Hammond Group’s new CEO Bobby Lucas sat down with Andrew Draper to talk about his ideas on growth, market opportunities, M&As and management style.
Speaking less than three months into his new job as CEO, Lucas is finding his way around the company and making his mark. He has plans for the future, based on maintaining faithful roots in the lead-acid battery industry, but being open to new markets and new products.
The idea of achieving growth in a 94-year-old company in “a great position” of financial health by making new acquisitions does not faze him – his legal specialty is mergers and acquisitions.
“To me, it has to be about continued growth, and that’s continued growth within the battery industry, and continue to do more of what we do. I think we do really, really well in the US and we do really well overseas in some areas. I think there are opportunities for us to expand into new geographic markets. I shouldn’t even say new, maybe just in a more meaningful way into geographic markets that we’re in.” Hammond has hired new sales people in Asia and North America.
Lucas also has an eye outside the battery industry. “I think we have a lot of experience just with dry chemicals that can be parlayed potentially into other industries and other markets. We’re in very early stages of looking into that and figuring out what that might look like, where we go.”
Diversification
He believes the company’s outlook on the lead battery industry remains good. “You see lots of numbers all over the place in terms of where everything’s going or where lithium’s going versus lead, etc. And I think that answer is: it’s going to be different all over the world. As you know, Europe is kind of out at the forefront of being more environmentally conscious than other areas and so I think lead-acid is going to continue to be a very, very viable and important technology. But we’ll just become a more well-rounded and even healthier company by diversifying a bit.”
The process of exploring that diversification is still young. Lucas said Hammond has an initiative called Future Formula which draws people from across the company to examine good new ideas and whittle them down to ones with a strong business case.
Any acquisition would have to add value, he said, and be about more than adding revenue or headcount.
“Those aren’t the end all and be all in terms of why an acquisition should make sense,” he said. Asked if it would be within the battery industry, he added: “I think absolutely within the battery industry, we could be acquisitive, and then I think we would have to have our eyes open to something outside of it as well.”
The US home market is an obvious one in which to expand, but he said the company – represented on every continent except Australia and Antarctica – has had conversations about looking overseas as well. It is open to joint ventures or partnerships.
Lucas’s background is in corporate law, covering governance and especially mergers and acquisitions. He has done “dozens and dozens” of M&As over the years, covering various price points and industries. At his last firm, Dinsmore & Shohl, he chaired the corporate department with around 200 attorneys. He had a place on the Hammond board as an independent director for around four years.
Some of his former colleagues are now clients as he has switched sides of the fence. Hammond used to be his client for a dozen years or so. “You can glean things both ways. I’m sure it’s even weirder for some of my former partners and colleagues that they’re talking to me as a client now as opposed to a partner.”
R&D with customers
The company has, according to Lucas, always adopted a two-pronged approach to research and development: what is the next great thing it can sell to customers, and what do its customers need? In more recent times, also before Lucas took over as CEO, Hammond has started being more proactive with joint R&D.
“It’s great if we come up with what we think is the next great idea, but then the market doesn’t agree with us,” he said. “Okay, well, fantastic time well spent, put it in the desk drawer and maybe somebody will want it at some point.
“So it’s how do we have conversations on a very frequent basis with our customers asking the simple question ‘what are your problems, or what are you trying to solve, to do better?’ How can we be helpful, understanding a lot of our customers have R&D facilities and expenditures as well?”
Being sent off on a client project is more valuable, he said, because it is chasing a solution to somebody’s articulated problem. Hammond’s most promising areas of R&D work include battery performance, battery life, and everything relating to start-stop. A big challenge is how its customers can produce in a more efficient manner using less energy. For Hammond, that means working on its additives to make grid formation quicker without sacrificing quality, for example.
Safeguarding IP
Hammond seeks formal protection by filing patent applications and has not had any breaches that Lucas is aware of, including from his time as counsel to the company. But in filing patents, it means you go public with what you are doing. “So I think a lot of what we do is just kind of proprietary. You know, keeping it proprietary to the extent we can, understanding that people can try to reverse engineer whatever the product is – whether it’s our product or a piece of software or whatever. People can try to figure it out. But being the first to market with that proprietary formula or product – and the hope that you’ve gained your market share – it doesn’t matter if somebody else ends up coming by and reverse engineering it.” In many instances, it partners with customers to develop specific proprietary formulas.
Awake at night
Other than his three daughters (aged 16, 13 and 10), the main thing that keeps Bobby Lucas awake at night is “everything”, as he gets his feet under the table in a fairly new position.
But the realisation that a lot of people depend on the company makes its mark too. “That there are literally hundreds of people and their families who are dependent on the company for their livelihood – that’s something that is not lost on me. And I hope it’s never lost on me because that should dictate a lot of the decisions that we make.”
That includes driving down blood lead levels, growing the business, handling financial improvements and the company’s products. “But in every business, it’s the people that are behind it. And that’s what I think about constantly.”
Lucas seeks to remain open and accessible in his management style. He caused some raised eyebrows by sending his personal mobile telephone number to the entire workforce with an invitation to contact him with any concerns.
As for his management style, Lucas sums it up: “I’m by no means a micromanager. I want to have folks around me on the team who are even smarter and better at everything than I am. I am perfectly comfortable delegating to people and letting people run with what they need to do and be there for oversight. Obviously you follow up and you remind as you need to, but I tend to trust everybody until I’m proven otherwise.”
