Linda Hasenfratz is the leader govt officer of Linamar, a global car elements and system business enterprise primarily based in Guelph, Ontario. With 28,700 personnel at its 60 flowers around the arena and 2017 annual income of $6.Five billion Canadian (US$four.9 billion), Linamar is in many ways a prototypical 21st-century production enterprise. It is also a circle of the relatives-influenced corporation. Founded in 1966 via Frank Hasenfratz, an immigrant from Hungary, as a one-person device shop in his basement, Linamar has been led by the handiest CEOs in its 52 years: Frank Hasenfratz, from 1966 to 2002, and Linda Hasenfratz, his daughter, from 2002 until the existing. Hasenfratz, now fifty-two, joined the enterprise at an access-level position in 1990 and gradually labored her way up to the corner workplace.
In her nearly 17 years at the helm of the agency, Hasenfratz has suggested Linamar via the global financial crisis, which laid low large swaths of the North American car enterprise, grown revenues fivefold, and led the organization’s diversification into regions which include industrial lifts and agricultural system. In the technique, Hasenfratz has established herself as one of Canada’s main corporate statespeople and a suggestion for women’s advancement in trades and STEM.
She sat down with strategy+enterprise to speak about the business enterprise’s one-hundred-year plan, how Linamar is coping with the turmoil surrounding trade, and how production companies can work intensively to increase possibilities for women. S+B: It seems groups inside the car area are redefining themselves. Ford is now a mobile answers company.
Your website says your task is “powering automobiles, movement, paintings, and lives.” Can you inform us a bit approximately the evolution of your self-definition? HASENFRATZ: We came up with that at the least ten years in the past. It’s purposefully huge because part of our normal method is diversifying into some new markets and supplying ourselves with more possibilities to develop the enterprise. S+B: You have made a few vast actions to diversify into agricultural gadgets and lifts.
Is this diversification, or is there a change at work right here? Are you looking to change the corporation’s nature, or are you simply trying to modify the mix of the business? HASENFRATZ: To us, it’s more of a diversification strategy. Globalizing, diversifying, and specializing in environmentally beneficial markets and merchandise and approaches to run our enterprise has been a middle part of our strategy for many years. From time to time, I find this terminology around transformation and disruption and anything a touch frustrating.
When people say, “Are you the disruptor or disrupted?” — Why do you even have to say that? You’re innovating, and you’re developing your enterprise. I wouldn’t say I like the concept that everybody’s got to be in a bucket. You’re in a bucket over right here where you’re a disruptor or, by way of definition, you’re in this disrupted bucket. We’re simply looking to develop our commercial enterprise, innovate, and take advantage of new technologies, and we’re continuously doing that. I suppose there’s a difference between innovation round product, system, and material development. I would name true disruption of really new and progressive, taking into consideration a very different technique. Like Uber with taxis — that’s true disruption. The purpose I get irritated is people get caught up within the allure, and all of a sudden, traders best spend money on agencies they suppose are disruptors, something their definition is of that, which doesn’t make sense.
S+B: In February, to procure MacDon, a Canadian organization that makes agriculture harvesting system, for $1.2 billion [Canadian]. HASENFRATZ: We have a hundred-yr plan at Linamar that consists of growth into a selection of markets. We’ve diagnosed six key markets we want to be part of. Some of them were already jointly invested in, like transportation or infrastructure, our Skyjack enterprise. But meals and agriculture turned into any other market that we’d identified as one that we desired to have a more significant play in. We were already doing some work with harvesting equipment out of one among our Hungarian centers. But we felt a lot of possibility for innovation and efficiency improvement and enhancing yields within the discipline. We had been happy to locate MacDon almost outdoors as a splendid enterprise with the super era and growth potential.
S+B: Are there a whole lot of these styles of acquisitions coming? HASENFRATZ: No, that is an extra paced funding. We’re targeted on three markets now: transportation, infrastructure, and food and agriculture. And I think there’s a big possibility to develop in every one of them. Although we have three different markets we’d like to be part of — water, energy, and age management — we’re now not nerve-racking to jump into every one of these proper away. Doing something every five, six, seven years that’s big in terms of a play into a brand new market possibly makes the experience.
That doesn’t suggest we can lightly make investments and start to understand a bit more about those one-of-a-kind markets and build our approach consequently. In any case, it is a one-hundred-year plan, so we don’t need to do it all in the subsequent six months. S+B: You’re one of the few CEOs of a prime vehicle enterprise corporation that successfully led her organization through the 2008–09 downturn and continues to be dwelling to tell the story. What instructions, if any, of the manner you survived to inform the way you operate? HASENFRATZ: Who we are as a company to start with helped us for the duration of that time body. We are a quick-transferring, very responsive agency. We’re entrepreneurial. We’re amazing-focused on lean and performance and continuously improving our fee structures.
So we didn’t have all these fats to reduce. But we nonetheless had to reduce fees due to the fact income dropped 30 percent. And we did accomplish that, and we moved fast to do it. We additionally targeted conserving cash. And again, a number of our philosophies of ways we run our corporation allowed us to do that extra successfully than others. We tend to utilize a flexible, programmable system in our machining lines. Not all businesses do this. Many organizations use the special-cause system, which using definition is custom-made for that precise component, and it does tend to be much less capital intensive.
But your volumes don’t usually pan out in which your customers think they’re going to be. And if you have a special-purpose gadget, you’re married to that potential. The fact that we had flexible CNC [computer numerical control] equipment that we ought to reallocate to new packages supposed that after the downturn came, we have been able to unencumber gadget from present production lines, better in shape ability to real necessities, and reallocate that equipment into new jobs. That become important because the third part of our strategy — after reducing fees and holding coins — became to develop.
We had been actively searching out new commercial enterprise possibilities, taking up enterprise from other providers who were going bankrupt or exiting the commercial enterprise. We had the equipment to place the ones jobs on without having to spend coins. We’d grown our content material in line with automobile so much using, taking up all that enterprise that our sales truly shot up as soon as volumes started to pick out up once more. Sales fell from $2.2 billion to $1.6 billion to $1.7 billion; however, we then picked up $four hundred million takeover paintings. S+B: What level of debt are you secure with? HASENFRATZ: We’ve always been conservative on the debit side.
Once more, this served us well in that time body because we never came near breaking a covenant. In many instances of uncertainty — and right now, obviously, there is lots of uncertainty around generation and politics and change — who we are culturally is useful. In times of uncertainty, it’s miles vital that we stay as bendy as possible in every manner viable, now not simply in phrases of our equipment but in terms of our approach. We like to mention our method’s ability and our commercial enterprise need to at once correlate to the level of uncertainty. S+B: I’m positive it didn’t escape your word that the simplest one of the Detroit Three that didn’t cross bankrupt become Ford, which is own family managed or encouraged.
You don’t have the class of stocks that offer the own family super control. But the organization, based using your father, has had the most effective two CEOs inside the past half of the century. Is Linamar your family employer? HASENFRATZ: Well, we’re a family-influenced business enterprise. We went public inside the 1980s. We’re no longer family-controlled. However, we do nevertheless very own approximately a third of the shares.
I suppose that own family groups — whether or not they’re a circle of relatives managed or family prompted — have an extended-term viewpoint. And to me, this is immediately correlated with your fulfillment. Because humans can get manner too stuck up in short-time period matters taking place and make selections that aren’t accurate for the long term. Family groups, because they envision destiny generations probably being worried and deriving their wealth from the organization, awareness on achievement within the long term. And while your call’s at the door or on the founding record, there’s a feeling of obligation.
Not that I don’t think that CEOs care about their companies. But I do assume there’s a deeper stage of obligation and responsibility that includes an own family. Certainly, we’ve been capable of using our perception of being a private family enterprise to gain on the acquisition side. We’ve been capable of collect a few circles of relatives corporations that truly cared lots about who sold their business. MacDon’s a great instance of that. Its leaders have been searching at selling their company for six or seven years but couldn’t get secure with non-public equity and whatever.
I suggest we paid a truthful price, but I’m confident these different groups were inclined to spend a terrific charge as correctly. S+B: Is there a cadre of other family members who’re operating in the business? HASENFRATZ: Only some in the meanwhile. My brother-in-regulation is a member of my crew, and I have a cousin who performs a position for us in Europe. I do have four youngsters, so I’m hoping with any luck one among them, or multiple of them, might be interested in coming into our enterprise. S+B: You noted you’re a hundred-yr plan.
The typical tenure of a CEO of an S&P 500 enterprise is something like five or six years. HASENFRATZ: Roughly 3.2 years. S+B: What is the intent in the back of having one hundred-yr plan? What offers you the self-assurance that you can guess at what the sector is probably like in 2119? HASENFRATZ: I don’t think we will as it should predict the future 100 years out. But what we had been seeking to do became pick out markets that could be important over the long term. We looked at forces like a developing international populace; this is aging and urbanizing. And from all of that research, we came up with the six markets we want to consciousness on.
That may thoroughly change. Thirty years from now, there will be something entirely new that no one’s ever idea of that comes up as a possibility. The key’s glaringly to stay abreast of what’s happening in markets and these mega-traits impacting markets. And mainly, maintain to innovate so that you’re continually developing new technology and applying them in new regions and new markets. And it’s now not a hundred-year financial plan. I do have a type of lower back-of-the-envelope concept of what we’re trying to do increase-wise over the subsequent 25 years.
And I do have a monetary model that goes out to 2040, only as a place to begin. It’s desirable to have a little touch bit of a framework. And then you keep adjusting and making sure it maintains to create the experience and that you keep growing. S+B. You’ve spoken about innovation. What is the focal point or definition of change at Linamar? HASENFRATZ: The design of products, procedure innovation, and cloth improvement are the principal channels of innovation. We now have investments in mild metallic casting and forging, and cloth improvement’s an essential part of the change for those businesses.
For instance, we make a hydro-shaped camshaft. That’s product innovation in the sense that the cam’s design is absolutely exceptional, but it’s far a system innovation because it’s a manner to make the camshaft that’s one of a kind as nicely. S+B. Do you smash down internally or externally your quantity of R&D investment? HASENFRATZ: If we have a look at the combination of product and technique, we’d say it’s among 3 and 5 percent of sales. It’s been growing as a percent of income over the past decade. S+B: Manufacturing as an enterprise has not usually been at the leading edge of diversity. How do you individually and Linamar as a company work to promote more participation, particularly women, in STEM fields?
HASENFRATZ: Let me merely talk a bit first widely, approximately range. One component that I suppose could be a by plenty of Linamar is that people boost on merit. If you’re doing a super process, you’re going to get an opportunity to advance and be promoted and run a business. Canada is a rustic that has many immigrants, so we’ve got quite a few people working for us who are new Canadians. These are intelligent, beautiful humans, and if they may be doing a tremendous job, they’re going to get a threat to get promoted. With appreciation to ladies, we are representative proportionally at every stage inside the business to our levels of usual women.
The awful news is we’re most effective about 20 percent g feels normal. It’s all nicely and suitable that we’ve were given 20 percentage w of women in management at each stage. But to increase range extra, we need to have greater women in the enterprise initially merely. A first-rate way to do this is with the aid of attracting greater girls into STEM and the trades.
For the closing seven or eight years, we’ve run a summer season camp for ladies in grades seven and 8 that is trades-focused with Skills Ontario and Skills Canada. We also host an occasion for young ladies in excessive faculty who can hear from women mentors who’re already in a whole variety of trades. At closing 12 months’ dinner, I suppose we had 2 hundred attendees, that is extremely good. We have an apprenticeship program mainly for women, and we’re sitting at around 20 lady apprentices right here in Guelph right now. S+B: How else can you assist in constructing the pipeline? HASENFRATZ: With recognize to STEM more broadly and engineering mainly, we installation a scholarship program with Western University [in Ontario] for women in the dual-diploma software of engineering and Ivey Business.
We aid 10 women according to year. We pay half of their tuition for the three years of the dual diploma, and we deliver them a job in the summers of years 3, and four and a process provide upon commencement. We have our first cohort of scholarship students in place this 12 months. And we’ve spearheaded a program which we’re definitely proud of known as See It, Be It, STEM It. It is a website and social media platform, and a calendar to draw younger women into STEM. We wanted to break this stereotypical photograph of who’s going to be in STEM with this calendar.
We published 10,000 of them, and we tried to usher in a spread of regions: chemistry, math, biology, engineering, agricultural science. I suppose it will likely be exceptional to have young ladies observe that and suppose, “Oh, I would like to try this job.” Or, “I can relate to this woman who plays volleyball; I play volleyball.” They may be stimulated through it. S+B: We hear from CEOs approximately a developing difficulty about alternate conflicts. You’re a Canada-based totally automobile parts employer with flowers around the sector that does various move-border business. About half of CEOs are announcing they’re already adjusting their delivery chain and sourcing approach to address the converting world. How are these exchange tensions affecting your commercial enterprise and the styles of decisions you’re making? HASENFRATZ: I feel like what’s been taking place in North America during the last year with NAFTA’s renegotiation and the price lists is short-time period noise.
I would never change my delivery chain or my place of operations because of something as bra ief time period as tariffs. I think it’s absurd that we nonetheless have them when we’ve agreed to a revised unfastened change agreement. We’re going to exchange with each different, except for this stuff freely? Like, what the heck? These price lists significantly impact American agencies more than all of us else because businesses are becoming hit on price on the manner in. They’re getting hit on the way out because of the retaliatory tariffs that Europe and other international locations are enforcing. So how does this make experience? It’s now not sustainable.
And I don’t make an extended-term decision, like I’m going to shift my production to the U.S., for something that, by definition, can’t hold. S+B. Do you experience such as you’re within the minority on that? Because we see headlines announcing, Mercedes used to export most of these cars from the U.S. To China, and now that they can’t, they are shifting manufacturing. HASENFRATZ: I suppose that it depends on the severity of the effect. It’s clean for our business enterprise to look past the noise because it does not impact us. That a good deal, right? For a few organizations, the severity of the effect will dictate what they’re going to do. Now, some businesses may additionally decide, “You realize what? We’ve were given this destabilizing force in the American management for as a minimum two extra years, perhaps six extra years, and I don’t need to be a part of that.”
But don’t forget that eighty percent of the sector’s automotive production and sales are outside North America. So you’re going to make selections that make feel for your worldwide business, no longer simply this one slice. S+B: Discussions around change are very certain up in politics. Popular religion in loose trade as a fine desirable has eroded, alongside a bit confidence in businesses’ CEOs. How can someone such as you and your colleagues play a positive function in the discussions we’re having about alternate? HASENFRATZ: Focusing on facts and now, not emotions, are surely how I’ve continually tried to approach it.
The facts are that 8 out of 10 American production jobs had been misplaced over the last two decades had been lost to automation, not trade. It’s a misconception that change has by some means eliminated jobs. There are something like 6 or 6.Five million unfilled jobs inside the U.S. Today. S+B: It’s 7.1 million, in line with the Bureau of Labor Statistics. HASENFRATZ: Oh, that’s good to recognize. So, wherein are these types of jobs that have been misplaced? I assume that there’s a real disconnect between the fact of what’s occurring and the manner humans suppose, the emotional side, in no small element fanned by using the rhetoric of Trump and his campaigning that absolutely blew that stuff out of percentage and didn’t awareness on facts and just tapped into emotion. So, I think it is critical to know facts and make decisions based totally on the information.
Make coverage selections based on statistics. Make investment decisions primarily based on records. S+B. You have a plant in North Carolina. Are you having an issue hiring within the U.S. And in Canada? And in that case, what kind? HASENFRATZ: We are having difficulty hiring anywhere — for professional and unskilled jobs — because unemployment is at forty-12 months lows. On the one hand, it’s forcing our hand to automate greater than we likely would be doing have been capable of finding humans.
For sure, the jobs are converting. We have manner greater indirect jobs than direct jobs. Direct jobs are humans loading and unloading machines, and indirect are largely anybody else. We used to have direct employees for every oblique worker, and today we’re at about one to at least one and rapidly attending to greater oblique than direct jobs. It’s interesting that over the past seven years here in Canada, our direct head depend has risen 36 percent, but the indirect head is counted up 62 percent. And wages have improved 7 by6 percentage. That’s a mirrored image, once more, that these oblique jobs pay greater as well. And sales consistent with worker has also increased significantly over that point frame, by way of 35 percent.
