COATING INSIGHTS. Connor Caitlin Talent Solutions. Mike Cash. of Axalta Coatings Systems - Part II. Interview by Connor Caitlin Talent Solutions

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1 COATING INSIGHTS Mike Cash of Axalta Coatings Systems - Part II Interview by Connor Caitlin Talent Solutions Connor Caitlin Talent Solutions

2 COATING INSIGHTS Mike Cash of Axalta Coatings Systems - Part II Interview by Connor Caitlin Talent Solutions At the beginning of 2015, the Managing Partners of Connor Caitlin sat down with Michael A. Cash, President, Industrial Coatings for Axalta Coatings Systems, for a discussion focused on current talent issues facing the industry. This is the conclusion of our two-part industry insight series. Impacts on the Coatings Industry In our first issue, we discussed the environmental concerns that have driven advances in technology, including powder coatings, waterborne products, and application equipment, in recent decades. These concerns drove product manufacturers to focus on energy consumption and methods to reduce customer energy costs when seeking to sell their products. For the coatings industry, a paint shop inside of an OEM usually consumes the greatest percentage of a facility s energy and is the primary focus of compliance with governmental regulations. For these reasons, the coatings companies that can adapt to new technological advances and provide top-performing coatings solutions are sure to outpace their competition. When we left off, Mike Muczyk of Connor Caitlin addressed the impacts of these factors on the industry and asked Mike Cash, How do you feel Axalta s been with the development of these advances and why? Faster, Better, Cleaner the latest developments in low-cure, fastcure technologies, we also are simultaneously working on next generation products. From an R&D perspective, being a pure, focused paint and coatings company is clearly one of the competitive differentiators that we have today. Low-cure and fast-cure technology is important in the U.S. and it is incredibly important in China, where energy costs are significantly higher. We feel good about where we are, Mike states. But we are always asking and listening to our customers to find out what Lean: Eliminate Waste Holistic: Set meaningful and achievable goals Circular: Supply-chain, products, life-cycle to create new value Limits: Begin with baseline and then make incremental improvements Profit Per Hour: Helps align organizational objectives 1. One of the competitive advantages that Axalta has is that we are a pure paint and coatings company. One example is our in-house resin development, responds Mike Cash, who has also held leadership positions at Sherwin- Williams and AkzoNobel. By having that focus and control, we put monomers and chemistry together in such a way that we can develop something unique. While we have 1. products and technologies will be important to them in the future. Formulating products with even faster and lower temperature cure, for

3 example, is one of the most requested attributes we regularly hear. A recent McKinsey & Company review of the book, Resource- Productive Operations: Five Core Beliefs to Increase Profits Through Leaner and Greener Manufacturing Operations, identifies focusing on lean, limits, profit per hour, holistic and circular thinking leads to great efficiencies for seeking cleaner production. As the Players Shrink the Market Grows Another factor affecting the coatings industry is consolidation in the market space. Mike anticipates that this will continue both in the U.S. and globally. Again, technology drives a lot of that. Advantages in technology are something that larger companies should have the capability to create innovative products and launch them much faster than smaller niche players. However, that s not always the case. The challenges for big companies are to be expeditious, listen to customers, focus on the right things, and get solutions to the customer faster. Done correctly, leveraging the benefits of a big company but remaining nimble should create circumstances that enable successful growth and market share expansion. The one aspect that is always in your control is the ability to grow organically, and this should always be our focus. Mike continues. Having said that, we recognize that there is an opportunity for us to move faster with strategic partnerships or acquisitions. But there is a need for balance. You need a company like Axalta asks. Do you put ROI on how they operate or whether they fit with Axalta s leadership endeavors, beliefs, and values? Absolutely, Mike responds. Within Axalta, our single most valuable asset is the more than 12,000 extremely talented and dedicated team members that take care of our customers every day. So, when evaluating any company for partnership or acquisition, the single biggest asset we see is the people who have made that company successful. You want to retain those people and create an environment where their skills and talents are additive and also fit in. A sentiment shared in a recent article on leadership development, highlighting what tools great companies are using to grow their talent internally. Both the individual and his/her organization need to ensure that high potential employees continue building their value to the organization through mentoring, career planning, job rotation, training and education. Progressive organizations place a premium on developing subordinates. (Muczyk, Adler, 2014) 2. Career Planning Training Mentoring Job Rotation Education We put focus on customers and we re driven to perform better every day. Innovation is at the top of our strategy. We want to be a global, collaborative team. We take ownership that is generating good cash flow, constantly reinvesting in the business, and taking advantage of consolidation opportunities where they exist, but not solely relying on them. We must have our focus on growing organically, but our eyes open for the right partners. People are the Reason When Axalta evaluates a company for strategic partnership or acquisition how much emphasis do you put on the culture of the group or the team of people? Connor Caitlin and are passionate about delivering solutions to customers faster than our competition. So, those are the qualities we seek in the people who are working for the companies that we consider for partnership or acquisition. We look for those qualities in the company s professionals just as much as the value that the company s technology, facility, or the geographic reach presents. The real crown jewel of any partnership, acquisition, or merger is the talent that joins your company. Without that, you really don t have anything. 2.

4 Future Aspects of Talent for the Coatings Industry Connor Caitlin asks Cash what advice he would give to trade schools or universities to help develop future talent for the coatings industry? I think collectively, we have to sell the students on the fact that many people have developed long, successful careers in the paint and coatings industry, Mike answers. And then you have to step back and ask, what do those successful people look like? Well, they have the desired qualities of an incredible work ethic, and a real love for customers. They re passionate about being able to make things more colorful or more durable through the coatings being supplied. So it kind of transcends the simple view of I m selling paint. It becomes, I m selling something that will make products more beautiful, more durable. And from the skills side, our business needs people with virtually every discipline from Finance, Sales and Marketing to Manufacturing Operations, the Material Sciences and Logistics, to name only a few. Former GE CEO, Jack Welch, considered self-confidence on the part of subordinates one of the most important assets an organization can possess and lack of it a damaging liability. Furthermore, while he was CEO building selfconfidence was a key component of leadership training at all levels of the organization. (Muczyk, Adler, 2014) If you re able to find a group of people who understand that concept and can buy into it, then, from a trade school standpoint, make it as easy as you can to develop them. Schools could work with paint companies with a turnkey concept. They could say here s a half a dozen motivated and pre-screened students right out of trade school or college, and here s the salary expectations for a sales rep trainee, technical rep trainee, or an R&D lab technician trainee. Together, let s create a trainee pipeline program with the coatings companies to develop the talent needed. Connor Caitlin asks, Do you think that the international opportunities that exist in global paint companies could be an appealing factor to those folks considering a career in our industry? There are a couple of sides to that, Mike says. For a younger person potentially looking to get into the industry, it sounds very exciting to do an international assignment. But, it really takes a very unique person to take that leap and a set of commercial conditions for that to happen. I m not discouraging that, but perhaps the better angle is that in working for a multinational company or a global business today, employees will have opportunities to travel and see the world as their careers progress in paint and coatings. Our industry is truly a global business today. That doesn t always mean that they will be required to live for three or five years in a foreign country. But being able to travel the world and connect to global customers and colleagues - on a daily basis is a regular course of business today, whereas when I started that was almost unheard of. The Premium of Local Talent From a company standpoint, today it is considered more important to nurture the best-suited, local talent in developing markets. Revisiting the China example, expats may have been primarily used in the past as a security blanket for International companies. Today, however, the days of importing expats to run companies are quickly fading away. The premium is now on the local talent abroad, as this is the most efficient, local customerfocused, and sustainable leadership to manage companies long-term. In China, you ll see companies like Axalta that will be run strictly by a management team made up of local leadership. We re getting to that point pretty quickly. Successful companies will build, and retain local talent, and will create a career path for employees where they can see an investment in their development, while taking on additional responsibility, and challenges, at a quick pace. McKinsey & Company highlighted this very item in their article, What s next for international chemical companies in China? referencing the potential for innovation in China is vast. A number of chemical companies have already established substantial R&D centers in China, gaining access to the country s large pool of engineers and scientists. While such centers have tended to use their 3.

5 going forward will be that our filter isn t just what we see, hear, and understand from our local management team. We actually have an opportunity to go out and talk to customers, spend time with them, and understand their business, challenges, and customers. Chinese R&D staff for basic technical and applications support, some companies are now evolving them in more sophisticated work on product development and adaptations of existing products. (Hong, Liu, Leudi,2013) Different Skills for a Global Economy For questions regarding challenges in preparing the workforce for globalization, Mike responds If you re focused on attracting and retaining the local talent in other countries, that probably puts a different skillset requirement on management and on your leadership team in the U.S. or abroad. How are you preparing your decision makers to focus their efforts toward that? Connor Caitlin asks. To start, it s a different requirement of management, because you have people from all over world who have to understand the business requirements in other parts of the world. It becomes challenging to relate when you don t live there or haven t lived there, or at minimum worked in another country outside your own. So, relationship building is really channeled through sensitivity training and spending time with customers when traveling abroad. The common denominator, in every global environment, is the desire of the customer to add color, durability or productivity to any product they are finishing. One of the things we do when we have different global leadership team members that travel to different countries is to require at least half of their time to be spent visiting current and potential customers. I think the advantage Final Thoughts When Connor Caitlin asks Mike what keeps him up at night when he thinks about the business and the industry, Mike states one more thing, and maybe it s a little unique. I see a unique opportunity where companies are cutting back customer support a great deal. This creates an advantage for another company, and we hope that s Axalta, to foster closer client relationships and provide them with different or exclusive customer experiences whether it be from the products we supply, the technology we have, the technical service we provide, or the marketing activities that we can help them with and we have a chance to learn from customers as well. So I think that there s a gap in the whole customer experience, and that s a great opportunity for a company like Axalta to step in and do the right things. But probably the single, biggest thing that I constantly think about, is how to upgrade our talent. That encompasses everything we ve talked about. How do we bring new talent into the company? How to get people excited about our business the same way that I was excited about my career in this industry when I began. Mike furthers it with, Then, once you get them into your company, how do you retain them? How do you incentivize them, and excite them, for performance? So again, the solution will be to find the right buttons to push to motivate and drive our team of passionate employees toward a higher course. How do you get people to be more effective, more efficient, and more focused on what we re trying to accomplish? Those are the things that tend to keep me up at night. More industry insights featured in our next edition of Coating Insights. n 4.

6 About Connor Caitlin Connor Caitlin was founded on the principle that great business integrates a world-class People Strategy into its core philosophies. Our team delivers Talent, Leadership and Human Capital solutions that meet the ever-changing dynamics of your business. At Connor Caitlin we understand distinction in talent is at the core of your business advantage. What you do different from the competition is the lifeblood of your company. Our success is paramount in the Talent we help you source, hire and develop. It s with this in mind that our relationshipdriven partnership lasts far beyond the assignment and fee, in fact our goal is not to replace your Recruitment, Leadership Development and Human Capital efforts, but to speed-up and grow your talent initiatives with our best-in-class techniques dedicated to locating and placing Difference Makers with you. We pride ourselves on providing an exceptional level of service to every client and candidate. We believe The greatest products, the best service and the most complex business problems are solved through people. We will help you find, develop and lead that Talent. Contact us for all your talent solutions: Connor Caitlin Washington Park 801 E. Washington Street, Suite 210 Medina, Ohio info@connorcaitlin.com Endnotes 1.) Markus Hammer and Ken Somers. Manufacturing growth through resource productivity. March operations/manufacturing_growth_ through_resource_productivity 2.) Jan Muczyk and Terry Adler. A Strategy for Climbing the Organizational Ladder. July ) Jan Muczyk and Terry Adler. A Strategy for Climbing the Organizational Ladder. July ) Sheng Hong, Nathan Liu and Thomas Leudi. What s next for international chemical companies in China? June 2013, mckinsey. com/energy_resources_ The partners of Connor Caitlin Talent Solutions would also like to acknowledge and thank, Rick Shaffer of and Cheryl Cooper of for their contribution to this work. Connor Caitlin is an Equal Opportunity Employer.