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Tuesday, October 17, 2006

Baldor, a model corporate citizen

Oct 17 2006 11:41AM | Permalink |Comments (2) |

It's too bad more semiconductor companies can't be like Baldor Electric. Of course, the Fort Smith, Arkansas, maker of industrial electric motors, drives and generators is vastly different from semiconductor companies that have to look east for survival and salvation. But I loved the company's pitch, which I heard today at an analyst meeting in Boston (I'm partial to mechancial stuff like motors). Baldor
has 15 plants, all in the U.S except one in the U.K. Want more? The company has not had a layoff since 1960 - most of people in the analyst meeting were born after Baldor's last layoff!

Now, I can't completely vouch for chairman and CEO John McFarland's pitch without greater scrutiny and I confess not knowing the company well. Just so I would not get suckered with this encomium, I scanned the SEC site to make sure there's been no recent stock misbehavior and there hasn't. The only recent mention in the WSJ was a July report of an ascending stock price based on higher sales. So I like what I heard - 90% of its stock options go to non-management employees; it has a non lay-off strategy and it WANTS longterm employees. Is this 1965 or something? I think so. Sales per employee has grown from $150K to $200K since 2000. Sales grew 11.3% to $721.6 million in 2005 and the company is $72 million ahead in revenues year to date from last year.

Is Baldor old-fashioned.? Yes, but in a good way. It emphasizes quality, product efficiency and value instead of volume and smartly stays out of perilous low-margin consumer markets. It strikes me as a cleared-eyed company that knows where it's going and that doesn't get greedy - a company as much for employees as customers and shareholders. Ok, that might be going a little too far! That said, I don't know what Baldor pays its help or what it provides in terms of benefits, but in this age of outsourcing and looking east for answers, the company's philosophy as presented to the public is like a warm, reassuring breeze. Maybe, a little Red, White and Blue is coming out in me, which for analyzing a company's balance sheet, is probably real stupid.

I promise to do a podcast with CEO John McFarland soon to find what drives this most solid of companies.

Reader Comments

at 10/18/2006 10:29:05 AM, Piense El Tanque said:
I am fortunate enough to work for a company that is also very dedicated to it's employees. The company was founded in the early 1970's and has NEVER laid anyone off. It operates from one location with over 1700 employees and only contracts call centers in other countries to handle calls in the native languages of the regions. As an employee I receive a fair wage and the best benefits package in the area (quite possibly in the entire state). We don't get stock options as the company is privately held, but do receive profit sharing every year. There are still some great companies out there, I feel very lucky to work for one of them!

at 10/19/2006 1:28:10 PM, John Dodge said:
Digikey is to be commended and often such great companies get overlooked. Life is good in Thief River Falls!

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Tuesday, October 17, 2006

Baldor, a model corporate citizen

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