You’re the COO of an international industrial aerospace and industrial manufacturer and service and distribution provider founded in 1857. With its CEO of seven years retiring, your company is re-evaluating its businesses and looking to position itself for a new phase of growth. You’ve been tapped to lead the way.
“The challenge that lay in front of us was to identify the core competencies and competitive advantages that would position the Barnes Group for the long term,” recounts Patrick Dempsey, who took the company’s reins in March of 2013. At the time, the Bristol, Connecticut-based company had three operating groups: distribution, aerospace and industrial. It had recently augmented its manufacturing arm with the purchase of Synventive Molding Solutions Group, a manufacturer of hot runner systems used in complex plastic injection molding applications.
“We realized that our true core competency lay in and around manufacturing, so one of the first deals I closed as CEO was the sale of our distribution business,” explains Dempsey. Shedding a business the company had been in for 50 years to shift toward engineered products and becoming an innovative solutions provider represented a huge move for Barnes Group—and one that Dempsey knew better than to take lightly.
“The task was to get out and win the hearts and minds of our employees to get their buy-in for that vision and strategy,” he notes. “The first order of business was communicate, communicate, communicate.” To that end, Dempsey spent a grueling 18 months traveling to locations around the world to speak to employees, as well as investors, customers and other stakeholders.
With the sale of Barnes Distribution North America under his belt and Barnes’ employees energized around the plan, Dempsey was free to pursue his vision of steering more firmly into
engineered products and solutions. “We became more cognizant of the fact that customers came to us for our expertise in manufacturing, but after we made a part and gave it back, they owned the intellectual property and the product,” explains Dempsey. “We decided to leverage our long legacy in manufacturing but to move into a more differentiated, IP-based set of businesses.”
For example, having homed in on the $2.5 billion hot runner solutions market with its purchase of Synventive, Barnes has since acquired two additional hot runner systems providers—Germany’s Otto Männer in 2013 and Italy’s Thermoplay in early 2015. “We didn’t go after fixer-uppers or turnarounds,” says Dempsey of the three deals. “We went after premium businesses where the value created was in the design, engineering, applications engineering, materials engineering—and, of course, they also manufacture and provide aftermarket services. In acquiring them, we also acquired a suite of patents that protect that technology, or systems IP.”
While the transformation of Barnes Group is still in progress, Dempsey is confident that the company is on the right path.
Investors seem to agree. The company’s stock price rose from $26.32 to $37.19 during his tenure. Overall sales were down 2 percent in Q2 of 2015, however, adjusting for the unfavorable exchange rate brings that figure to a respectable 4 percent. “With a good first half of 2015 behind us, we foresee another year of solid financial performance and cash generation,” says Dempsey, who notes that the company is well positioned to make additional acquisitions and to fund investments in organic growth.
Reflecting on the past three years, Dempsey cites the importance of communicating effectively and often to stakeholders during times of change as a key lesson from his tenure thus far. That learning was driven home when the market reacted negatively to the first acquisition in the transformation process.”
“It became evident that we had surprised the investor community—they weren’t sure where we were going,” says Dempsey, who now takes a proactive approach to communicating to employees, customers, investors and other stakeholders. “When you’re doing something this transformational, telling people once or twice isn’t sufficient. You need to tell them probably four, five, six times before they really start to understand and embrace what you’re saying.”