Henkel takeover hasn't ruffled Manco's feathers

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Sun., Feb. 21, 1999

By MICHAEL ZAWACKI, Morning Journal Business Writer

"AVON -- Don't ever change.

This seemed to be the first order after global giant Henkel Corp. began to take control of family-owned Manco Inc. in the fall of 1997.

''Don't ever let us change your culture,'' recites Jack Kahl, Manco chief executive officer, from a conversation with their new German owners. ''Rather, we want you to change us.''

It's a philosophy quite contrary to the common corporate takeover story, where the bigger company cleans house, institutes its particular corporate climate, and begins to police its philosophy upon its new acquisition.

This wasn't true for the marriage between the German adhesives giant and the Avon-based maker of ''do-it-yourself'' products.

Today, the giant ''Manco T. Duck'' -- the company's whimsical yellow corporate mascot -- continues to greet visitors at the end of Just Imagine Drive. Inside, pearls of wisdom from Greek philosophers to modern day business tycoons still hang from the complex's myriad of walls challenging workers to be better.

In the 13 months since the deal was first announced, Manco has retained its entire management team, said John Kahl, Jack Kahl's son who serves as Manco's president and chief operating officer. Contrary to most business executives, John dresses ''corporate casual'' -- as is the Manco style -- this day with a black turtleneck and khaki pants. Jack Kahl's other son, Bill, serves as Manco's executive vice president.

''We didn't lose any senior or middle management people during the takeover,'' John said. ''We just openly and honestly came forward from the get go and told our workers that we're selling the business and this is what Henkel is all about.

''Sure some of the lingo has changed, so have some of the human resource and finance programs, but all of those are minor,'' he said. ''But what's important is that those are still the same people running those departments.''

''Have there been bumps in the road?'' Jack Kahl said of the merger with Henkel. ''You can bet on it, but there have been a lot of positive aspects that came out of this move that have outweighed all of that.''

Globalization has been the main benefit of aligning with Henkel, and it fueled the initiative to go under the wings of a larger company.

At first Kahl conferred privately with his two sons about the possibilities of merging with a larger, global company.

''We needed to globalize the company,'' he said of Manco's corporate strategy for the second half of the 1990s and into the new millennium. ''Our most important customers -- like Wal-Mart and Staples -- were going global and they wanted Manco to follow.''

Manco was not equipped financially to handle a large multimillion dollar global marketing push, like their chief competitor 3M.

''We just didn't have the infrastructure in place to serve those global customers,'' John said. ''If we sat in the U.S. while the others operated business around the world we'd be looked at as a minority player rather than the majority player we wanted to be.

''We had to make a decision. Were we going to be a good domestic-based company, or would we align with a global partner,'' he said.

After some private discussion the Kahls confided in Manco's executive committee about what they were considering.

''We never intended to put the company up for sale,'' Jack said. ''What happened next was good timing.''

It was then that Henkel literally came knocking on Manco's front door.

A Henkel representative approached the company cold -- with no warning and no request for an appointment -- and told the Kahls that Manco was one of a short list of American companies that Henkel felt could potentially serve as their vehicle into the highly competitive American marketplace.

Chemical giant Henkel Group, based in Dusseldorf, Germany, is known not only for its adhesives, but also for detergents, cleaning supplies, cosmetics, and other chemical products. Henkel employs more than 55,000 people at more than 330 companies in 70 nations, and reported 1997 sales of $11.7 billion.

According to the Kahls, Henkel was impressed with Manco's unique corporate style -- or ''servant leadership'' -- which focuses on customer needs rather than dictating business to the retail customer. The concept has become the mantra that falls off nearly every Manco employee's lips.

Jack also likes to refer to this business style as ''altar boy management'' -- through attentive and complete service to his employees and his customers comes business success.

After a courting period of about a year, Henkel completed its buyout of Manco in August 1998.

Soon after the acquisition, Manco became the darling new company that every Henkel executive from around the world had to come and experience for themselves.

''They come skeptical and they leave convinced,'' Jack Kahl said.

Manco even held Henkel's World Wide Consumer Adhesive Conference last year, which catered to more than 50 international executives from 21 countries, most of whom wanted to see Manco in action.

Executives saw traits, especially Manco's servant leadership, that they felt they could learn from and grow.

''(Henkel) wanted us to become a small model for them,'' Kahl said. ''For us to become a change agent for them.''

Last year Manco began to introduce Henkel products into the marketplace. The first, which also represented Manco's first television commercial, introduced Correct-It -- a dry alternative to liquid correction paper -- to American audiences. Additional products soon followed, endorsed by Manco T. Duck, throughout last year.

So far, if financial figures are any indicators, the formula seems to work. Manco reported more than $180 million in gross sales during 1998.

Henkel, which is the 30th largest consumer advertiser in the world, has assisted Manco with bringing their products to a larger market.

As John Kahl said, the honeymoon is over and it's back to business for both companies.

''You can't take your eye off the ball and off basic business,'' he said.

This year the Duck goes global. Henkel will introduce Manco's flagship products -- Duck Brand duct tape and Easy Liner adhesive paper -- into German, French, Polish, Korean, Brazilian, and Czech Republic markets.

Manco is also prepared to introduce more Henkel products into this country that have already proven themselves successful in other markets.

With the acquisition now behind them, another turning point is on the horizon for Manco.

At the end of 2000, Jack Kahl said he will step down from the company and allow Bill and John to take over, an ascension they've prepared for since joining the company.

Manco's roots reach back to 1950 when the Melvin A. Anderson Co. was a small industrial supplier of tape products operating in Cleveland.

Jack joined in 1971 as general manager and steered the company toward retail sales. He quit later that year due to a discrepancy with the owner, but soon after purchased the company through a leveraged buyout and shortened its name to Manco.

Jack Kahl, from his cluttered executive office overlooking Manco's front parking lot, said aligning with Henkel played an important part in securing a strong company for his sons to inherit.

''A mark of a good leader is to leave the company stronger than when he found it,'' Manco's leader said. ''And then leave by letting your company go on forward like you're not even missing.'' ..."

For Further Information:

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Organizations of Avon, Ohio

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