Window of opportunity
On the first day of next year, Mel Haught will become just the third person outside Pella Corp.’s founding family to lead the window and door maker since its founding 77 years ago.
For the next three months, Haught will serve as president and chief operating officer of the private company – his final vetting under Gary Christensen, who has been Pella’s chief executive since 1996.
In Haught, Pella will have a chief executive who has spent more than a decade within the company. He has also spent the bulk of his career at manufacturing companies, working at both General Motors Corp. and electrical components maker Molex Inc. before joining Pella in 1991. Most recently, he was president and chief operating officer of the Pella Division, Pella’s biggest unit.
Pella continues to benefit from America’s love affair with the home. New housing starts leaped 13 percent in September. As mortgage rates decline, homeowners are refinancing in record numbers, giving them more cash in their pockets. Many are sinking those funds into home improvement projects, including installing new windows.
Haught’s biggest challenge is likely to be the U.S. economy, which continues to sputter and threatens to dampen consumer spending.
“For the past three and a half years, Mel has taken responsibility for leadership of a large part of the company, and he has handled it beautifully,” said Christensen.
The announcement of Haught’s appointment capped a more than three-year search process, though insiders at the company have known for at least the last six months that he was Christensen’s likely successor. The decision wasn’t final, however, until the company’s board gave its approval in August.
Additionally, Pella’s board named the company’s chief financial officer, Jackie Dout, as board secretary, and it elected Chris Simpson, the company’s senior vice president of sales and marketing, to the board.
What is now Pella began when Pete and Lucille Kuyper invested in Rolscreen Co., a small Des Moines maker of window screens that could be rolled up. The couple moved the fledgling company to the small Dutch community of Pella.
Since then, it has had a remarkable record of taking care of its employees. The company has not had a layoff since it began operating in 1925, though it has been known to make cuts at companies it acquires. It has been named one of the 100 best companies to work for in America for three straight years by Fortune magazine.
The company builds windows, doors and other entry systems under the Pella, Cole Sewell, Pease and Viking brands. Its biggest competitors include Andersen Corp. and Atrium.
Pella’s largest manufacturing facility is in Pella, which is located about 45 miles southeast of Des Moines. Other Iowa sites include Carroll, Story City, Shenandoah, Clear Lake and Sioux Center. Outside the state, it has manufacturing plants in Gettysburg, Pa.; Fairfield, Ohio; Murray, Ky.; and Portland, Ore., where Pella’s Viking Industries unit makes vinyl windows and doors.
Last year, Pella was estimated by Fortune to have had revenues of $914 million, making it the 304th-largest privately held company in the nation. Haught and other executives declined to comment on the report, stating that the company doesn’t disclose financial information.
Fortune estimated that the company had sales of $878 million in 2000 and $770 million in 1999. By comparison, the largest closely held U.S. company, Cargill, the food commodities and processing company, had sales of $49 billion last year, according to the magazine.
The company has been altering its business strategy to be prepared should the U.S. economy take a turn for the worse. Pella, long associated with upscale and expensive windows, has been working to introduce products that broaden its reach with consumers of varying income levels.
It also intends to boost its focus on replacement windows, in addition to the new residential and commercial lines of window and door products it already offers.
Pella took one of its biggest steps toward expanding its product line last year when it introduced the Pella Design Center at Lowe’s Home Improvement Warehouses. The company plans to continue open its centers at all Lowe’s stores, Haught said in an interview.
Each of the changes is designed to capture still greater loyalty from its current customers, as well as win new ones.
“We’ve changed our focus from an internal focus that included some fuzzy picture of our customers but very clear picture of the issues we face internally to one that is very much now externally focused and customer driven,” Christensen said.
Haught has plenty of experience at manufacturing companies. Prior to joining Pella in 1991 as vice president of manufacturing, he worked in senior management positions at Molex, the No. 2 maker of electrical switches and connectors behind Tyco International. Before Molex, Haught worked at General Motors’ Packard Electric Division.
His selection as chief executive could be a sign that the company has confidence in the strength of its brand and indicate that manufacturing is an area where it sees room for improvement. By contrast, Christensen first joined Pella in 1990 as vice president of sales and marketing.
Along those lines, Pella has been working in recent years at streamlining its procurement and ordering systems. It recently switched to a computer management system designed by Oracle Corp.
The new software promises to cut costs by making the company’s computer systems simpler and able to communicate across a broader range of the business. Prior to the Oracle system, the company used different computer systems to manage inventories, order-taking and manufacturing and other tasks.
In taking the helm of Pella, Haught has other experience that may prove valuable – working at a company that is dominated by a single family. In Pella’s case, the company is controlled by descendants of the Kuyper and Farver families. Molex, which is based in Lisle, Ill., is controlled by the Krehbiel family.
Haught earned an education degree from Ohio’s Youngstown State University in 1968. Earlier this summer, when it became generally known that he would succeed Christensen, he completed Harvard University’s rigorous Advanced Management Program, a nine-week series of lectures and coursework that links top managers from around the world with the school’s faculty.
He and his wife, Dorna, have two sons. Christensen and his wife are planning to retire to Naples, Fla., where they are building a home, he said.