Leesa Smith, president and regional representative of Freudenberg North America, spoke with DBusiness Daily News about the company’s move from New Hampshire to Plymouth and its plans for the future.
1. DDN: Why did you decide to move your headquarters to Michigan?
LS: We could have located our North American Regional Corporate Center anywhere, because our business is really bicoastal. We have concentrations in California, Texas, and down the east coast. But when I looked at our concentration of businesses, (we have quite a few) in southeast Michigan. Freudenberg-NOK Sealing Technologies — our largest automotive business — is in Plymouth. Chem-Trend is in Howell. And we have several businesses in Ohio, Indiana, and Illinois, so it was beneficial to locate our corporate headquarters near our large businesses. In addition, Detroit’s airport is a wonderful hub — you can reach basically every single one of our facilities in North America from Detroit.
2. DDN: What growth opportunity do you see for Freudenberg in the automotive sector?
LS: Automotive has always been a very important aspect of Freudenberg’s business, and that’s part of the reason why we chose southeast Michigan for our regional corporate center. But if you look at our automotive concentration as a percentage of total sales, it actually declined in 2013 (down from 30 to 24 percent). And that’s not because we’re deemphasizing automotive, quite the opposite. We are continuing to focus on automotive but we have what we call our green areas that we’re really focusing on: chemical surface treatments, medical technology, oil and gas, industrial filtration technology, and vibration control technology, with a specific focus on wind energy and agricultural and construction machinery. So if you look at the overall percentage of automotive, one could say “Automotive is declining.” But it’s not — we’re just starting to see growth in these other five green areas.
3. DDN: What projects are you working on?
LS: One of the activities that I’m driving right now is a strategy that (consolidates) all of our health care activity. We have about 7,000 employees here in the United States, and up until last year, many of our 12 business groups were buying health insurance on their own. On average, we spend somewhere between $40 million and $42 million a year on health care, so we’re (developing) a single benefit platform that applies to all of our employees. We want to make sure that we’re maximizing our purchasing power, providing competitive benefits, and complying with the Affordable Care Act.
I’m not doing it by myself, though. We’ve created structures where we engage representatives from all of our business groups to work in project teams, so these are not just initiatives that are being driven down from a corporate perspective. I believe it’s much more beneficial for the organization to gain alignment, so you can work with and listen to what the pain points are of the different businesses.
4. DDN: How else does Freudenberg encourage communication throughout its vast number of employees?
LS: We have a regional communications council, so all of the communicators from each of our 12 business groups meet at least once or twice a year to talk about key initiatives and communication strategies. They talk about, for example, how we can be most efficient in our presence at tradeshows. We do the same thing for our health and safety, environmental, and finance communities. I like to think of it as a big Venn diagram. We have all of these circles of communication and at the center of it is Freudenberg North America, where we bring it all together.
5. DDN: What’s next for Freudenberg North America?
LS: In 2013, we invested in excess of $80 million in North America, and the prior year was around $100 million. We expect to continue those investments here. We are acquisitive, so we are looking for the right acquisitions that are really focused in those five green areas that I just mentioned. But we’re also very active in innovation and R&D. Last year, Freudenberg Oil & Gas in Houston built a highly specialized lab for material and product testing for oil and gas applications.
Freudenberg-NOK Sealing Technologies, which is the automotive business that most people in Detroit know, is looking at alternative drive concepts, focusing on more fuel-efficient cars, and reducing CO2 emissions. They just introduced this concept called Low Emission Sealing Solutions, or LESS, which is looking into lithium ion batteries and using hybrid electrical vehicles. So we’re still focusing on our core competencies, but always with an eye toward innovation.