TROY, Mich.—As he approaches the end of his first year leading Dayco Products L.L.C., CEO Nick Orlando is looking to drive cost-competitive innovation.
Orlando became CEO last December when John Bohenick stepped down after two years of leading the automotive belt and pulley producer. Orlando previously was a board of managers member.
Coming in, the first thing Orlando did was take a look at where the company stood, he said.
"We had to assess strengths and weaknesses of the company," he said. "Where we're strong, we need to get stronger. And where we're weak, we had to assess how to eliminate that weakness."
Dayco needed to evolve to become a competitive force, whether it was involved with original equipment manufacturing or aftermarket, he said. He took a broad view of the company and began an assessment of the teams and processes in place to bring about change.
"Dayco, for the last 100 years, has always been innovative and bringing up new products," he said. "I think it lost its focus, and we wanted to refocus the team on the importance of innovation.
"Second, we have to be cost-competitive. We've got to find new approaches to manufacturing, and reduce and eliminate non-value-added costs. By being innovative, selling products at the right price and by delivering on time, we create a competitive organization that's going to be around for many years," he said.
Part of shifting the focus for the company meant a change in management for five positions during the first half of 2017, he said. Colin Hindman joined as chief human resources officer in March from TriMas Corp., a manufacturer of engineered products. Danny Infusino, the new president for global powertrain operations, started in May, coming from Martinrea International Inc., a developer and producer of metal parts. Kathleen Vigars became chief procurement officer in May, joining from Gates Corp., a manufacturer of power transmission belts and fluid power products. John Harvey joined as vice president of research, development and engineering in June, also from Gates Corp. Most recently, Jake Santora was named vice president of OE sales in July, coming from Linamar Corp., an automotive parts manufacturer.
Orlando, who most recently served as CEO at Martinrea International before Dayco, was looking for managers who could be flexible while making quick decisions, he said.
"They have to be creative in their roles," he said. "They have to have a sense of urgency in their roles."
Another change is increased consideration of the original equipment market to develop both a strong OE and aftermarket business for Dayco, he said.
"OE wasn't getting the type of attention it needed. We're making strides on both ends of our business because they're both important," he said. "The aftermarket depends on strong OE. We want to make sure that both businesses are dealt with in the appropriate manner and that we are creative, cost-conscious, quality conscious and have a sense of urgency to deliver things on time to the customer."
Getting more out of products like the Activac vacuum generation system, which replaces the need for vacuum pumps to run auxiliary systems in engines, is part of that goal, he said. The system already has been launched and has a good book of business to build on.
"We won the PACE (Premier Automotive Suppliers' Contribution to Excellence) award for that and we've got great customer interest in it," he said. "We're looking at different applications of the technology to deal with customer problems and solve those problems for them."
That means expanding on Dayco's current technology and know-how and applying it to different functions to create new products according to what the market needs to make vehicles more efficient and push performance standards. Dayco's culture needs to find new ways to keep the customer happy and allow them to sell more of their products, but that also requires a hard look at where resources are best used, he said.
"We're here to serve (customers), and that's what we need to focus on," he said. "Obviously, we don't have a bottomless pit financially to do that, so we have to allocate resources appropriately, so we can do the right things for us and our customers."
Orlando has shifted the company's structure to act more globally for product divisions like powertrains or belts, with managers connecting and encouraging best practices within a group, he said.
"Those individuals are tasked with effectively promoting best-in-class throughout the whole organization," he said. "Why re-create the wheel? If someone is doing it the right way, then you take that best practice and apply it globally. They're not revolutionary concepts, but they're practical concepts."
The company also has started moving toward a leaner structure, with some reductions both in manufacturing operations and distribution operations already completed, though specific job numbers weren't shared. Dayco most recently opened a new 400,000-sq.-ft. distribution center in Memphis, Tenn., in July 2015.
"We've looked for more efficient ways to deliver services within the organization. We've also looked at different production systems on the floor that have helped reallocate resources within the organization," Orlando said.
But the goal is a more balanced approach to both OE and aftermarkets while building growth, and running too lean isn't going to help, said Orlando. Even though some consolidation already has taken place, he doesn't want to take resources out of important areas.
"You can't cut your way to success," Orlando said. "You have to spend where you need to. You cannot gut a development budget or innovation budget. You need to balance your resources, and I think by applying the global approach to our product areas, we eliminate duplication of personnel, tasks, systems and everything else."
Doing that gives Dayco the financial resources it needs to spend more time developing and marketing new products, he said.
Going forward, searching for those best practices and areas where leaner procedures can be put in place will be second-nature for the company, rather than an occasional checkup or an emergency plan, he said.
"That's part of the new culture," Orlando said. "It has to be what we do every day. I think it becomes a way of life, and it's promoting that way of life."
He's counting on lean operation and increased attention to OE products like the Activac system to grow the business on the top and bottom line during the next 12 months. The key is growth in strong OE offerings, as well as continuing to build the value of the brand in the aftermarket, he said. He'd like to see an increase in business of 20-30 percent over today's totals during the next three to four years.
"We're well-positioned as a parts supplier in the automotive market. What we need to do is be a little more aggressive in promoting our product and how our products help our OE customers to deal with their needs," he said. "I think we have some great concepts, and we've got to promote them and be successful in selling those products."
Another part of Orlando's new company culture is a push for urgency in getting the necessary facts and making informed decisions as quickly and diligently as possible, he said.
"Collect the data you need to make a knowledgeable decision," he said. "Usually, it's well thought-out because you've done the proper root cause analysis and analyzed the benefits to cost and everything else. Nine times out of 10, you'll make the right decision.
"The business world, especially the automotive industry, it doesn't wait for you. If you don't bring about that sense of urgency, you're going to have problems," he said.
But since he's taken the lead at Dayco, he's seen a "surge of excitement" about the business and what could be done for the company with the tools they already have, he said. Bringing in new team members helped build that energy even with employees who had been with the company for more than 15 years.
"Dayco is a very exciting company. It has a lot of good technology and a lot of good people," Orlando said. "I think that's what we're starting to see, in that we've got renewed energy, and it's starting to show."