Exide: Tim Vargo

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Tim Vargo shares the remarkable story of how he became CEO of Exide without finishing college, and how they’re tackling issues like sustainability head-on!

 

 

Danny:

Okay well, welcome today’s episode of IndustrialSage with our Executive Series. I have the distinct pleasure of being here with Mr. Tim Vargo, who is the CEO of Exide Technologies. Tim, thank you so much for joining me today.

Yeah, thankful to be here. Thank you, appreciate it.

Danny:

Well, we’re excited to have you here. So, for those who aren’t familiar with Exide, can you just tell a little bit from a thirty thousand foot view, who you guys are?

Tim:

Sure, one of the oldest and largest battery manufacturers in the world. We began manufacturing batteries in 1888–

Danny:

1888!?

Tim:

One of the very first companies to manufacture batteries and have served a variety of different markets. Over the last 130 plus years. So it’s pretty amazing. We have our main emphasis in manufacturing in Europe, which is about two thirds of our revenue and then North America. So we ship products generally all over the world from either North America or Europe.

Danny:

Excellent. I’m excited to kind of dive into that a little bit more.

Tim:

Sure.

Danny:

Especially what batteries looked like back in 1888. But before we do that I just kind of want to get a little sense of Tim.

Tim:

Sure.

Danny:

Of you, your story, how you got to where you are, take me back, where did you go to school? What was that first job, what did that look like?

Tim:

Sure. Well I’m a boomer, so my father served in World War Two. My family is from Eastern Europe, Hungarian. So I grew up in the rust belt in manufacturing. So family farmers came over from Europe, got manufacturing jobs in North America to build a better life for them and their family. So my aunts, uncles, and cousins all worked in factories generally up in the Cleveland, Ohio area: from Detroit down through Pennsylvania. So I grew up in a just a good old-fashioned rust belt town, a lot of manufacturing jobs, and so having a good work ethic was expected.

Danny:

Hmm. Yeah.

Tim:

I watched my dad come home from work every day, not really having a good time at work, but it was a job, he got it done, and he just never really had a whole lot of fun. And I was determined that whatever I did with my life, I was going to try to come home from work with a smile on my face. Man, I just love what I do, so aspirationally that’s what I wanted to do versus what I saw my father and some of my uncles, and some of my aunts who worked in long, long day manufacturing jobs, just didn’t really appeal to me.

Danny:

What were they doing?

Tim:

Assembly work.

Danny:

Okay.

Tim:

Punching outfits and parts. Assembly at Ford Motor Company, GM, building engines, building pumps. You know, all the little things that the rust belt is known for. Real, great industrial manufacturing.

Danny:

Okay.

Tim:

So, you know, I was a pretty industrious young guy. I started raking leaves early, shoveled snow. When I got old enough, our family did hunting and fishing, and so my brother was older than I was and had a trap route. So I was trapping muskrat and mink…

Danny:

Awesome!

Tim:

…when I was probably 11 years old.

Danny:

That’s pretty cool.

Tim:

Yeah, walking into a creek, setting traps, doing that, bringing the game home, skinning them, and selling the pelts.

Danny:

That’s awesome.

Tim:

So that was my winter job since I couldn’t rake leaves and there wasn’t really that much snow to shovel. Had a job in a kennel, cleaning kennels as a young guy, maybe 13 years old. Had an office cleaning job, you know. So I learned to work hard, I learned to be responsible for showing up to work on time at a young age. I got that from my dad, you know. My dad was up every morning at five, left the house at six, came home at 5:00, 5:30 so you know, that’s what you do.

Danny:

Yeah.

Tim:

So anyway I did those things and graduated from high school, had aspirations to go to college. My dad said “Great, you go ahead, but you can pay for it, ’cause we don’t go to college here, we go to the factory and work.” I said “Okay,” so I attended Kent State University in the fall of ’69, not a good time to go to college.

Danny:

Yeah.

Tim:

Spent my first semester there of my good hard-earned money not meeting one professor; they were all out protesting the war. So I quit college, put a backpack on my back and hitchhiked to Florida.

Danny:

To Florida!? Oh, okay. The story plot thickens!

Tim:

Worked on construction and made a pretty good living down there for about six months, got really lonely, kind of missed my home, missed my family. Drove in my 1950 Cadillac from Florida to Ohio, and my dad said, “Welcome back son. Get a haircut tomorrow, and get a job.” So I said, “Thanks dad, good seeing you after six months,” and so by golly I got a haircut and got a job as a manager trainee at an auto parts chain. Now my father loved cars. And much like any kid, male or female: what your parents like, you’re usually kind of attracted to. So I loved cars and so boy, here’s an opportunity to go to work for an auto parts company at age 19 years old, as a manager trainee.

Danny:

Wow.

Tim:

And so boy I really loved it, got paid $56 a week for 56 hours of work after tax.

Danny:

All right.

Tim:

My dad said, “You’re crazy, come to the factory and work with me.” I said, “You know what? I come home smiling. You don’t.” And so one thing led to another. I made the assistant manager’s job, got to manage my own store. Took the worst store to the best store, really found a way to get work done, through other people in an enthusiastic way. Made sure I had the right butts in the right seat.

Danny:

Yeah.

Tim:

Ended up getting multi unit responsibility, did pretty good there. Then kept growing, eventually became the Executive Vice President of a family-owned business. Not mine, somebody else’s, learned from some great mentors and how to purchase product and how to serve customers and just really learned a lot. Then I had an opportunity to join a company by the name of Auto Shack, which became AutoZone in 1984. So I joined them as an Executive at age 34.

Danny:

Wow.

Tim:

Running half the stores. Within a couple years I was running all of supply chain, eventually became the President, Chief Operating Officer. And watched the company grow from virtually nothing to 3,000 stores and five billion in revenue. That was over 84 to 2001 and today that company has 80,000 employees, 6000 stores and does about 11 billion in revenues. So, my heart’s in retail and my heart’s in distribution. I believe in being a servant leader and like to surround myself with people who share that passion to do that. Took a couple years off. You know, when you’re running that hard, a little vacation is good now and then. Don’t get a chance for much of that, with that go-go of a company.

Danny:

Right.

Tim:

Served on a couple of boards of directors when I was fairly young, in my 40’s, wasn’t really a good fit for me. I wanted to actually get stuff done.

Danny:

Ha. Yeah.

Tim:

So I ended up getting back in the workforce, I ran a heavy duty truck parts distributor for a couple of years and real downturn years of eight, nine, and ten. So I learned, I’d been used to this kind of growth. I hadn’t been used to ever running a business that declined. We declined 30% in one year, in the downturn. Managed to turn that around. It was a private equity owned business. They had another business they wanted me to run, so I then ran a commercial HVAC parts distribution company. So more distribution just a different segment.

Danny:

Yeah.

Tim:

Retired again at age 60, pick a number four, five something like that, six, and served on a couple of boards, Exide being one of them.

Danny:

All right.

Tim:

And lo and behold they said, “Listen we need a little help. Here, would you consider running this company?” and I went, “Absolutely, let’s go.”

Danny:

Awesome.

Tim:

So I’ve learned I don’t do retirement well. And I really like working with people who want to be successful and are driven and are passionate about the work that they do and the customers they serve.

Danny:

That’s awesome, what a great story! There’s a lot of things there that I love. You know, obviously a strong work ethic. And I think that story of smiling, coming home and smiling. I’ll get into that in a little bit. It gives me a great follow up question later. Throughout your journey, where were some people who helped to really influence that, that created some of those milestone moments or mentors? What did that look like?

Tim:

You know, my first store manager had just come out of the army in 1970, which is when I started working at the auto parts company. And he was a guy a few years older than me, but he had a passion for customer service. I don’t know where he got it from, but he shared it with me. He taught me how to embrace solving customer problems, how to do it with a smile on my face, how to be inquisitive, how to always try to learn. And so I was very blessed to have a mentor like that for my first few years in business. And so that’s how I thought you were supposed to do it.

And so I learned how to do that and that worked pretty well for me through the years. I would say that Bill is the guy’s name, still a friend today, and had a really strong influence on me, and I was blessed to have other leaders along the way, who in that family business shared the family principals: and so that’s how we kind of ran our business. And so through the years I’ve certainly been involved in businesses who I could see weren’t led like that, and the results that they got. And rarely are they ever as good as a business kind of run the other way. So, had a strong influence on me.

Danny:

So today now, you mention this story or this idea of going to work and coming back with a smile on your face.

Tim:

Yep.

Danny:

Today what is that, what motivates you, get out of bed super excited and come home with that smile on your face?

Tim:

Well you know, Exide is a great company: it’s been run 130 years, it has grown, it was the largest battery manufacturer in the world back at the turn of the latest century 2000. Fell into some hard times, had some leadership issues, some financial issues, kind of over-extended their reach and growing too fast. And then a downturn and then maybe some mismanagement, so we’ve had a pretty bumpy road since kind of 2006, seven, eight, nine. And so the company’s gone through a lot of turmoil, shrunk in size, which is not as unusual for a company that’s having problems.

And so joining the board of the company, seeing the enthusiasm that the people had, in spite of the challenges. I felt like this was going to be one of those ones where you just needed to harvest the energy of the people, who were there and make sure we directed in the right way, in order to solve our own problems, while solving the customers’ problems. So it was pretty easy for me to come to work kind of being myself. And then motivating the people around me to come in with that same kind of attitude, even though many of them had been through some really tough times.

Danny:

Yeah.

Tim:

We had hired some really good people, from other industries, to kind of fill some slots based on the fact that we lost some really good people in the downturn of our business. And so we had a really nice blend of people who had been in successful businesses and knew how to do that, trying to motivate and encourage our folks who have gone through some tough times. To kind of pick themselves up by the bootstraps and look at the glass half full instead of half empty.

Danny:

So it sounds like what I’m hearing is, culture.

Tim:

Absolutely, culture.

Danny:

Big emphasis on culture.

Tim:

Yeah– and speak the truth. We, our company I think for several years really kind of hid from the truth. We didn’t face up to the fact, to our employees, “Yeah we’ve had tough times, but here’s our path to success.” And with the help of our communications team and our leadership team, we were able to jump in there and as a leadership team talk about where we’ve been, where we’re going, and how we’re going to get there. Kind of paint a picture of what success looks like.

Danny:

Right.

Tim:

And then put the cornerstones in place to get there. So that’s been the path we’ve been on now for almost a year and half. And we’ve had some really good successes and I think now our employees around the globe can see where we’re going and can see where we’re making progress in getting there and our customers have been very welcoming and very supportive. So that’s helpful too. Very loyal customer base.

Danny:

That’s awesome. So let’s pivot a little bit now, let’s talk about things that don’t necessarily… might not put a smile on your face, maybe they do– and that’s some of the challenges the industry is facing.

Tim:

Yeah.

Danny:

That maybe goes beyond Exide, just the industry in general. What are some of those challenges that you’re seeing in the industry?

Tim:

Well, you know, obviously we’re in the battery manufacturing business, so we’re manufacturing batteries for cars, for trucks, for any kind of transportation piece. We also do standby power, which is how we got in the business in the first place back in 1888. Standby power today would be harvesting solar energy and storing it in a battery, for example. Doing backup power for data centers and that sort of thing and then, of course, what we call motive power, which is forklifts.

And then we have a variety of different solutions for the military. Almost all include things that aren’t necessarily environmentally friendly that for years, and years, and years people didn’t recognize as environmentally, as not environmentally friendly. So lead and acid are things that make a battery click and if you don’t take care of the leftovers, you’re going to have a problem. And for years our industry did not do that and I mean for years. So if you went back into the early first century, in England, they were mining lead, they were pounding lead out with open kettles and they were making roofs and utensils and all kinds of things out of lead and then eating out of it. And so consequently, people were dying of lead poisoning, but they didn’t know.

Danny:

Yeah.

Tim:

You really had to go to the middle of the 20th century before we finally realized that lead was a problem. And so unfortunately our industry has a lot of baggage around lead.

Danny:

Sure.

Tim:

Listen, it’s…our industry’s done a great job. We recycle in the transportation space. If there are roughly 70 or 80 thousand batteries manufactured in North America. We recycle all the lead, all the acid, all the chemicals and the plastic from those at almost 100%.

Danny:

Wow.

Tim:

So it’s a fantastic story to tell.

Danny:

Yeah.

Tim:

It’s not told often enough. Same thing in Europe. Europe has a great recycling history as well. So the challenge in our business is that you know, everybody’s always looking for the easy solution. So then lithium has come on board here over the last decade or so. People are saying, “Lead acid is dead, Lithium is the solution,” but kind of forgot lithium’s got a lot of stuff in it that people don’t like either and isn’t good for the environment. And oh, by the way, it’s not something that’s completely recyclable yet. And may never be.

Danny:

Really.

Tim:

And so we’re dealing with a couple of things. We do lithium today, we buy lithium cells, we assemble them. Provide solutions for a variety of different energy needs, from backup power to motive power for forklifts and that sort of thing. But it’s a complicated problem, because the industry isn’t old enough yet to have developed the full recyclability. So we’ve got to be good stewards of that product as well. And that’s exciting. So we’ve got the old technology, which people are investing in and trying to make it better, cheaper, continue the sustainability, while providing better solutions, for what people are using lithium for today. They can let acid be a substitute for that in the future.

So even though it’s a 130-140 year old technology, new solutions are being developed today out of this old mineral called lead. It comes out of the ground and provides great energy storage. Energy storage is going to be in everybody’s lifetime who’s watching this. And we just have to figure out how to provide the most efficient solution at the best cost and have it be sustainable at the same time. How could you not be more excited about that? Doesn’t matter whether it’s car batteries, truck batteries, stationary power whatever it is.

Danny:

Yeah, you know it’s so interesting to see. And I imagine, obviously, you’ve seen just a huge shift. And just looking in the automotive space, for example, this big push: the Teslas of the world going more electric, which has a big battery. The power is kind of a big deal with that. Or you look at-

Tim:

It is a big deal.

Danny:

…talking about drones and Amazon, talking about how now we want to, having operated a few drones in the past… We’ve seen over the past several years like the efficiency, just, it’s getting pretty amazing, but as I imagine, as you mentioned a lot of hurdles there. We’ve got to make this better, faster, cheaper and, by the way, we need to be nice to the environment.

Yep, that’s right, yep.

Danny:

Yep, so you have a big challenge on your hands.

Tim:

Of course. You know, the fun part about business from my perspective, is no matter what business I’ve been in, there are always challenges. It’s how you embrace them, in my opinion, that’s how you are going to be successful or not. You can’t walk around and say, “Woe is me. Oh, we’ve got this really tough time. Our sales are down, so battery sales are down, what are we going to do?” Get over that. Find the solutions, generate the business. Have deep relationships with your customers, provide better solutions then your competitors do.

Danny:

Yeah.

You know, that’s one of the things that drives American business so well: we’re very competitive around the world. And we set the standards for efficiency, productivity, return on invested capital… that’s why the US markets are so hot today. The US manufacturing is outstanding.

Danny:

Well competition helps drive innovation.

Absolutely.

Danny:

You don’t have competitors, you won’t have innovation.

Tim:

Well, lithium is helping the lead acid battery manufacturers become more innovative. And so we know for a fact that we’re going to be providing solutions, in the future, that we weren’t able to do today, because, like most businesses, you go through investment cycles. And the lead acid battery business has been kind of stagnant in the investment cycle for a long time. Now there’s a lot of enthusiasm around it, because the challenges of lithium are now coming to the forefront. And so it’s forcing more investment in that tried and true power storage of lead acid, to take that next jump in technology too, so real exciting to be a part of that.

Danny:

Absolutely. So we’ve got a large show coming up. We’ve got MODEX, and I think you guys are going to be a part of that. Do you have a new technology, innovations that you’re rolling out that you can share?

Tim:

Well, obviously this is for the forklift power business- and we’re a key supplier in that industry and have been for a long long time with our GNB brand. And so we did a really key acquisition a few years ago. A small company in South Carolina, called Aker Wade, and they provide some outstanding charging systems that actually monitor the battery usage for large users of forklifts And it’s a very intelligent system. So we’ve been able to integrate that into our battery technology and so we’ll be demonstrating there at MODEX.

The technology that we’re bringing to the marketplace and how we can study the usage of our customers’ products and where they’re actually in use, monitor their performance, let them know when they can be charged and all that is available in the Cloud so they can look at real time. So we’re pretty excited about that and I think we’ve got a number of things that are leading the way in our industry. Which is pretty good for, you know, a 130-year-old company to be innovative and leading the way in certain things.

Danny:

I’d say so. You have to be. That’s the big story right now: making, to dumb it down, ‘smart products,’ or leveraging IOT. To take more data and see what the story tells. Somebody was telling me that, I was reading a report, they were saying that actually manufacturing, and we can lump in logistics and supply chain and all that. Is actually one of the most data prolific, if not the most data prolific, industry out there at all.

Tim:

Absolutely.

Danny:

So it’s, I thought that was interesting. I thought about it for two seconds. Think about all the processes and everything that’s going on, that’s very exciting. So that’s kind of it, that’s what I’ve got for today. I really, really enjoyed hearing your story. I really enjoyed hearing your background. I think one of the big takeaways that I have is just this concept of, A, your work ethic; interjecting that into the culture and this notion of coming home smiling. Making sure that there’s a passion and that you are plugging yourself in, and you come back and not all days. I’m sure you’ve got your non-smiling days, right?

Tim:

Yeah well, not too many, but yeah. You know what’s interesting to me is, now that I’m old enough to remember people saying that when I was young, the work ethic had gone down the drain, and we didn’t have the same work ethic. I’ve been around long enough to hear that from my kids and now my grandkids. And what I would tell you, we find a great workforce out there today. They’re easily motivated, provided you are giving them reasons to work, from where they like to work and how they like to work. And so, the challenge for old guys like me, is to try to figure out how you can make sure you’re providing a work environment for today’s employees, differently then we’ve had in the past. And I think our company’s doing a really good job of that.

Danny:

That’s awesome.

Tim:

Happy to be a part of that, too.

Danny:

Excellent, no lack of challenges.

Tim:

No, none.

Danny:

But that sounds like you’re tackling them head on. In a great way.

Tim:

Great.

Danny:

Thank you so much for coming on.

Tim:

Appreciate it. Thank you, my pleasure.

Danny:

If anyone would like to check out more about you guys, I’m sure they can check you out online?

Tim:

Exide.com.

Danny:

Perfect.

Tim:

We’re there.

Danny:

Excellent, thank you Tim.

Tim:

Thank you.

Danny:

All right, well that wraps up our interview with Tim Vargo, the CEO of Exide Technologies. Listen we’ve been rolling out with these stories. The Executive Series, fairly new, and I tell you what I’m really, really enjoying this, hearing all the different stories and the background. Just to getting an understanding of how the influence of your background and these different stories are influencing today’s executives and going into the different companies. It’s been, I’m excited about it. Get really excited, we can have more coming down the tracks. A lot more executives are going to be coming and hearing their stories.

If there’s something particular you’d love to hear about, reach out to us. You can submit a question to us at industrialsage.com/questions. We’ll take that feedback in and put it into the show, so that’s all I’ve got for today. Thanks so much for watching or listening if you’re on any of the podcasting stations. I’m Danny Gonzales, thanks for watching, and I’ll catch you next week here at IndustrialSage.

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