Peter Anthony
Leadership

Peter Anthony on "The Power of the Position"

Peter Anthony, President and CEO of UGN Inc., has been with the company for more than 20 years, and, in that time, has guided the company through the last recession and expanded it from a niche supplier to a broad-based corporation with a diversified product line. We spoke with him about managing the skills gap, fostering efficiency and living by the “bad news first” rule.
October 15, 2015

You have been at UGN, which provides the auto industry with everything from acoustic solutions and interior trim to thermal management products, since the early 1990s—how did your journey there start?

It is funny to think about today, but I actually found my first job at UGN in the Chicago Tribune’s classifieds section!

I was working for Nissan at the time—I was in their power equipment, industrial engines and forklift division, which moved to Dallas; they transferred me to help them start that office, but I missed Chicago. I saw an ad for a position at UGN in the classifieds section, and I responded and was hired.

I began my career at UGN managing their Honda account, and I worked my way up. I was a fan of manufacturing, which helped. If you are selling manufacturing goods—especially to the automotive industry, where you have to negotiate four positions past the decimal point—you really have to have an exact understanding of what happens on the floor, so I became a student of manufacturing, as well as the Toyota Production System (TPS), which we later incorporated. I learned a lot, which was helpful in justifying our costs to customers. I was promoted to vice president of sales in 1998, and in 2002, I took over as president and CEO.

The fact that you found your first job at UGN in the classifieds section of the newspaper speaks to just how different the job search is today. What are the challenges you see in hiring, and how is UGN addressing those?

First of all, we use as many digital and social media avenues as we can for hiring salaried team members. We also got pretty aggressive and started an internal job-referral program. If a team member recommends someone who is hired, there is a rewards system in place. We still use recruiters, we use temporary agencies, and we have an experienced-hire program. These have all been good avenues for us to find good manufacturing talent.

We are really active in our communities. Each UGN plant has a charity they support. For example, our plant in Kentucky supports the United Way, and we do the American Cancer Society Relay for Life. There is also the Somernites Cruise, which is the largest monthly classic car show in the state. We sponsor some of those events and are able to hand out applications and collect resumes. We really don’t have any rules when it comes to hiring—any innovative idea that might generate exposure and/or hiring is something we try to do.

We are concerned, as many manufacturing companies are, with the need for skilled tradespeople, but we look at any variety of candidates, from those at the high school level—who don’t think college is for them—to military veterans.

I just interviewed a candidate for a sales position who said, "No one really knows about UGN; what are you doing to promote it?" I responded with, "It is not my number one concern that no one knows about UGN. Culture and our team members are much more important." Of course, I would love it if UGN had the brand recognition of GE or Siemens, but it is not a priority. And, on the flip side, there are plenty of companies that people know of, but that don’t have great reputations. I would rather know that my team members are the best in their fields and that they get the job training and professional development they need. I want a person to invest in a career here, versus just coming in to do a job.

There are actually a number of UGN team members, not just yourself, who have moved up through the ranks, correct?

Yes, we have a lot of success stories. We have vice presidents who used to work in the plant. Esther Jones, who is our vice president of information systems, has been with us since 1984. After she worked in IT, we positioned her as the manufacturing manager for our Valparaiso, Indiana, facility for three years. Then we brought her back to the corporate offices and put her in a program management role. Randy Khalaf, our CFO, has responsibility not just for finance and accounting, but also for our Mexican facility. We try to stretch people into a variety of different areas so they can broaden their skill sets and be very cross-functional. Your bench can never be stacked enough; you can never have too many players.

The Toyota Production System, which you mentioned earlier, is the foundation of the UGN business model. For those who might not know, what is TPS, and how has this affected the company?

There are many different names for TPS, and people have tried to adapt it in many different ways—we call our version UPS—but it is essentially an efficiency tool. Whether you are in banking or consulting or manufacturing, many principles of TPS can translate to better efficiencies, elimination of waste, better ergonomics and overall more efficient operations. It is really about taking a look at your processes and making them as efficient as you can to ensure maximum output.

We use it as an enterprise tool. We look at every process—from accounting to payroll to RFQ generation to design changes to making carpets—and we use TPS to be as efficient as possible and ensure there is no waste in our value chain.

I incorporate it in my everyday life, actually—which, ironically, can mean I am inefficient because I am overthinking it. (If you have an A-type personality, you love TPS.) But think about how you organize your desk or your briefcase or your wallet. With TPS, everything has its own place, every process is defined and everything is executed to the maximum efficiency.

I believe any manufacturer in the world—because it really is a world economy—needs to have elements of TPS to be successful and to be certain they have continuous improvements and are lowering their cost structures every day. If the smallest department is not efficient, it will trickle out. For example, if shipping is inefficient, then the trucks are not going to get loaded, the customers are not going to get their parts on time and we will have to spend extra money bringing in another truck to expedite things. In automotive, we make today what the customer uses tomorrow.

You actually managed to grow UGN during the recession, which is a feat many CEOs were unable to pull off. Can you walk us through your strategy and explain how you managed to succeed in such a tough business environment?

The hardest thing we had to do was lay off members of our team—the essential thing there, I think, was to just be transparent with them. People may not like what you are telling them, but they will respect that you are honest and understand you have no other choice.

And everyone understood the cause—we all took wage decreases, and we cut wherever we could. We also never outspent our capacity—we were a really conservative company, and we did not have a lot of debt. We doubled down and watched every dollar we spent throughout the organization. We got everyone on the same page, and we held weekly updates with the plants so we could understand where their orders were and how they were flexing all their costs, from labor to spending.

Additionally, the Car Allowance Rebate System ("cash for clunkers") breathed some life into the economy and into vehicle sales—we were able to generate a good momentum after that.

The UGN website states that no customer has ever left the company—what kind of environment have you created for customers to garner such loyalty?

We are likely not the easiest to deal with, and we are likely not the cheapest, but customers know they can count on us. We are very candid, and we treat customers like business partners. If I succeed, you succeed and vice versa, and while we don’t have good days with all of our customers, we try and make sure we have more good days than bad.

Toyota has a rule: Bad news first. And that is what we try to live by, too. It is a different philosophy, because it is not transactional. It is about business partnering, and customers know we are wired to do whatever it takes to make sure they are successful. The word "no" is never an option here. It is just not something we tell a customer.

Between your parent company and subsidiaries, UGN has a huge international presence. How do you manage all the moving parts—from global liquidity and international red tape to dealing with local competition and day-to-day management issues?

It is more of a coordination effort these days. If you look at these new world cars—the Honda Civic, for example, is being built in Canada and Indiana, and it is also being built in Thailand and Japan—we have to coordinate worldwide activities when we are quoting our customers. And that is something we have to be careful about, because car companies want to say, "UGN, this car is being built in these regions, and you have to guarantee that you can support those regions with similar or like materials of certain specifications and costing models." We have to coordinate new business activities very closely to ensure we are successful. It is complicated, but doable. It takes an enormous amount of coordination with both of our parent companies to do that, but when you are part of an international company, that is what people demand, and you have to have the infrastructure set up to do that.

So we have arranged what we call "core teams," and there is a core team for each customer—on that team, there is a representative from our European parent company, our Japanese parent company, and UGN, the US company, so we can communicate and make sure we are all on the same page. We spend a lot of time on teleconferences to make sure we have all the right information.

What advice do you have for someone who might want to grow into a role like yours?

If you are a leader, always think about the power of the position. I have a title, but I don’t want that to define me—I want people to know me by the type of person I am. If you have the big title, you have to be cognizant of that and make sure you don’t stifle ideas. In a group, you are much smarter than you are on your own. I always try to push my team to give me their opinions and to listen to those of others. Fluid communication internally is important to build that consensus piece. Learn from others and consider options that might contrast with yours—you may not want to hear the negative, but it may be a reality, so you have to compensate for that.

 

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