Duncan Ross
President of Barnstead International

TH: Your biography mentions that you won a student entrepreneur award from Babson College. What was that about?
DR: I come from a family of entrepreneurs on both my mother's and dad's sides. I had a snow-blowing business in my neighborhood while I was in school, when I was younger, and decided to go out and start to do some landscaping, too. So I basically started a business my senior year in high school.
Then, in going to college in the local area, I teamed up with another friend of mine who was going to Northeastern University. We developed a landscape business, mostly maintenance, but we also did some construction. We plowed snow in the winter. We had three trucks. A good line of credit with a local bank. We employed eight people seasonally, three on a year-round basis, and basically ran that business right through college. Then I sold the business when I graduated.
Babson is known for its entrepreneurship programs. There's a number of student businesses on-campus and off-campus. You compete against the other businesses your senior year for the Student Business Initiative Award as the outstanding student entrepreneur.

TH: Are there things that you learned from that experience that you feel you apply to your job today?
DR: I think that probably the most important lesson you learned is that there are certain people you can depend on in business and there are certain people that you may not be able to depend on. Probably the most critical lesson was that the good people are absolutely critical to your success.
As soon as you get any type of scale in your business, no matter how good you are, you're dead if you don't have the right people.

TH: Barnstead International just observed its 125th anniversary. Is there a way to keep that thread all the way back 125 years? Or would you point to a different time in the company's history that might better reflect the current state of the company and its direction?
DR: Well, I think it's difficult not to go back to that (starting) point, simply because both the name of the company, part of the culture of the company, and many of the core products within the company were built on that original Barnstead product line.
Our second- largest portfolio is the Barnstead-branded products, the water products if you will, which have expanded significantly. Water is a universal re-agent, if you will. It's needed in every type of laboratory pretty much. University, hospital, industrial research, pharmaceutical biotech. So a significant competitive advantage that we have against other laboratory equipment companies is that we're the only broad-based laboratory equipment company that is in the ultra-pure water market. So that clearly is something that helps differentiate us and get us in front of a number of users and applications by leading with that.
But at the same time, in order to go from this water company in Boston to this broad-based equipment company, there were several key gates.
One, of course, was coming together with Thermolyne back in 1986 through '88 when Barnstead moved out here to Dubuque.
Another major threshold was the acquisition of Lab-Line Instruments in 1998 in Chicago. Lab-Line was more focused on the life science business of constant temperature equipment, where Thermolyne was focused more on the industrial and industrial research sector.
Then, when you look at the history, the acquisition of the STEM Corp. over in the U.K., which has made us a major player in chemistry and process optimization and drug development.
Then the corporation shifting the Genevac division and centrifugal evaporation for drying off of liquid-phase to solid-phase solvents in medicinal chemistry has given us two fast-growing areas in the drug discovery market, which is part of the Barnstead responsibility now.
So we have this ability to leverage some leading technology positions.
I spoke the other day at the 125th anniversary, and I mentioned many of the strategic acquisitions that (former president) Randy Hoff made back in the 1990s in both product lines and businesses. Some of those businesses have given us the muscle and the scale to be that 500-pound gorilla in this industry. All important, but that kind of ties it together, those gating events.

TH: What you do here could pretty much be done anywhere in the country - or the world. Why Dubuque? What do your bosses and your shareholders see in Dubuque to keep so much of the operation here?
DR: Well, Dubuque has a lot of advantages. First of all, the business was really built here. When you look at our vision and our mission statement, we talk about our brands and our people as being cornerstones of our business.
In Dubuque, you have a very strong, dedicated, good Midwestern work ethic, team of people that if you have a good opportunity for them, you provide opportunities for career advancement and development, they will come and they'll stay and they'll work with you. I clearly believe you have more loyalty in what you're trying to accomplish. That's a significant competitive advantage.
Candidly, Dubuque is excellent for customer and technical service, instrument repair. Engineering, we have a very good relationship with Iowa State University. Many of our degreed engineers came through Iowa State.
We have an outstanding production team here in Dubuque. We're very efficient at what we do. It's not to say we can't improve, but as our CEO said the other day, today everybody's going somewhere else, but there's no substitute for loyalty. There's no substitute for quality manufacturing. It's kind of the good news/bad news. I'm always going out to the production floor, handing out watches because people are leaving after 30 or 35 years. They're just tremendously productive people. The crew here produces product at the highest service levels in the industry. We build a quality product. We have things in stock that our competitors don't.
It's known in the industry if you need something quick, you call Barnstead.
A lot has to do with the fact that because we're in Dubuque, because we have this environment, because we have a good overall benefits package and I think a decent environment we create here, that people come here and they want to stay here. And that's critical. I've operated in the big cities and I know what it's like to have a revolving door, and it's not fun. It costs you a ton to replace people and bring them back up to speed. Loyalty and people that have that intellectual knowledge, that's absolutely critical to the success of a business.
At the same time, it's good to have people that have come from other places too, to mix them in because they bring a different perspective. But the right combination of that and having a core group of people to come here and spend their whole career to me, you know, it's just outstanding. It gives you a competitive advantage.
Sales, we run it out of here but we have people that live all over the country. We have international people overseas and also on the two coasts that travel to Asia and travel to the Middle East. From that standpoint, not a challenge.
Now, really the only challenge we have in being located in Dubuque is in the marketing area. We have some very good people in marketing, but since we don't have other businesses like ours in the tri-state area, it's very difficult to have a strong bench behind that. So what we've done is, when we need to, we will put marketing people over in the Chicago office. We have one very talented marketing manager over there that we recruited a few years ago from the industry. She wasn't able to relocate because of husband's career, so we worked through that.
But overall, I would say for our business, everything is positive. When you look at it in total, it's a good decision to be in Dubuque. There are times when you get frustrated when you get stranded at O'Hare or something, but for the most part, it's a good place to be.

TH: Your vision and mission statement also includes a statement, "We will be a 'best place to work' company." In what form and fashion do you feel that is occurring here?
DR: Well, we want it to be even better. We're going to be adding another person, a right hand for Lynn Osterhaus in human resources, so she can get out in front of the business more.
One of the areas that we're focused, is we try to promote from within versus going outside and provide people career-pathing opportunities. We need to do a better job at being able to develop our people and providing more money and resources for education.
We do have a very good benefits plan here. We're one of the few companies still that has not only a 401(k) and employee stock purchase plan, but a defined benefit pension plan. A regular traditional pension, too. Our health care plans are outstanding. So we've always tried to provide extremely good benefits.
Also, based on the culture that was here with the Thermolyne company was always somewhat of a family culture. I think we've been able to retain that as we've grown. We've been able to continue with an entrepreneurial spirit.
One reason that I came here versus other opportunities that I had available to me was because of the fact that the business was still entrepreneurial. It had sufficient scale, but it wasn't a bureaucracy. We try to keep it loose. We try to keep it open. Respectful, but at the same time not a political, bureaucratic organization. That's very important to me coming from a family of entrepreneurs.
To me, that's what it's all about, but we still have a lot of work to do. That's a goal.
It's been difficult the past couple of years because in our industry and other industries, you haven't had the dollars as much as you would have liked to have to invest in your people. But when you're talking about trying to give somebody a raise versus sending two people Madison for two weeks for an executive education program, you've got to pay the people first.

TH: How do you manage change and how do you approach change with your team?
DR: Well, as positively as possible. The team is very mature from the standpoint of wisdom and overall business and emotional maturity. People understand that there's change, it's constant.
What I try to do is filter things as best I can, provide air cover, stay very positive and focused and try to distill it down to the three or four critical things that we have to do. Because it's very easy to get overwhelmed.
A lot of it is just communication. Being open. I think a lot of leadership too is just being comfortable with who you are and knowing that someone can come in and talk to you as they would up here and not necessarily the fact that they're reporting to you.
I've always been the type of person that likes to work. Roll up my sleeves and roll around in the mud with people. I'm not into a hierarchical type of process. I like to keep things loose. I like to keep things light. I'm from the East Coast. I've got kind of a dry sense of humor that way. We've got some other people from the East here that came out with the Barnstead move. It works. Not to say that it isn't stressful and there aren't challenges and people don't face challenges. I mean, I have challenges in dealing with things. We all do. But it's a pretty resilient group. Being open and authentic is a big part of it.

TH: What are the major challenges that the company is facing?
DR: One area that we have to get very focused on is developing our leadership for the future. Not just in this company, but our industry is somewhat dominated by the baby boomers. We haven't had a lot of Generation X and Y coming into this business. We have to find a way to develop the people that we do have and create more opportunities for people to come into the business.
The second challenge we have is we have too many portfolios and too many products. Over time, we still want to be the broadest-based laboratory equipment company, but maybe not quite as broad-based as we are today. So we clearly are making some decisions to harvest a few minor product lines and grow more core businesses more quickly. We are also looking at what we call "adjacent development" or product portfolio opportunities that are not similar to our competitors in market segments we plan to expand or enter. For example, to expand our "cold products" portfolio beyond our basic refrigerators, freezers and cryogenic storage vessels, a logical next step would be ultra-low freezers. Since that segment is already well served by a half-dozen competitors, we are looking at technologies that are completely differentiated where we could develop a segment monopoly.

TH: Earlier this year, the Ever Ready Thermometer unit moved into Dubuque. Then you had some fluctuation in employment, related to figuring out exactly what right numbers there.
DR: Right. We laid off 12 and brought seven back.

TH: What do you project for employment here in Dubuque over the next few years?
DR: Right now, we still do have some capacity here. We're running two shifts. This is a very good facility. We would like to use it more, not that we're not using it in a very robust way for the first two shifts.
It's difficult for me to project employment over the next few years. I would anticipate that if, short of buying any businesses or doing anything else from a consolidation for a transfer of product line into Dubuque, which aren't on the drawing board right now, that on a worse or base case scenario, I would expect that the employment growth here will be low single-digit (percentage) from where we are right now. So, we're planning on growing. We're not planning on taking anything out of here. If it makes sense, we'll look at doing more here.
But right now, for example, we're looking at some opportunities to do some work for our company over in Chicago that we currently outsource in Chicago.
We will look for ways to leverage our cost structure, which is a big part of our corporate initiative going forward because we do have a relatively attractive margin or attractive return on sales as a corporation, and the Street is looking for us to maintain and improve our margin which, as you know in businesses that are a little more mature, like the lab business is, the only way to do that is to raise your prices, which you're always going to be limited, have a home run in technology and create a short-term monopoly, and/or take costs out of your overall value chain, your supply chain, which has to be a big part of our initiative.

TH: When we were getting acquainted earlier, you mentioned being a Red Sox fan and, secondarily, a Cubs fan. That leads to the question that's on a lot of minds in Dubuque right now related to baseball and the baseball stadium referendum coming up. Do you have a point of view on that?
DR: In my own personal opinion, I think that the baseball piece is something that we should embrace.
I was just standing in the parking lot at the Grand Harbor last week and I was talking to our VP of marketing. I said, "Can you believe this? When I got here three years ago, none of this was here. Look at this convention center. It's world class." I was speaking with someone from the Twin Cities last night. I said, "You know, Dubuque has really done an outstanding job with the resources they've had. I mean, they've hit a home run as far as putting some infrastructure, some amenities in here." The aquarium. People can't believe it when they go in there. It's something you'd expect in a city of a million people. So I think Dubuque's done a wonderful job. I know it started long before three years ago to get to this point.
When you consider the size of our transportation infrastructure, I think the development people here need to be given an A-plus for what they've accomplished. This summer, we decided to drive to the East Coast rather than fly. And I'm coming back to Dubuque and I'm saying, "You know, what a great town, what a beautiful area. Great resources. On the river. But I-90 is up here and I-80 down here." I think it's the biggest city in the country without an interstate going through it, or access to an interstate right there. So that's probably the thing that's limited the growth here the most.
I think that you have to take development when it comes to you. I clearly felt that we probably should have looked, thought maybe a little differently and maybe that's still open as far as the old Pack facility with what Wal-Mart wanted to do. I understand it doesn't create maybe the level of jobs that we're looking at. But when you look at the number of manufacturers - not us, but a number of manufacturers - are looking for lower-cost alternatives outside the country, it's going to be difficult to get those types of high-paying jobs in Dubuque. So I think you have to take reasonable development when it comes to you.
I think the baseball piece is just another reason for this to be a destination. There's something else that can be done because when people have meetings in a destination like this, they want to have a diversity of things they can do, both cultural and athletic, if you will. And I think that just fits really nicely. I definitely think it's something we should do. I think it's a step in the right direction.

TH: I think the naming rights are still available.
DR: (Laugh) Well, you know, if this was the corporate headquarters of Apogent maybe we'd be talking, Brian. I'd like to do it, but ...

TH: "Barnstead Ballpark."
DR: Barnstead Ballpark, yeah, On The Water.

TH: If you had a magic wand that could change one thing about your job, anything at all, what might it be?
DR: Boy that's a tough one. About my job itself?

TH: Mm, hmm.
DR: This is what really comes to me, so I'll blurt this out. It's the constraints you have by having to hit quarterly results. You can only invest so far out in front before you get a return. I think there's a lot of advantages of being with a public company because it does give you discipline. But at the same time, maybe too much discipline because, you know, at all costs, staying within the law, you have to be able to meet with the Street expects. And that doesn't always necessarily line up with the best long-term growth prospect for the business. So if I could change that. If I could have six more sales people and three more marketing people instead of two more sales people and one more marketing person in front, because I know I'm going to be here in two years. Or if I could spent another half- million dollars in product development and bring in three more engineers and really drive into the cold strategy further in our cryogenics and ultra-low freezer market more quickly and hit a home run there rather than, you know, get there next year rather than in two years. Those are some of the frustrations, but it's just the reality of how we're set up in American business.

TH: That's certainly not unique to this company ...
DR: It's everywhere. But that's one thing that I'd change. The only other thing that I'd change is if I could find a way to grow this business organically and unorganically to twice the size it is today, then I could have a jet of my own, and that would make my life infinitely easier. Because I would like to get out more to see customers and do things in the market and sometimes I do, not say hold back a little, but the complexity of traveling out of Dubuque becomes somewhat of a challenge commercially from time to time. So, the secondary thing would be our own jet.

TH: You might have your name on the ballpark before that happens.
DR: Yeah, I know. Well, if we get to quarter million maybe I could name the ballpark. If I get to a quarter billion in revenue, $250 million before the ballpark was done, then I could probably talk the board into letting me name it the Barnstead International Ballpark at the Port of Dubuque.

TH: That would be a good goal.
DR: Yeah, that would.