FAIRLAWN, OHIO — Joseph Gingo could have taken the easy road.
By late 2007, Gingo had worked for the Goodyear Tire & Rubber Co. for more than 40 years as an executive in a variety of roles. Retirement must have been approaching on the horizon. He surely could have accepted the gold watch and lived at a more relaxed pace.
Instead, Gingo accepted the top job at materials firm A. Schulman Inc. in Fairlawn, Ohio. Almost seven years later, Gingo has announced his retirement — and he's leaving Schulman in much better shape than it was when he came aboard on Jan. 1, 2008.
Gingo, 69, will retire from his roles as president and CEO on Dec. 31, but will continue as the firm's chairman. Longtime Schulman executive Bernard Rzepka will begin as president and CEO on Jan. 1.
Things were far from smooth when Gingo took the reins. Schulman's European operations had been outpacing its U.S. ones for so long that, by fiscal 2007, Europe was accounting for 72 percent of Schulman's total sales and all of the firm's profit. New York investment firms Barington Capital Group LP and Ramius Capital Group LLC also had been hammering Schulman for underperformance, leading to the departure of longtime CEO Terry Haines.
“I said I was interested in the company, but I didn't want to fight [with investors] every day,” Gingo recalled in a recent interview in Fairlawn, just a few days before his retirement was announced.
Gingo thought he knew the company pretty well, because he had served on Schulman's board of directors since 2000.
“[Barington CEO] Jim Mitaratonda already was a board member, and he contacted me and said he wanted me to run the company because I asked the right questions at the board meetings. Ramius said no [to me being CEO] because since I already was on the board, they thought I can't be any good. But [Ramius] agreed to it after they got two seats on the board.”
Soon after getting the top job, Gingo's education began.
“Just because you're on the board, don't think you know the company,” he said. “When you get into the details, you find out that the company is presenting what it wants to present. You only see a version of it while you're on the board.”
The biggest change he found was that the firm's U.S. operations were losing $30 million per year. North America had been reporting a $15 million annual loss, but that number was lessened by a $15 million annual profit in Mexico.
Gingo also found different answers to questions he had asked as a board member.
“I asked why we were so big in auto in North America, when it's such a competitive field,” he said. “When I was on the board, they told me that tire companies like Goodyear don't have the strength to fight the Big 3 in Detroit. They said Schulman was in the ranks of bigger companies like Dow and ExxonMobil and DuPont. But when I got here, I found that everyone was treated the same.”
Additionally, Gingo decided to have Schulman cease an attempt to enter the automotive sheet market through a product called Invision.
“Invision was a good product, but it would have required a lot of changes in Detroit, so we got out,” he said.
The bigger question Gingo asked — and one that would shape Schulman's strategy going forward — was why the firm was big in the packaging market, and in color and additive masterbatch concentrates, in Europe and Mexico, but not so in the United States.
“I was told that packaging here was very competitive, but our competitors — people like Ampacet and Clariant — had facilities in all of those regions,” he said.
On all of these topics, Gingo said he didn't think previous Schulman management was being deceptive — just that they were looking at the market in different ways.
Gingo had to decide what assets to keep. An automotive-focused plant in St. Thomas, Ontario, was closed because it was competing with polypropylene suppliers who could make compounds and pass through costs, something that Schulman couldn't do. A tolling plant in Orange, Texas, also was sold because of its commodity focus.
“We had to go where the big guys don't want to go,” he said. “They don't want small runs of complex products, they want to run volume. A commodity plant manager doesn't want anything complicated.”
Gingo also set in place a long-term plan of changing Schulman's money-losing U.S. operations to make them resemble the firm's money-making businesses in Europe and Mexico, which were focused on packaging and concentrates.