil. We have two factories there, one for Irwin® and one for Rubbermaid Commercial Products®, both of which are very successful. We're investing more in manufacturing, in people and in marketing as well. If you think about the growth associated with future events coming to Brazil — the Olympics, the World Cup — we're well-positioned to be a part of that, from the building of infrastructure with our tools business to a visible presence at the events themselves with Rubbermaid Commercial Products.
Looking at 2012 and beyond, what are the most compelling growth opportunities?
Bill Burke:For Newell Professional, we're very excited about the opportunities in our healthcare business, and how our solutions are providing real value by helping increase nurses' capacity to care for patients. Geographically, Latin America and China are key targets where we look to build on our recent strong growth by Lenox, Irwin and Rubbermaid Commercial Products. Our commercial cleaning portfolio, for example, is being very well received in these markets.
Penny McIntyre:At Newell Consumer, we've invested in the global expansion for Writing & Creative Expression with great results, and we'll be even more aggressive going forward. In Fine Writing & Luxury Accessories, Parker has been moving from strength to strength. The launch of the Parker Ingenuity line will contribute even more to that growth, especially in China, Japan, Russia and Southeast Asia. Brazil and Mexico will be key areas of emphasis for several of our consumer brands, including Paper Mate® and Sharpie®. In North America, where we enjoy considerable market strength already, we are doubling down support for our Rubbermaid Consumer cleaning platform and for our culinary business, Calphalon®, which had a phenomenal year in 2011.
How does Newell Rubbermaid's financial performance and structure support this next chapter in the Company's transformation?
Juan Figuereo:Newell Rubbermaid is a very cash-generative business. Our initiatives to boost productivity have contributed to that performance. We have already reaped benefits from the implementation of our European Transformation Plan, which significantly increased our margins in that region. Our robust operating cash flow, coupled with a stronger balance sheet and reduced debt, provides the flexibility to invest in organic growth and, where warranted, in bolt-on acquisitions that complement our existing businesses. In addition, even as we invest in growth, we continue to remain committed to returning value to shareholders through dividends and share repurchase.
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