The outbreak of coronavirus is disrupting the commercial foodservice equipment market like nothing that has gone before it. So how does a global multinational corporation cope with such a fast-moving challenge – and how do you enact a contingency plan for something that is completely unprecedented?
Editorial director Andrew Seymour was granted an exclusive interview with Phil Dei Dolori, Senior Vice President and General Manager, EMEA and APAC, at Welbilt. The global nature of Mr Dei Dolori’s position – he is also a member of Welbilt’s senior leadership team – means he has an unparalleled view of the way the virus is impacting operations and firsthand experience of the kind of strategic decisions that a global foodservice equipment business is forced to make during a crisis.
During a fascinating 30-minute conversation, Mr Dei Dolori explained how the company – which makes annual sales of $1.6 billion has so far managed to avoid closing any of its manufacturing plants, the most important lesson it has learned about its business since the crisis began and his view on when we can expect to come out the other side…
Phil, the current situation means we’re conducting this interview by telephone. Where are you based and are you currently facing the same kind of lockdown restrictions that we are now seeing in Europe and the US?
Right now, I am in the United States and have been here for about a week. I am normally based in Munich, Germany, where I have been for four years and prior to that I was based in both Italy and France. In Germany, I think the lockdown started a little bit sooner and it was a little more draconian in nature because the numbers were rising faster than they were in the UK, but generally speaking it is a similar kind of environment.
You’re Senior Vice President and General Manager, EMEA and APAC, at Welbilt. That encompasses quite a large chunk of the world’s geography – can you tell me a little bit more about your role?
Essentially I have responsibility for all of our operations that are outside of the Americas. This involves developing a clear strategy with clear execution plans in order to achieve profitable growth. That is the primary responsibility, but equally as important is to develop a strong leadership team that is incentivised for growth, and one that has a succession plan component built into it. We want to grow, and continue to grow profitability, but it is really largely about the people and making sure we have a pipeline of talent throughout the business to help the business grow profitably.
In terms of your day to day responsibilities, so many things must have changed in these last few weeks due to the coronavirus crisis. How are you adapting?
Well, essentially the responsibilities are still to oversee the business but a lot of time has obviously been spent on making sure we have our health and safety programmes aligned and in place. I was in China in early January celebrating with our team. We have 500 employees in China and we traditionally have a New Year’s celebration in each factory. That was about a week before China was locked down.
I remember a couple of weeks after that I went to Singapore and then came back over to Europe and it was pretty evident about two or three weeks afterwards that we were going to be training the rest of the world on some of the issues that we had already encountered, such as putting in health and safety protocols and making sure we have product sourced from other regions.
Presumably, the importance of product sourcing during these times can’t be underestimated. If you don’t react quickly enough, I guess it can be difficult to recover the situation?
One of the benefits of Welbilt is that we have brands such as Merrychef, for example, which we build in Sheffield for the European market, but which we also build in China for the Asia market. We were therefore able to ramp up production schedules in the other parts of the world because even though China was closed we still had customers in South-East Asia, Australia and New Zealand that needed product. In this instance, we were able to move that production over to Sheffield to help out.
I was in China in early January celebrating with our team. We have 500 employees in China and we traditionally have a New Year’s celebration in each factory. That was about a week before China was locked down”
And what about the health and safety aspect given that you operate 20 manufacturing facilities around the world? Did China serve as the blueprint for implementing company-wide protocols?
We essentially got trained by what happened in Asia and we have taken all those learnings from Asia and applied them in Europe immediately. I think it was mid-February when we started putting in the health and safety protocols in the event that the virus would spread. At that time we didn’t know if it was going to spread, we just said that if it does we better be ready, so I guess fortunately or unfortunately – depending on how you look at it – we got a heads-up from China and Asia, and that gave us a head start in Europe, and then we started doing the same thing in the Americas. A lot of time has been spent making sure we have the safety protocols in place and now along with everyone else we are in the middle of a downturn in the business so it is about getting ready for that.
The last corporate statement on the coronavirus situation came on 20 March, when the company stated that all of its manufacturing centres were operational. That was a week ago, so is that still the case today?
As I stand here today, it is. I think the key point here is that if we do decide to close any of our manufacturing facilities we have back-up plans already in place because of our structure. I gave you the example of Merrychef in the UK. We have Merrychef in China and build base products for the Chinese market, the US market and also the European market. But we also build ice products at our Mexico facility, so we are really fortunate that we have a built-in back-up system for production and the local supply chain in place to support that.
Merrychef is the brand that Welbilt is perhaps best known for in markets across Europe. What is the operational situation with Merrychef as it stands today?
As we are speaking today, we are fully operational. We are seeing a little bit of a decline in incoming orders but we still have a backlog and we are still producing. As I said, a week from now anything could happen. The government could decide to shut down all the factories like they did a few days ago in Italy and we have just got to be prepared. And I keep going back to it, but if that happens then we know right now that we are fully up and running in China. We can source Merrychef product from China tomorrow, so that gives us a little bit of comfort.
The key point here is that if we do decide to close any of our manufacturing facilities we have back-up plans already in place because of our structure”
Is it fair to say that in a climate like this, the normal rules of business go out of the window? With the mainstream restaurant sector closing down, leaving delivery, public sector and healthcare as pretty much the only markets operational. Nobody could have envisaged this scenario just a few weeks ago, so how do you comprehend and deal with that as a large multinational corporation?
Again, I go back to the three regions. Asia is starting to recover, Europe is in the middle of it, and the US is at the beginning of it, so we can share best practice. We need to stay in touch with our customers, that is the primary goal. We have an online programme that allows us to do that and earlier this week we introduced Welbilt TV to our Asia-Pacific markets where we do short master-classes targeted to certain customer segments, such as grab-and-go or convenience store concepts.
We have got a series of these online master-classes coming out through Welbilt TV. We also have a virtual hotline and we are doing a lot of online training on the product, service and technical aspects. But really it is things like the master-classes that bring the kitchen to the customer live on the air that have been a really solid connection point for us.
Clearly the biggest fiscal challenge facing the equipment industry right now is the reduction in sales caused by the coronavirus. Can you even try and address that while all this is going on?
Obviously it is a challenge. The business is starting to decline and that is happening across the industry, but the reality is we still have customers ordering parts and we still have customers that want equipment because not all restaurants in the world are closed at one time. It is an evolving situation so we have to make sure that we keep at least some level of production open and that we keep skeleton crews in place for parts shipping.
It is not as if we can just shut everything off, close everything down and come back in a month like China did. That is not the reality in the rest of the world. We just have to make sure we have those skeleton crews in place and we are actually in the middle of preparing for that as we speak.
I imagine multinational corporations such as Welbilt spend a huge amount of time on business continuity planning and preparing for certain disaster scenarios. But as I mentioned just now, this virus and the impact it is having on the world economy is not something that anybody could have forecast. How does such a large corporation get to grips with managing that? Is it driven top-down from the American leadership team or is it about strong leadership from your regional teams and adapting to different market conditions at different times?
That’s a great question. One of the benefits we have is we are geographically diverse. So if I go back to the point I made earlier, when things started to spin out of control with the virus in China and we had to shut down, we immediately put those safety protocols into our Singapore distribution facility and our Singapore office. As that started to develop and the next area was Europe, the first thing we did was get the team in Asia on a video conference with the team in Europe to say, ‘here is what we are experiencing, here is what we are doing, here is how we are going to be prepared’, and the Europe team immediately enacted that.
At the same time, my team and I went to Bill Johnson – our CEO – and I said, ‘this is what has happened in Asia and what we are preparing to do with Europe. We now need to be prepared in Canada and the United States and Mexico.’ Our headquarters took all those learnings and basically compiled that into a summary sheet on what to do – a green light, yellow light, orange light and red light alert. With those various categories we assessed the situation. At that time, Asia was in red, America in green and Europe in yellow, so we had fairly specific protocols to put in place depending on the situation or the colour of the light, if you will. And that was how we managed it.
The team in the headquarters in Tampa was taking inputs from Asia and Europe and helping to develop a global plan while protecting the Americas. To put it another way, there was nobody in Tampa, Florida, that was watching the crisis in Wuhan and coming out with a global policy without speaking with the regions first.
So really, the proficiency of the regional teams and the speed at which they react determines how effectively headquarters team can respond and take action?
Yes, while we are a large corporation for the foodservice equipment industry, one of our values is entrepreneurship and being able to move quickly. And that is exactly what happened. There is no way that you could have a prescription to solve a problem in China from the team based in Tampa, Florida. The prescription for the solution has to come from the local market. If this had happened in the UK or Germany first, the prescription for dealing with it would have come from that country. The key is sharing the best practices and making sure you are shouting and letting your teammates across the world know what’s going on. That is really the key.
If Europe or the United States goes into complete lockdown tomorrow, that will shorten the timeframe, but it is going to be longer than China, for sure”
Welbilt’s global reach means you are exposed to this situation until it has completely gone away. But on the other hand, you’re suggesting that it is also an advantage?
Yes, we were trained in Asia on what to do in Europe and the Americas. Dealing with it in Asia was hard enough but thank goodness we have had the practice even though it feels right now that I am going through this for the third time. It is like a story you are seeing over and over again. The good thing is that eventually all these crises come to an end.
The last global crisis was in 2008-2009 and there have been several before that over the last few decades. How does this one compare to those?
This one is very fast and things are moving downward very sharply and very quickly. That is the main difference. The 08-09 crisis was really a financial prime mortgage-driven one. I guess I would call this a supply and demand crisis, so we have a supply issue and a demand issue happening at the same time. But the banks are well-capitalised and willing to lend, so this one is very different.
I guess the other thing I would say – and this is something that we didn’t really think about but which we have learned through the lockdown process with China – is the psychological element of people working from home. There is a feeling of isolation by some employees that you have to deal with and you have got to be ready not only to protect your employees from physical disease but also be aware that there could be some psychological issues that people develop as a result of being isolated.
We are not experts at that but that was one of the first things that the Asian team said to the EMEA team – make sure your leadership team is on the phone, talking to people much more regularly than you did before, because before you were in a group and now you are separate. Stay in touch with your people, talk to them, get on the video chat, find a reason to call them and keep their spirits up. It’s a real issue for some people and we have to be aware of that.
You’ve talked a couple of times about China emerging from this situation and factories becoming fully operational again. What is the feeling internally on how long this is going to last? When do you think the UK and European markets will be out the other side of this?
First of all, I don’t think it is going to recover as fast as China. If you look at China, they locked down on 20th January and cases peaked there about two-and-a-half to three weeks later, and then another three weeks after that they had the cases down to nearly nothing. So from lockdown to nearly no cases was a six-week period. I think it is probably going to be double that amount of time or close to double. I hope not, but my sense is that it is going to be an eight to 10, maybe 12-week period, from the beginning to the end. 12 weeks is maybe a little extreme, but who knows? If Europe or the United States goes into complete lockdown tomorrow, that will shorten the timeframe, but it is going to be longer than China, for sure.
A lighter question to end the conversation: I am guessing with a role like yours, you spend an awful lot of time in the air travelling from one country or territory to the next. Are you secretly enjoying having a bit of enforced time at home behind a desk?
I am actually not! I’ve been in quarantine for 10 days since coming back to the US from Germany, so I am not in my home at the moment – I am in a hotel about one kilometre from my home, where my wife and daughter are! So I’m not enjoying it, I want to get out of here! It looks like I am going to have a few weeks here, so what I would say is that I am looking forward to not getting on an aeroplane because I am on one usually every other week – if not every week – and have been for the last four or five years!