GLENVIEW, ILL. (Nov. 19, 1:10 p.m. ET) — David Speer, who pushed Illinois Tool Works Inc. deeper into international markets as CEO while wrestling with a fierce recession that upended the industrial conglomerate's business model, has died after a long illness, the company announced Sunday. He was 61.
After climbing the executive ladder at the century-old industrial equipment maker, in tandem with predecessor CEO Jim Farrell, Speer was named president in 2004 and CEO a year later. He added the chairman's title in 2006.
In October, 11 months after the Glenview-based company announced that Speer would undergo treatment for an undisclosed medical condition, he took a leave of absence “to fully focus on his health,” the company said at the time.
The company has never disclosed the nature of Speer's illness.
Last month Vice Chairman Scott Santi was named president, chief operating officer and acting CEO. On Sunday the company announced Santi, 51, has been elected CEO to succeed Speer and elected to ITW's board of directors.
Lead Director Robert Morrison, an independent director since 2003, became non-executive chairman.
"On behalf of everyone at ITW, our thoughts and prayers are with David's family during this difficult time," Morrison said in a statement. "David's energy and enthusiasm leave an indelible mark on ITW, the Chicago business community, and the many not-for-profit organizations he served. He will be greatly missed."
Before news of his illness, Speer had just emerged as a local civic figure, taking over as chairman of the Economic Club of Chicago in mid-2011 and setting in motion the replacement of longtime president and CEO Grace Barry with fellow director Donna Zarcone. Health reasons forced him to relinquish the chairmanship in December 2011.
During his years as CEO, revenue grew about 40 percent, to an estimated $18.2 billion, but earnings were erratic, reflecting recessionary times. After falling 50 percent, net income rebounded to a record $2.1 billion in 2011.
Meanwhile, ITW stock outperformed the broader market while Speer was CEO, rising more than 60 percent (through mid-October) vs. 30-some percent for both the S&P 500 Index and S&P 500 Industrials Index.
Born in Sault Ste. Marie, Ontario, the third of seven children, Speer moved around a lot as a youngster. His father was a metallurgical and mining engineer; when Speer graduated from high school, the family was living in suburban Barrington, Ill.
After studying industrial engineering at Iowa State University, he was selling electrical insulation and had just earned a night-school MBA from Northwestern University's Kellogg School of Management when he interviewed at ITW in 1978.
He started out as a salesman of Buildex self-drilling fasteners. At age 33, he was named general manager of the unit. By 1995 he was an executive vice-president.
Known in pop culture as the inventor of the plastic-ring binder for six packs, ITW grew into a sprawling 800-unit behemoth with decentralized management and products ranging from industrial packaging and welding products to commercial food processors and medical devices.
In a 2007 interview with Crain's Chicago Business, Speer boldly predicted 10 percent to 13 percent sales growth and 12 percent to 15 percent profit increases for the next five years — close to what had occurred under Farrell. It was not to be.
Two of ITW's biggest business lines — construction and auto parts, which accounted for about 25 percent of the company's then-$13 billion in annual sales — hit the skids, thanks to steep downturns in homebuilding and U.S. auto production.
Yet ITW kept growing, thanks to its trademark approach of snapping up small companies with concentrated sales, where 20 percent of customers accounted for 80 percent of revenues. In 2006 there were a then-record 53 acquisitions, including Chicago-based business software firm Click Commerce Inc., adding $1.7 billion in revenue.
But just as earlier conglomerates were undone by economic downturns, the latest one confounded ITW's strategy of wringing out more profit from its often-undermanaged acquisitions. The company eventually made an about-face, declaring in 2012 that it would shed as much as 25 percent of its assets.
Speer emphasized more organic growth, particularly in China, where ITW built factories rather than buying them and then staffing the plants with Chinese managers recruited and trained by the company.
In 2007 he forecast that Asia-Pacific revenue would reach $4 billion annually by 2010 from $1.7 billion in 2006, but the recession slowed this strategy, too. In 2011, Asia-Pacific revenue, including Australia, was $3.4 billion.
“His imprint on the business was international,” said Walter Liptak, an analyst at Barrington Research Associates Inc. in Chicago. “The company's at the early stages of growing up again ... and David was right there to get them started.”