Smulski ready to lead Danfoss unit

NASSAU, Bahamas—When Denmark's Danfoss Co. purchased the hydraulics business from Eaton Corp. in a deal that closed in August 2021, there were two prime pieces to the deal that stood out.

One was the extensive distribution network the Eaton unit had built up to handle the lion's share of the business. And the other was the fluid conveyance business and its host of iconic brands in the hose and fittings industry, a key part of the hydraulics offerings, and something Danfoss officials know they could never build from scratch.

For his part, Andrew Smulski became intimately familiar with both of the those key pieces to the puzzle in the nearly 19 years he spent with Eaton, much of that in fluid power and distribution sales. Prior to the acquisition, he had been director of sales in North America for nearly four years, before serving as vice president of sales and marketing for Americas distribution.

And for the 20 months after the deal was finalized, Smulski served as the senior vice president of global distribution sales for Danfoss Power Solutions (DPS), where the hydraulics business is one of four market segments.

All of that experience made him more than qualified to serve as president of the DPS Fluid Conveyance Division, a post he was named to on April 17.

"Over the course of the last 20 months, I've had the pleasure of not only leading North America, but I've also led our global distribution network," Smulski told Rubber News during the NAHAD Annual Convention, held April 29 to May 2 in Nassau.

"I've had the opportunity to understand their strengths, the opportunities and, most importantly, the synergies that exist to best serve our end users."

It's a track record that the management of Danfoss Power Solutions didn't overlook when promoting the Eaton veteran to his new role.

"Andrew's demonstrated passion for leading global teams, partnering with customers to solve their most challenging machine problems and collaboratively growing with our distribution partners will be a great asset to fluid conveyance," said DPS President Eric Alstrom, to whom he will report. "He has the competencies to take this division to the next level, and I look forward to seeing how his contributions position the team and our customers for continued success."

Smulski sees this opportunity as the chance to bring everything together—"the best-in-class network, the best-in-class products and best-in-class brands"—to move the unit forward.

Rather than just overseeing distribution, Smulski now will carry responsibility for all of the division's operations, engineering and sales activities. It's a business he said posts roughly $1.35 billion in annual sales (out of nearly $5.5 billion for all of DPS), has more than 5,000 employees and 30-plus manufacturing locations around the globe.

"It's a huge opportunity for me," said Smulski, who is based at the company's site in Eden Prairie, Minn. "I told the team the day I took over, it's truly an honor for me to have the opportunity to lead, but I'm also humbled with the understanding that there are 80-plus years of experience inside the organization, with relationships and engineering and talent that has really built up the business.

"My job is to now match the customer focus with the engineering focus and the operations focus, to make us No. 1 in the marketplace."

Smulski takes over the position from Ines Sira, who was only in the role for less than six months. After her short tenure, Smulski said DPS was looking for someone to lead fluid conveyance who knew the ins and outs of that market.

"We were looking for a leader who could provide knowledge of not only the customer base, but also had knowledge of the industry, the markets that we played in, the business and the operations," he said. "We've always had a very strong team, but my being a senior leader, leading the global team, having built up good equity inside of our own company, it was just a good fit for me to help lead an already strong team, but also help lead it within the organization.

When the Eaton acquisition was finalized, there were a good number of fluid conveyance staff who stayed with Eaton, so the process of integrating new blood into the fold continues, he said.

"Part of my job is really to take the business to the next level with the Danfoss business system," Smulski said. "That includes understanding and applying best practices from the other divisions, whether it be in sales or operations, and what made others successful. And putting the Danfoss print onto an already successful Fluid Conveyance Division."

The longtime Eaton veteran is the first to admit that with his wider role, he will be overseeing areas where he doesn't have a lot of personal experience. But he's also confident they have the proper leaders in place in each of the disciplines.

"I have a great team behind me, and a great team that works beside me to help fill the gaps," Smulski told Rubber News. "I'm really a customer first leader. I told the team, I'm more of a servant leader. I let people do what they're experts at. We have great experts when it comes to operations, which is not my forte. We have great engineering teams all across the globe. And our job is to really get the right investments, and make sure we're focused on the right markets so we can take the business to the next level.

Even though it's going on two years since the Eaton deal was finalized, it's still top of mind in many regards. But mostly it's good to be in a company where your division is seen as a key component, rather than one where it was seen as anything but core.

Eaton at that point was leaning into businesses that were seen as non-cyclical, something that hydraulics and fluid power were not.

"In all honesty, I think Eaton ended up deciding to sell hydraulics because it provided too much noise to the investment community," Smulski said. "Every quarter would come in and if we were doing great, it would make us look great. If we were doing bad, it would look bad. And yet every other business was steady as could be."

While hydraulics wasn't seen as core for Eaton, he said it is "in the core of the core for Danfoss."

"They wanted to continue to invest in hydraulics. They saw major opportunities for synergies in fluid conveyance, as well as in distribution," Smulski said. "That goes back to the beginning as to why they purchased us."

For those coming from the Eaton side into the Danfoss organization, the sale was seen as an extremely positive event, he said, putting two industry leaders together focused on the same goal.

"The Eaton employees had invested their time, energy and effort to make the business. And now we were going to have an owner who was going to match that energy and effort with investment of cash and capital," the new DPS Fluid Conveyance president said.

Over the ensuing 20 months, Danfoss had made investments into their facilities across the globe, along with boosting engineering, research and development, and other areas of the division. Whereas hydraulics and fluid conveyance had to compete at Eaton for capital dollars against divisions with higher growth trajectories, that's far from the case with the new owners.

"Everyone from the top down brings a real passion to fluid power and hydraulics. They see the opportunities, they see the trends, the changes that are coming," Smulski said. "We're positioning ourselves well for electrification, for energy efficiency, leading the green agenda and green transition in the states. And they're putting their money where their mouth is."

Something equally important, though, is they're listening to people's ideas. Sometimes when you're at a company where it would be a challenge to draw investment to your part of the business, it could be difficult for staff to let their creative juices flow.

But now, Smulski said, engineers are bringing new ideas about what could be in the future, and sharing innovative new ways of thinking about manufacturing. That's what happens when your operation is viewed as a big part of the company.

Besides the expertise and experience of the staff, Danfoss also acquired a number of well-known brands in the hose market. Names like Aeroquip, Weatherhead, Synflex and Boston that have been around for decades.

And Danfoss has made the conscious decision, Smulski said, to keep all of these major brands active going forward.

"That's what's helped build our distribution network. That's what's built our brand, and we're going to continue to build on that equity," he said.

In many cases, customers grew up with these brands. If they are building a machine and see it's an Aeroquip hose, that's what they want, and they don't care if it was built by Eaton or Danfoss.

"Our distributors and end users will tell you that's something they value, and continue to want to see," Smulski said. "They see the quality, the innovation, the reliability of the brand. It's something they believe in"
Given that he's been in his new position just over a month, the team still is working on defining it's common vision, but there are a few tenets that will be part of that.

"We want to be the No. 1 player in market share, and the No. 1 player in our core brands," he said. "So our core vision needs to be around making sure our customers are successful, making sure that we're successful, and that we continue to innovate and bring out the best products in the industry."

The majority of business is done through distribution, roughly between 60 and 70 percent, depending on the region. Smulski said the Fluid Conveyance Division will continue to support and grow that side of the business, providing the tools to grow utilizing the existing brands, along with products bearing the Danfoss name as well.

The U.S. is by far the top market for Fluid Conveyance, with sales in other regions dropping off quickly from there. He said the European business is much different than the states, being very fragmented and driven by OEM and private label sales.

"We do have the world's largest hose manufacturing facility in Turkey. That provides both the Aeroquip and Weatherhead brands to markets around the globe," Smulski said. "But it also is a flagship for our European manufacturing of hose in that region."

There also are plans to grow in Asia-Pacific, in areas such as India, Australia and Southeast Asia. The unit continues to invest in sales there and is looking to find new ways to grow through manufacturing and operations. They want to localize as much production as possible, but don't need to make every hose themselves, citing a newly signed supply agreement with an Indian hose manufacturer as an example.

Smulski sees the markets "in a period of declining growth," and are starting to steady out. After dealing with the COVID-19 pandemic, the business is battling some of the over-inventory and over-purchasing that was common by both OEMs and distributors during the supply chain nightmares.

But while he sees opportunity for some growth in the market, the Fluid Conveyance Division has a big chance to boost its fortunes through "synergy sales," with the integration of the business into Danfoss. That brings potential for penetrating new OEMs and sales channels where they had no presence before.

"We sell so many Danfoss products where we're not selling hose into today," Smulski said. "So we're just leveraging those and trying to find synergies and expand relationships that already exist. That is really our growth opportunity as we go forward, regardless of what's happening in the market."