Ecolab Inc. announced Thursday that it tapped Thomas Handley to become its next president and chief operating officer, a role that will be crucial as it integrates newly acquired Nalco into its business.
Handley, 57, takes over the president duties from Doug Baker, who will remain CEO and chairman of the board. Handley, who joined Ecolab in 2003, was most recently Ecolab's senior executive vice president and president of its global food and beverage unit and its Asia Pacific and Latin America businesses.
Handley takes over as president after some months of instability in the role. The job has been somewhat of a passing baton since Ecolab bought Nalco for $8.3 billion at the end of last year.
In December, Baker turned over his role as president to former Nalco CEO Erik Fyrwald. But in April, Fyrwald resigned to become the CEO of the Washington-based chemicals distributor Univar.
At the time, Baker said he would not name a new president but would assume Fyrwald's duties, which included overseeing Nalco's energy- and water-management businesses.
Now the president role firmly belongs to Handley.
Andrew Wittmann, equity research analyst at Robert W. Baird & Co., said Handley's experience makes him a good fit for the job. Nalco does sizable water-processing business inside food and beverage manufacturing plants. And Ecolab serves the food and beverage industry through restaurants, hotels and food-service plants.
"It's probably not by accident that Tom's background is from the food and beverage industry. That is one of the most obvious overlaps between the two companies and it matches Tom's skill set," Wittmann said.
He added that many companies the size of the new Ecolab have a separate president and CEO. Given the widened demands on Baker's time, "I'm surprised this didn't happen sooner."
A statement released by Baker early Thursday seemed to echo that. With a combined 40,000 employees, $11 billion in sales and operations in 160 countries, "The expanded scope and scale of our company following our merger with Nalco last year warrants additional leadership support," Baker wrote.
"Tom's business experience, knowledge of our company, focus on talent development and tremendous strategic abilities will provide me with terrific support and strengthen an already strong leadership team," Baker said. "I am excited to have Tom as a partner for the years ahead."
St. Paul-based Ecolab has been known for its sanitizing, food-safety and pest-elimination products that cater to hospitals, hotels, restaurants, schools, car washes and laundry services.
Nalco, based in Naperville, Ill., processes water for food and beverage manufacturing plants and manages industrial water systems for paper manufacturers, as well as oil and gas exploration and refining companies.
Big job of integration ahead
Some analysts questioned how well Ecolab will do in these heavy industrial and energy sectors, which can be more volatile than Ecolab's traditional cleaning chemicals and services to restaurants, hotels, schools and hospitals.
"They had such a great track record of repeatedly delivering on expectation. But with Nalco, some of their energy, oil and gas markets are more cyclical," said Edward Jones research analyst Jeff Windau "It's still a concern on our end, especially with the sluggish global economy. But to Ecolab's credit, they have done a very good job with the integration" so far.
Handley will probably use his global supply-management skills to find new, closer distributors and get better prices, Windau said. "As this organization continues to grow you need that additional management to make sure things run smoothly."
Most analysts agree it will take years and diligent management to fully integrate Nalco and Ecolab.
Robert W. Baird's Wittmann said Wall Street is most eager to see how the two companies will mesh their respective technologies to create products that tap new markets and produce fresh revenue.
Until then, Ecolab said it expects the blended company to provide $250 million in annual cost savings. That's up from about $150 million when the deal was first announced.
Baker insists the integration of the two global giants is going well. In a move that bolstered such confidence, Forbes Magazine recently named Ecolab to its list of the world's most innovative companies for the second year in a row. It placed 31st out of 100 firms.
Dee DePass • 612-673-7725