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A Discussion with Wabtec’s Albert Neupaver

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Boyden’s Leadership Series presents discussions with business and thought leaders from organizations across the globe. The series focuses on topical issues that offer executives, political leaders and the media insight into current trends in business and talent management in the global marketplace.

This issue features Albert Neupaver, President and CEO of Wabtec, a global supplier of products, services and systems for rail and industrial markets. He discusses the importance of a technology edge, the real definition of lean principles, the company’s push into China and who makes the best mentor.

Albert Neupaver joined Wabtec Corporation in 2006 as president and chief executive officer, and a member of the company’s Board of Directors. Under his leadership, Wabtec has more than doubled its operating profit and net income, and its stock price has continued to increase each year, making it the only NYSE-listed company whose year-end stock price has increased for 10 consecutive years.

Prior to joining Wabtec, Neupaver spent nine years as president of the Electromechanical Group of AMETEK, Inc., a leading global manufacturer of electronic instruments and electric motors.

Prior to joining AMETEK, Neupaver spent 11 years with Pfizer, Inc. in several engineering, operating and business management positions. A native of Belle Vernon, Pa., he earned a Bachelor’s Degree in Mechanical Engineering from the U.S. Naval Academy in 1972 and served as an officer on nuclear submarines from 1972-77. Although he left active duty to join Pfizer, Neupaver served in the U.S. Naval Reserves for the next 25 years and retired as a captain in 2002. While he was with Pfizer, Neupaver earned a Master’s Degree in Materials Science and Metallurgical Engineering (1980) and a Master’s Degree in Business Administration (1982), both from the University of Pittsburgh.

Discussion with Albert Neupaver

Boyden: What do you attribute to the renewed focus and appreciation of the rail business globally?

Neupaver: The rail business has been the backbone of this country for a century and a half. In the mid-1800s, it was really the railroad that allowed the US to expand west and it enabled our country’s industrialization. Rail is still the backbone of the country and has that same importance globally. So moving freight and people by rail is a compelling story. It’s environmentally friendly, more efficient, and it solves a lot of problems related to demographics, as more people live near the cities. So, from all aspects, this is a growth business. And that’s the reason why there’s always been a strong focus on the rail industry.

Boyden: There are alternative energy solutions being developed to power rails in the future. Is that an advantage for the industry?

Neupaver: Railroads and suppliers are looking at alternative energy sources, but I think commercialization is a long way off. Keep in mind, freight rail and passenger transit already offer environmentally friendly solutions. For example, many people are surprised to hear that it only takes one gallon of fuel to move one ton of freight more than five hundred miles.

Boyden: That’s amazing.

Neupaver: And one intermodal train, used to  move truck trailers long distances,  takes 280 trucks off the road. There are so many of these comparisons. Another interesting statistic is that the use of public transit in the US saves four billion gallons of fuel annually.

Boyden: What do you think is least understood about the rail sector?

Neupaver: When I first joined the industry, I did not fully appreciate the depth of technology in the rail business. It’s amazing how complex and innovative the industry has become.

Boyden: For all sectors, US companies have to work harder now to compete—what can US companies do better and what has Wabtec learned globally?

Neupaver: I think that when you compete globally the most important thing is that you have to have a technological edge. Beyond that we have to be cost competitive and have a total delivered cost that is competitive. If you have technology, you have a competitive product and you provide the right quality and service to the customer, you can compete with any country in the world. 

Boyden: Why has the team concept been a big success at Wabtec?

Neupaver: Rather than a specific team concept, I think we’ve tried to encourage every employee to become fully engaged in the business as part of our Wabtec Performance System, which is based on continuous improvement in every process, every day.

Boyden: Wabtec is known as a super lean company – what is the point a company becomes too lean and where do you draw the lines?

Neupaver: When we use the term lean, what that represents is a business model that was first used by Toyota. And it became the Toyota business system. We developed a business system long ago. Bill Kassling, our former CEO and current Chairman, took the company private in 1990 and then public in 1995. He was an advocate of lean manufacturing and lean principles, which are the bedrocks of our Wabtec Performance System. It’s our process for continuous improvement, eliminating waste and making sure that we do everything in the most efficient and productive way.

So, by definition, you never become too lean, because lean isn’t about how many people you have; it’s about eliminating waste. You don’t waste resources in how you manufacture, how you process an invoice, or how you conduct an interview in the hiring process. If you apply continuous improvement principles, the company becomes more efficient over time, and you will have opportunities to grow the business.

Boyden: What have been the keys to the company’s acquisition program?

Neupaver: The most important step was to create a strong corporate development team by hiring the right people with the right skills. So we created a department and they developed the processes and procedures to move forward with our acquisition strategy. But, in order to do that, the key was getting people with the right skills and capabilities in place.

Boyden: Wabtec’s global operations are on the move—what have been the keys over the last few years?

Neupaver: First, you have to have the right products and technology if you are going to export. Next, you have to understand there is not one strategy that fits all global locations. In fact, in every country, every part of the world, you need a separate strategy. In some cases you need to acquire businesses. In other locations you may start a “greenfield” site. You might export into a given country or develop joint ventures in another. The key to success is having the right people and the right talent in place, and then picking the right entry strategy for that market.

Generally, we like to hire and have people that are from that specific country. We’re careful not to take our American way and force our culture into those areas. There’s always a lot of interaction that helps our staff and partners learn products, processes and culture.

Boyden: What has been Wabtec’s “China Strategy” given recent reports of projected spend there of $1.3 trillion to ease shipping and transport bottlenecks?

Neupaver: China has made a strong government commitment to building their infrastructure, both transit and freight. Our first step was to recruit a managing director for China to coordinate our efforts. In China, the government owns the freight railroad and they also own the mainline transit business. They require that you have some type of joint venture arrangement to participate in their markets. If it is a critical product, the outside owner cannot own more than 50 percent.

Boyden: Investors have been high on Brazil and Latin America. What’s your take on this market and Wabtec’s recent expansion there?

Neupaver: I think that these are excellent emerging markets. Brazil’s expansion is primarily being driven by the fact that they have a tremendous amount of natural resources. The iron ore is in great demand from China and other fast-growing countries. In country, they transport the ore and other commodities by freight rail. It’s a good market for us. Now that they will be hosting the World Cup and the Olympics, they are also looking to expanding their capability with mass transit. 

Boyden: How would you describe your management style?

Neupaver: I started my career in the military. During the early years, I learned the importance of good leadership. I try to lead by example. I’m very demanding yet I hope I’m realistic and considerate. I try to insist that people have a good balance in their lives with work and family. Lastly, I really expect people to be accountable for their responsibilities.

Boyden: What has been your most difficult decision at Wabtec or at another time in your career?

Neupaver: I’ve always had trouble with tough decisions related to people. As you go through life and in a position like this, many times you have to make decisions that impact individuals’ lives, whether through cutbacks or restructurings. For me, these decisions have always been the most difficult thing to deal with. And I realize that if it ever does become easy, it’s time to get out.

Boyden: How do you approach recruiting?

Neupaver: Depending on the level of the position, we try to use a balanced approach. When looking for an individual that’s very specialized we use professional recruiters, such as Boyden. Almost always we use a recruiter when we are looking for an international position. We do post open positions within the company first. We prefer to promote from within first. 

Boyden: If you could go back in time, what would you have changed in the career department?

Neupaver: I really have been a blessed individual, given the challenging and rewarding roles that I have had throughout my life. There’s not much I would change. Obviously, I have made many mistakes and wish that I could reverse those decisions. But as far as my career, I’m pretty happy.

Boyden: If you were giving advice to a manager moving up, what would you say?

Neupaver:  For an individual that has the desire to move up through the ranks, he or she needs to first take the time and effort to prepare for their next position. Get the right level of education and the right experience. Try not to get overwhelmed by pushing too fast without proper preparation.

It’s also important to find someone in the company that is a mentor for you to give you honest and direct feedback. You have to take that feedback and try to improve upon it. Sometimes the direct line of command doesn’t allow for honest and direct feedback. That’s why it’s always good to have a mentor or someone that you can go to and get really good critical suggestions on what you need to do to be better. I think it’s also important that you communicate your ambitions.  A great company needs individuals with many different ambitions.

We would like to thank Thomas Flannery of Boyden Pittsburgh for making this edition of Boyden’s Leadership Series possible.

The views and opinions expressed here do not necessarily represent the views of Boyden; only those of Mr. Neupaver.