Don Washkewicz couldn't get the engine grease out from under his fingernails.
For his first six months at Parker Hannifin Corp., the 23-year-old Washkewicz removed defective hoses from about 300 truck engine starter motors. For the later portion of 1972 into 1973, the graduate from the Fenn College of Engineering at Cleveland State University spent his days in a truck garage cramming his arm into the narrow gap between an 18-wheeler's engine and frame, wrenching off a large nut to remove the hose.
The heat from these engines - which rolled into the garage straight from the highway - had burned all the hair from his arm, and coated the rest of the future chairman, CEO and president of Parker in a thick layer of oil and engine grease. The coverall he wore was so caked in muck that it could stand up by itself.
"I spent all these years growing up working on cars and grease and working in garages," Washkewicz says. "I thought I had passed through this phase already. I can tell you more than once I was thinking this might not be for me."
Eventually, Washkewicz was reassigned to a safer, cleaner research project reducing truck cabin air-conditioning noise using thermoplastic tubing. He was grateful for the switch.
"I thought, ‘There is a God after all,'" laughs the 56-year-old Washkewicz, more than 30 years later sitting in the chief executive's corner suite in Mayfield Village, which seems a universe away from the truck garage in Richfield. "I've been at both extremes at this company."
Named CEO in 2001 and then chairman in 2004, Washkewicz, who can't climb any higher in the company he joined as a hose division engineer in 1972, started without even a notion he would lead the $9.4 billion, 57,000-employee corporation, the third-largest public company in Cuyahoga County and eighth largest in Northeast Ohio.
AT A GLANCE
DONALD E. WASHKEWICZ
EDUCATION: Garfield Heights High School, 1968; bachelor's degree, mechanical engineering, Cleveland State University, 1972; MBA, Case Western Reserve University, 1979
CAREER: Joined Parker Hannifin Corp. in 1972 as an engineer in its hose products division. Promoted to manager of research and development; general manager, Parflex division; vice president, Fluid Connectors Group; president, Hydraulics Group; CEO in 2001 and chairman in 2004; assumed president’s title after retirement of Nick Vande Steeg in 2006
FAMILY: Wife, Pam, and three children, Bryan, junior, Solon High School; Tiffany, graduate nursing student, Marietta College; Dawn, marketing executive, The Corporate Executive Board, Washington, D.C.
Photo by Izabella Viktoria
Washkewicz ascended to this level by staying grounded in his Cleveland roots and never being afraid to cut loose old, wasteful manufacturing practices. Being raised in the company, he has an admiration for its traditions, but he's not shy about embracing new, leaner philosophies for Parker's nine diverse business segments, which produce more than 3,200 motion and control systems and products.
His strategy has earned recognition from investors: The corporation's New York Stock Exchange stock was trading close to $90 per share in early April, en route to the company's goal of $100 a share. Its moves have also been praised in Investor's Business Daily, Fortune magazine, and in a March page one story in The Wall Street Journal, which lauded Parker's pricing savvy.
"My boss at one time said, ‘You know, Don, one thing you ought to think about is I've never walked through a door here at Parker I've regretted. It's always been a new experience and a wonderful experience,'" Washkewicz recalls. "And he was right. Everything has been a new challenge, a new opportunity."
Boeing makes airplanes, Caterpillar makes bulldozers, Freightliner makes trucks. Parker Hannifin makes the guts of almost everything that moves on those machines and thousands upon thousands more. Think of it as the big-box hardware store to the world's largest manufacturers.
In the Parker catalog you'll find simple items like motors, valves, filters, hoses, couplings, adapters, fittings and seals, but also more complex hydraulic, flight control, robotic and diagnostic systems. You'll find Parker products inside the cooler of your neighborhood ice cream store to an oil rig in the Persian Gulf to the space shuttle orbiting the earth. You've also seen Parker systems moving the capsized ship from the movie "Titanic," as well as T-Rex and the other dinosaurs in "Jurassic Park."
"Over time, if you look at our peer group, we're always a solid performer, never really in any serious trouble, so I think we've managed the business well," Washkewicz says. "We've tended not to be at the top of the class either, so what should we be doing about this? One of the things I feel is we should be taking this company to the next level. How do we do that? I have no clue right now. But I am going to figure it out one way or another."
Although a mechanical engineer and the leader of one of the most diverse industrial manufacturers in the world, Washkewicz' affability and lack of pretension reflects the blue-collar tradition of Parker, founded in 1918 as a maker of braking parts for buses and trucks.
"Don is extremely analytical and thoughtful, he brings an engineering mind to the table," says Joseph Roman, president and CEO of the Greater Cleveland Partnership, of which Washkewicz sits on the board. "I really feel he's an engaged CEO in our town."
One of five brothers and sisters, Washkewicz was not raised in a life of privilege. He attended Garfield Heights public schools, worked in car garages in his spare time and then enrolled in the Fenn College of Engineering, which at the time had just been absorbed by Cleveland State University.
Washkewicz' father, Stanley, who was also an engineer, had an obvious impact on his son. When Washkewicz was a teenager, his father, who had worked for Cleveland manufacturers Brush Berrylium and Picker X-Ray, launched a machining business on Cleveland's near East Side in the early 1960s, but didn't know what to call it. After much deliberation, "Modern Industries" was the moniker that finally stuck. More than 40 years later, the name still resonates with Washkewicz.
"The word ‘modern' will never get old," says Washkewicz, echoing his father's words. "It will be modern in 1960 and modern in 2000. This is going to stay forever and never age. It was an interesting thought process to witness."
Washkewicz felt Parker Hannifin had a similar cutting-edge mindset. Nearly in bankruptcy following World War II, Parker was enjoying a rebirth in the 1960s after an acquisition of Chicago area-based Hannifin Corp., as well as its relationship with NASA and the space race. (In 1969, upon the Apollo 11 moon landing, Astronaut Harrison Schmidt can be heard instructing his co-pilots to "Cycle that Parker valve" - talk about product placement.)
Washkewicz' superiors, Vice President Denny Sullivan and future CEO Duane Collins, found he had a knack for research and development of new products, the lifeblood of any manufacturer, and promoted him numerous times during his 34 years with Parker, sometimes to his chagrin. He became manager of research and development, where he received seven patents for new product designs and developed several proprietary manufacturing processes. He was named general manager of the Parflex division, which he helped grow from a small unit to a workforce of 400 people with more than $100 million in annual sales, where he then served as vice president of the Fluid Connectors Group and then leader of the Hydraulics Group.
"I had no ambition to be running the company," says Washkewicz, recalling his early years. "As a matter of fact, as I reflect back on my career, I was always happy doing what I was doing. At times I wanted to say, ‘I really enjoy this, so why don't you leave me alone for a while so I can do the job now.'"
As Washkewicz' experience and responsibility grew at Parker, it had purchased 153 companies, including more than 73 since 1996, which boosted its revenue by $4.2 billion. With that rapid growth came the integration of facilities, people and systems. By the beginning of the new millennium, Washkewicz started to notice the company had taken on a lot of inventory, or what he calls: "waste."
"You would go around the company, there was inventory everywhere," Washkewicz says. "The other problem was some of this stuff became obsolete because sometimes you never got the order and you ended up throwing this stuff out and it was very wasteful."
Parker's pricing structure, which hadn't changed in decades, also needed updating. Instead of charging what customers would pay for Parker's pumps, valves, motors, accumulators, and thousands of other products and systems, the company was relying on outdated computer models to dictate the prices. While that method may have been efficient, it wasn't as profitable as it could've been.
"One-third of the products we made were specials, classics, things that nobody else wanted to make," Washkewicz says. "We were pricing those the same way we were pricing the other two-thirds of the portfolio that had more than one competitor, where there would be elasticity in demand."
Washkewicz grasped the state of his company shortly after he was named CEO and just before the economic recession of 2001, during which its sales volume slumped by 20 percent. He toured more than 200 Parker facilities worldwide talking to the general managers of Parker's 115 divisions. Modernization was in order, but he didn't want to centralize and systemize the company in a way that would contradict the entrepreneurial philosophy it had run on for decades.
"The whole idea then was how could we get the whole organization doing these things in a decentralized structure," Washkewicz says. "We love the decentralized structure because that works well for us; it keeps us closer to our customer; we're more responsive, and that's critical, especially as you get larger and larger, you don't want to lose touch with the customer."
Getting lean - eliminating the superfluous manufacturing processes, inventory and suppliers - and implementing a strategic pricing structure were Washkewicz' two paradigm shifts at Parker. They are cornerstones of his "Win Strategy," which also includes premier customer service, profitable growth through acquisitions and increased sales and empowered employees. He printed copies of the strategy with all the steps and goals on full-color, glossy 3-inch by 7-inch cards and sent one to each of Parker's 57,000 employees.
"Don was internal and a lot of times when an internal candidate gets the (CEO) job, they talk about change, but they don't change," says Jeffrey Hammond, equity research analyst at KeyBanc Capital Markets. "But Don really set out to change the culture and articulated it on one page with the Win Strategy."
The difference between Washkewicz' Win Strategy and previous growth missions at Parker is he gave employees the how-to tools. He sent managers to lean manufacturing boot camp and hired 25 consulting groups, hundreds of lean experts, including a Japanese Sensei, to analyze its processes and eliminate waste. As many as two-thirds of the company's 60,000 suppliers were eliminated.
These steps saved more than $500 million the company spent on inventory. The overhauled pricing structure boosted operating profit by more than $800 million since 2002.
"If you ask anybody in Parker, ‘What are you working on today?' It's going to be on this," Washkewicz says, holding up his Win Strategy card. "It had better be on this piece of paper otherwise they're working on the wrong thing."
The Securities and Exchange Commission analysts and stock pundits have made most CEOs of public companies wary of talking about the future. All published materials from companies include a big chunk of legal jargon warning about "forward-looking statements."
Washkewicz doesn't play it so close to the vest. He's confident about Parker and optimistic that it will shatter the $10 billion revenue barrier this year and deliver the return on investment that Wall Street covets. For Washkewicz, however, the mark of success is much simpler to recognize.
"The most important thing, and I told my kids this when they were looking for jobs, and I tell prospective applicants and Parker this: You've got to find a company that's growing," says the father of a teenage son and two daughters in their 20s. "If the company isn't growing, your future is going to be limited. We are growing and have been growing and people see that."