Ron Jadin, CFO of W.W. Grainger, says there are pros and cons to being in a short-cycle business.
Because Grainger, an $8.1-billion provider of maintenance and repair supplies and operating equipment, doesn’t have a big order backlog the way longer-cycle industries typically do, “it can be hard to tell when a downturn is coming,” Jadin says. “We didn’t see the downturn until the fourth quarter of ’08.”
Jadin says that through the recession, he and the rest of the company’s senior management focused on providing good service to customers. While Grainger laid off 600 employees, it added 150 salespeople. He also rolled out a proprietary tool developed by the company, called KeepStock, to help Grainger’s customers manage their own inventories.
Jadin also implemented a board decision to increase the company’s dividend. “Our earnings were down 10% in 2009, but we increased our dividend by 14%,” he says. “The shareholders loved it!”