Fred Poses
1942–

Chief executive officer and chairman, American Standard Companies

Nationality: American.

Born: 1942, in Yonkers, New York.

Education: New York University, BA, 1965.

Family: Married Nancy (maiden name unknown); children: two.

Career: Peace Corps, 1967–1969, volunteer; Allied Corporation, 1969–1977, financial analyst; 1977–1985, general manager of Home Furnishings division; AlliedSignal, 1985–1986, president of Plastics and Engineered Materials division; 1986–1988, president of Fibers division; 1988–1998, executive vice president of company and president of Engineered Materials division; 1998–1999, president and chief operating officer; American Standard Companies, January 2000–, chief executive officer and chairman.

Address: American Standard Companies Inc., One Centennial Avenue, Piscataway, New Jersey 08855-6820; http://www.americanstandard.com.

■ Engineering executive Frederic M. "Fred" Poses was the CEO and chairman of Piscataway, New Jersey-based American Standard Companies. During Poses's transition from AlliedSignal to American Standard, the outgoing CEO, Emmanuel A. Kampouris, said of Poses, "We are delighted to have Fred Poses lead American Standard into the new century. Fred has a strong track record of driving business performance and enhancing shareowner value. He also has an intense focus on growing businesses and developing people. His global leadership abilities, coupled with broad management experience, will enable American Standard to profitably grow its businesses around the world" (peacecorpsonline.org, October 7, 1999). During the same time, Lawrence A. Bossidy, the chairman and CEO of AlliedSignal, stated that Poses was "A strong, experienced, innovative leader with a wonderful will to win. He will make American Standard a great place" (peacecorpsonline.org, October 7, 1999).

AMERICAN STANDARD

American Standard was a leading manufacturer of a wide range of air-conditioning systems, plumbing products, automotive braking systems, and medical diagnostics equipment. In 1999, the year before Poses took over, American Standard had total sales of $6.7 billion, while operating 116 manufacturing facilities in 50 countries and employing 60,000 people worldwide. As of 2004 American Standard derived 62 percent of its $8 billion in annual sales from its air-conditioning business, 24 percent from plumbing (bath and kitchen), and 14 percent from vehicle-control systems. About 43 percent of those sales occurred outside the United States.

The three divisions of American Standard were Bath and Kitchen, Air Conditioning Systems and Services, and Vehicle Control Systems. American Standard sold its plumbing fixtures under the American Standard, Ideal Standard, and Porcher brand names, among others. It was the world's largest seller of fixtures and faucets. The air-conditioning group made commercial, institutional, and residential products under the Trane and American Standard brand names; moreover, it was the world's number-one producer of chiller equipment and a leading provider of commercial air-conditioning systems in the United States. Through its WABCO (Westinghouse Air Brake Company) subsidiary, American Standard made electronic braking systems and air suspension systems for vehicles, which it sold mainly to original equipment manufacturers such as Volvo (Sweden), DaimlerChrysler (Germany), and Scania (Sweden), as well as to the secondary market. American Standard was the world's leader in electronic control systems for braking, stability, suspension, and automated transmissions for heavy-duty trucks, buses, and trailers. In the early 2000s it expanded its sales into systems for luxury cars and sport utility vehicles.

CAREER HISTORY

Poses spent two years, from 1967 to 1969, on voluntary assignment in Peru with the Peace Corps. He joined Allied Corporation as a financial analyst in 1969 and was named general manager of the company's Home Furnishings division in 1977. In 1985 Allied Corporation merged with the Signal Companies to form AlliedSignal. At that time Poses became president of the Plastics and Engineered Materials division. In 1986 Poses was selected to become president of the Fibers division and was promoted in 1988 to president of the Engineered Materials division and executive vice president of the company. He became a member of AlliedSignal's board of directors in 1997, a position he held until 1999. Poses was appointed president and COO in June 1998. He was targeted to become the CEO of AlliedSignal until the company merged with Honeywell International in 1999. Poses terminated his relationship with AlliedSignal on December 31, 1999, and assumed the position of chairman and CEO of American Standard Companies on January 1, 2000, upon the retirement of his predecessor, Kampouris.

WORK WITH AMERICAN STANDARD

Poses began to build on the work of Kampouris, who had reengineered the company's manufacturing operations around Demand Flow Technology (DFT). The operational strategy of DFT was to bring in raw materials and products to be manufactured through a process that relied on actual customer demand, resulting in much more efficient operations. Kampouris's efforts had transformed American Standard into what industry experts considered one of the best manufacturing companies in the world. Kampouris gave American Standard a strong operational performance, an experienced and well-coordinated management team, a high profit statement, and good cash flow. However, even though the company saw increased sales from its strong brand names and enviable market positions, its profit margins were not increasing. Poses identified this problem and strengthened the already strong company by focusing on this variable.

"CALL ME FRED" ATTITUDE

Poses directed his new company based on a self-improvement method of operations, complete with his management style of "Call me Fred" and his teamwork logo of "Raise the Standard." Early on Poses saw that many of the company's operations needed much more focused programs based on improvement, such as those with which he was familiar while working at AlliedSignal. Poses also disliked such words as "fault," "blame," and "boss," but he liked the phrase "we could be better" and the word "leader." Poses concentrated on an improvement strategy that included consolidating the ways raw materials were bought, improving productivity, and decreasing manufacturing errors. He also relied heavily on the widely accepted corporate improvement program called Six Sigma, which is an integrated, disciplined strategy aimed toward efficiently improving measurable parts of an organization based on historical information and data. (Sigma is a term used to represent standard deviation; that is, how far from the average [mean] is some measurable quantity. One sigma means that 68 percent of all measured quantities are at a distance of one standard deviation from the mean, while six sigma means that no more than 3.4 errors will occur in one million chances.)

PRODUCING IMPRESSIVE RESULTS

When Poses assumed the leadership of American Standard in 2000, he raised the goals for financial performance, specifically targeting growth for earnings per share in the range of 13 to 17 percent each year. Within his first 12 months with the company, Poses began to take market share away from the company's competition, which included Kohler, Robert Bosch, and York International. He also began to produce impressive results by cleaning up the company's balance sheet through reducing debt, which also decreased interest payments; reducing operating expenses; streamlining operations; increasing productivity; and expanding globally, including into China. The company still carried billions of dollars of debt, but the amount was far less than at the height of its burden in 1988. One of Poses's most impressive projects was a materials-management program involving office supplies. In the past various company branches had purchased these items from a total of 81 vendors. Poses consolidated purchasing under a single vendor, saving the company 28 percent over what it had spent the previous year.

Due to the economic downturn that occurred from 2000 to 2002, Poses was forced to lay off employees (about 1,700 people in 2001) and administer additional cost-cutting measures, such as relocating plants to places that would incur lower costs. Poses continued to lay people off only as a last resort, preferring to transfer employees to other locations. He also preferred to move production plants to locations near local markets if conditions permitted. Poses reorganized his management team as well. Within two years of taking over, Poses had removed seven of 10 people who reported directly to him and had created three new positions to supervise global supply management, communications, and marketing.

Poses moved to American Standard during troubled economic times. Under his leadership, however, the company's stock gained nearly 2.1 percent from January to August 2002, as compared to a decline of almost 25 percent in the Standard & Poor's 500-stock index, which added American Standard to its roster in May 2002 due to its rising performance and financial strength.

Poses announced in March 2004 that first-quarter total sales were $2.185 billion, up 12 percent from the previous year, with net income rising to $84.6 million, up 33 percent for the same period. Bath and Kitchen unit sales increased 11 percent to $601.4 million, and net income rose 43 percent to $50.3 million. Poses said that gains were the result of better productivity numbers, better foreign exchange rates, increased sales from its Champion toilet line, and fewer operating issues that had plagued this division during the previous year.

Sales from the Air Conditioning Systems and Services unit were $1.16 billion, up 7 percent, and net income was $93 million, up 12 percent from the previous year. Poses noted that growth in U.S. residential systems, global commercial equipment, and global commercial parts, services, and solutions contributed most to the growth. Sales from the Vehicle Control Systems unit were $420.3 million, up 30 percent, and net income was $58.9 million, up 26 percent in one year. Poses declared that increases were due to larger global sales areas, higher sales volumes, and additional physical features sold on trucks. With a strong first quarter behind him, Poses predicted a solid growth in sales, earnings, margins, and cash flow for the entire year of 2004 from each of American Standard's three business segments.

Besides his work as a CEO and chairman, Poses also served on the boards of Raytheon Company, Centex Corporation, the National Center for Learning Disabilities, and the 92nd Street Y in New York City. Additionally, he served on the Duke University Board of Visitors.

See also entries on AlliedSignal Inc. and American Standard Companies Inc. in International Directory of Company Histories.

source for further information

"Fred Poses Spent Two Years in the Peace Corps in Peru," Peace Corps Online, October 7, 1999, http://peacecorpsonline.org/messages/messages/467/3001.html.

—William Arthur Atkins