Patrick McHale explains how he joined Graco as a machinist supervisor and rose to lead the global maker of fluid-handling equipment.
Patrick McHale was a skilled machinist when he took a supervisory job at Graco in his native northeast Minneapolis in 1989. Eighteen years later, McHale was named CEO of the global manufacturer of fluid-handling equipment. Graco, which manufactures most of its products at plants in northeast Minneapolis and the United States, recently reported strong 2011 results. McHale is proud of Graco's soup-to-nuts manufacturing prowess, that it exports hundreds of millions worth of equipment annually, and of the company's several-acre campus along the Mississippi River, just northeast of downtown.
Q2011 was a record sales-and-earnings year for Graco?
AWe exceeded our 2007 sales peak by more than $50 million. Our earnings per share matched our 2007 peak. We have significantly increased our annual investment in both new product development and emerging markets over the past five years, and are getting nice incremental growth.
QWhat's driving business, and do you still have a positive outlook for 2012?
AOur growth in 2011 was broad-based, with double-digit growth in all regions and across all product categories. While construction markets in the U.S. remain challenging and there are concerns regarding Europe, we are positive about our prospects for 2012 and expect to grow sales and earnings.
QIs it true that you got your first job at Graco responding to a "help wanted" posting more than 20 years ago?
AThat is a true story. I lived in northeast Minneapolis and worked at a company in the western suburbs. Driving to work one night, I saw a big sign outside Graco that said "Help Wanted." At that time I didn't know much about Graco but decided to investigate. I was offered a factory supervisor job on the "graveyard" shift. It has been an interesting ride!
QYou were trained as a machinist and learned management along the way, if I understand it correctly. Is it an advantage for a CEO of a manufacturing company to understand the laborers and what happens on the shop floor?
AA neighbor in Minneapolis hired me at age 15 to sweep the floors at a family-owned manufacturing business, Minneapolis Molds and Engraving. Apparently I did a good job sweeping. At 16, they began to teach me to run machines. I ran machines all the way through college to pay for tuition. During college I studied accounting, but had already fallen in love with making things. Those years of hands-on work had a significant impact on me, and I believe gave me insights into the factory floor that I could not have gained otherwise.
QGraco is a significant domestic manufacturer and exporter. That's not been the trend in American business for 30 years as companies moved operations to Asia and other, lower-wage places. What makes Graco a competitive exporter?
AMore than 90 percent of our manufacturing is in the United States, and more than half of our sales are now outside the United States. A large part of the credit goes to our manufacturing team. They are a smart, loyal, hardworking group who use the latest technology and processes to produce high quality products at a very competitive cost.
We invest heavily in our factories each year to make sure we have the best equipment in the world. Our product design people also deserve a lot of credit. They develop innovative products that can be manufactured efficiently. Our leadership has played a significant role in making us a strong U.S. manufacturer. David Koch ran this company for 40 years and created a unique culture of loyalty, pride and community service that permeates Graco.
During the 1990s, through his sheer determination, intellect and power of personality, George Aristides transformed our operational performance from solid to world-class by establishing new metrics, setting high expectations and investing in equipment and education. While many manufacturers have elected to pursue a strategy to chase the lowest global wages, Graco has focused on lowest total cost and continuous improvement.
QThe Federal Trade Commission is challenging your proposed acquisition of Illinois Tool Works' finishing business as anti-competitive. How important is this deal to Graco, and why do you say it won't hurt competition?
AThis deal is important to Graco, and will make us a stronger global competitor. This is a highly competitive industry, and the majority of our largest competitors are foreign companies. I am extremely disappointed with the position taken by our government, particularly given our high unemployment rate, tax revenue shortfalls and the endless political speeches on both sides of the aisle expressing the need to strengthen U.S. manufacturing. We repatriate our foreign earnings and pay more than 30 percent in federal taxes. We fund the Graco Foundation with millions to support local charities. We offer great jobs in the heart of the city. In my view we are the good guys and worthy of the full support of our government. Obviously the FTC has a different viewpoint.
QWhat's the most enjoyable aspect of your job? What do you like the least?
AThe people really make this job fun. It is a dynamic environment. We have great employees all around the world who energize me with their ideas and passion. We have a great board, and fantastic distributor partners.
What do I like the least? There is just not enough time. I've got small kids at home and don't like to be an absentee father. If I had a magic wand, I'd create the 48-hour day.
Neal St. Anthony • 612-673-7144