Date: Thu, 18 Dec 1997 00:16:09 GMT
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Remarks to Shareholders
Brian Girdlestone
President
The Hoover Company
May 15, 1997
Hoover Company President Brian Girdlestone was keynote speaker at the annual shareholders'
meeting, May 15, 1997, in Newton, Iowa. He also spoke to financial analysts in early June, when
CEO Leonard Hadley described Hoover as an excellent example of the corporation's strategy to
"drive profitable growth behind great brands, great products, great distribution, and strong
financial discipline." Girdlestone joined Hoover in 1982 as managing director of Hoover
(Australia) Pty. Limited. He was named senior vice-president of U.S. operations in 1986, and
president of The Hoover Company in 1989 with responsibility for Hoover floor-care operations in
the United States, Canada, and Mexico. Excerpts from Girdleston's annual meeting remarks
follow.
An American Success Story Continues
Five years ago when I spoke at the annual meeting, I talked about an American success
story: In 1907, a man named W. H. "Boss" Hoover was in the leather goods business. His wife's
cousin, Murray Spangler, was a janitor who suffered from asthma. Spangler gathered a tin soap
box, a fan, a pillowcase, and a broom handle, and built a contraption to keep the dust out of the air
so he could carry on his work. Boss Hoover saw this, bought the rights to manufacture that
product, and the rest is history. The following year, in 1908, The Hoover Company made the
world's first electric suction sweeper.
I also told shareowners five years ago that Hoover had experienced a tremendous amount
of competition in recent years. Prior to the mid '80s, there had only really been three companies of
any significance in the floor-care industry. But in recent years, the competition had grown to 10,
even 20 competitors in the floor care business.
During that time we set out a strategy to establish product leadership change in every
product that we produced; manufacturing efficiency large investments in automation; and
organizational productivity changes.
Through that period of much competitiveness and with new competitors entering our
industry, we grew both sales and profits significantly. I concluded my presentation five years ago
by saying that we were beginning the next phase of our strategy diversification and that we
were and we would continue to be the American success story, having the greatest name in floor-
care products.
So what has Hoover done in recent times? I'll give some examples of the product
diversification and the new markets that we have entered since 1993. You'll notice in these
examples a common fact: It's a Hoover design.
Our strategy was and remains that we would never have a product that was "me too."
There would be something unique about it and preferably something we could patent. For
example, a dual-tank system on a wet/dry vacuum cleaner. The only reason no competitor has a
dual-tank system is that we have the patents on it. The dual-tank system is still a unique product
and is improving our market share of that category. In 1994 we got into extractors with the
SteamVac deep cleaner. We invented the first upright-design extractor; we spent years
developing it; and it's paid us very handsomely.
More recently, we've developed a list of specialty products. Some years ago we were in
hand vacs corded model hand vacs and we re-entered that market with the swivel vac, Twist
& Vac . We are just now entering the lightweight stick market, again with a unique feature in
those products. And we are very, very large now in extractors because we completed the whole
line last year when we entered the portable extractor market. In addition, we're marketing our own
detergents.
Collectively these new products that we've introduced since 1992 represent a significant
portion of our growth. Since 1992, we've had sales growth of 60 percent. Perhaps shareowners
are more interested in profit growth of 130 percent. Those two are related, but not directly related
because there are many other factors in addition to sales that make up where that additional profit
comes from.
What have we done to retain our leadership, our efficiency, and our productivity?
Just two years ago we came in with embedded Dirt FINDER technology, again technology that
Hoover owns. The Dirt FINDER actually senses with a microphone the impact of dirt hitting
the throat of a vacuum cleaner. So not only is the carpet groomed, but you know when to stop
orth Star Project, which will hit the market in the second half of next year. It is a major
investment that is certain to retain our leadership in a big way in floor-care products.
Also, next year, we will totally re-engineer and redesign the rest of our upright vac line.
Five years ago those products represented about 85 percent of our profits. Because of
diversification, that's now a much smaller percentage. However, those uprights still make up our
single largest segment, and it are due for an overhaul. We will be redesigning to give the
consumer a far better product and to give us far better productivity.
Five years ago I concluded my annual meeting presentation with the slogan "The American
Success Story Continues." In market conditions today, if you don't keep that next step ahead, you
will quickly fall behind, and it is hard to catch up. We have led in a very strong way our industry
ever since 1908. We will continue to do that from here on in as the American success story
continues.
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