DOUGLAS M. BAKER,
CHAIRMAN,
PRESIDENT &
CEO,
ECOLAB, INC.
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Hi. So I have a cautionary statement and it now takes two pages, because we’re in the midst of this deal. So, I thought this is important for one reason…I never worked at Suez [laugher and applause], nor in private equity [applause]. So, and I got a dog, which somehow makes me more lovable. So, look, I mean, like everybody, I’ve been working at Ecolab now for a little over 22 years, and I joined Ecolab, this is a funny story, after 8 years with Proctor & Gamble, and the way I learned about Ecolab was I recommended to P&G that they buy Ecolab, and I did all this work. Ecolab at the time was about $800 million in sales. So that’s 1989 when I joined, and P&G wasn’t interested in moving into that space, and so I became really enamored with the company, and I ended up knowing somebody up in the Twin Cities who was a headhunter, and I asked him if they knew anybody at Ecolab and they did, and so I interviewed and ended up taking a job up there. Really, I was hoping for a lateral, but they made me take a thousand dollars less on salary, I think just to see if I really wanted to do it. So, I went over there, and it has been one of the best decisions, not simply because I have this, but because this business model, which is really exactly the business model Nalco runs, which is taking technology, marrying it with in-unit service, it’s like people, technology, nature, customers all coming together is, I think, fascinating, and it’s a lot of fun, and so this model is very intriguing, and I think really one of the real powers of both of these companies, and it protects us in many ways, but what it ultimately does is allow us to bring unbelievable value to customers. And it’s that value that really enamored me, and so what I want to do is three stages of a presentation. I’m basically going to share with you our talk to investors recently. So I’m going to give you a presentation that’s from an Ecolab point of view about Ecolab, I think it’s important for you just to hear it briefly, and I’ll go fast, and then also about the thinking around why the marriage with Ecolab and Nalco and how it makes sense and how we’re talking to the Street about it. The next will be really more about integration, and it’s supposed to be more an objective, here it is, here’s our thinking about it, what are some of the principles, and then lead into Q&A, and I think at that point, Erik and I will stand up here and see how brave you are in terms of questions. So, look, here’s what we talk about. I don’t know if this thing gets to go backwards. We serve three basic industries, hospitality, food and beverage processing, and healthcare, and our promise to our customers is it will help them be cleaner, safer, and healthier. Either in outcomes and their environment, or in their products to their customers. And we do it be driving a model, and so this is going to look very similar to you, right? We take technology and service, training in unit, capture information, collect the information, bring it to the headquarters, try to develop new programs to go back and sell and help deliver on our promise a cleaner, safer, and healthier. And so this is what we do over and over again. And the majority of our folks are what? Sales and service people. And so we’re walking into these units on a very regular basis, and so one of our quips is, or my quips out when I’m talking to Wall Street, is we’re one of the last corporations on earth that still loves people, because it’s really how we grow, and it’s what it’s really predicated on. And so that in our mind is our ultimate advantage. It’s certainly technology, and so like Nalco, we measure our technology strength with a vitality index, our goal is 35% or above, and every industry’s got a little different goal, and we are typically right around 35 or a little north of it, you don’t want to be too far north of it, but it’s very important, and then also our sales and service team, which really, ultimately, is the reason, I think, that both companies have got great barriers to competitive entry long term. I mean, everybody can build a plant, they can somehow mimic your technology, although we think both Nalco’s and ours is far superior, it’s very hard to build service teams that can deliver day in and day out. It’s very complicated, and so it’s very important for us as we go forward, so it’s clicking…there we go.
So how do we go to market, then, with these assets? We go under a strategy called “circle the customer, circle the globe.” And so you know it’s a good statement when like five CEOs take credit for this. Of course I can’t, because the other four prior to me are trying to, but it’s a great way of marketing what we do, and so, like you, we get beachhead with a customer, we try to make sure that we offer an array of services to help them have clean, safe, healthy outcomes, and then we follow them around the world. And so we’ve ended up in 160 plus countries just like you have, for very much the same reasons. And so we ended up with a very global business, and it’s one of our real strengths. And our market is fragmented from a competitive standpoint as well, and so we stand here as the 2x leader, pre-merger, chasing a $57 billion market opportunity. Our number two competitor is a company called Diversey, and Diversey, some of you know Diversey over the years because you had an alliance with them. Everybody strays [laughter]. But Diversey is about half of our size, but if you go back just seven years ago, we were almost equal in size.
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