“The valve industry is all about people. Hands on, manufacturing, selling, that’s what appeals to a lot of us. It’s a no-nonsense industry, with many high-quality people,” said an enthused Gil Richards, Chairman Emeritus of Richards Industries, in a recent interview with VALVE Magazine. “It’s a pleasure to work and associate with them.”
It’s no wonder, then, that Richards spent more than 50 years in the industry he loves despite finding his career almost by accident. He chuckled, “There was no master strategy on my part–it was just fate.” After graduation from Harvard, his first employer was a private equity company in New York. “I spent the first two years as a financial analyst in New York, but the company owned OPW Corporation in Cincinnati, and they sent me there to get some practical experience. Once I got there into the manufacturing environment, it didn’t take me long to realize that that was my natural habitat. I just wasn’t cut out to sit behind a desk on Wall Street.”
A year after his arrival, the company bought a small valve company in Cincinnati, and Richards was appointed general manager. “I was given the assignment of managing a very small product line they had acquired called Jordan Valves, and I did that for the next six years. When I took over, there were just six employees, but we improved Jordan's product quality and built up a distribution organization, so that by 1958 the company was turning a profit.”
In 1960, OPW and Jordan Valves were both sold to the Dover Corporation. “But Dover management came to me in 1961 said, ‘This is too small for us, you only have a dozen employees and we just can’t keep track of such a thing so we’ll sell it to you,” Richards reminisced. “I told them I didn’t have any money, but they told me to just come up with what I could, and they’d take notes for the rest of it. So I screwed up my courage and went into the deal.” Jordan Valves then became Richards Industries.
By 1970, Richards had paid off the notes and, he said, “That was it. We just kept on going.”
Bread and Butter Business
When asked how the company weathered the ups and downs in the industry for so many years, Richards was quick to point out that part of his success was good timing. “Basically, I came into the industrial valve industry in 1954 and the industry was on a growth period that lasted a long time. Sure, there were a couple of hiccups like in the early 1980s, but then it went strong until almost to the end of the century, the late 1990s. And then for some reason, maybe it was over-saturation, we really went into, not a recession, but a very soft period. We didn’t come out of that until 2004 but then it turned up again. So for almost 45 years, we benefitted from a constantly rising market.”
Richards attributes success to another factor that was peculiar to his company. “When I started in 1955 with Jordan Valves, we only had six employees. We were very small and the only way we could sell was to go into the back door at the industrial plants and sell to the maintenance people. We built our business on end-user ‘ones-y and twos-y’ business. The engineers wouldn’t touch us, the big companies wouldn’t touch us for their projects. If they were building a $100 million pinnacle plant, they only wanted the big names.”
Consequently, unlike many of the bigger manufacturers, Richards Industries did not depend on those big projects. “It’s great when they’re there, but when they’re not there, it’s bad. But since we were in the replacement and maintenance end of the business, we had a steady bread and butter business. If you had a bad valve, you had to replace it. So that’s where we came in.”
Richards believes that constant, steady business is what insulated the company against swings in the marketplace. “We were able to maintain our business by doing the right things–the obvious things,” said Richards. “Selling very hard is part of it, and when we had acquisition opportunities, we would buy other product lines and incorporate them into our production and marketing.”
Paying it Forward
When Richards retired, there were 190 employees, with five different product lines and one plant location. In September of 2007, he sold Richards Industries in a management buy-out. “This is the greatest satisfaction in my life. Against strong competition, we built a business from a very small size to a respectable medium-sized company and in the process I think our company has a very good reputation in the industry with the customers, and we treated our employees well. We were and are a non-union shop. Since 1955, we have never laid off anybody, and our employees have never had less than 40 hours a week. I think the capstone on all of that was my selling the business to the management team with whom I had worked.”
Richards is proud of being able to do for others what had been done for him. “Sure, there was some risk involved when I sold the business. I had to take notes for about half of the purchase price. But that was what people did for me in 1961, and I always had it in my soul that I wanted to do that when it was time for me to retire. So the company has gone on, I’m all paid, and in the last five or six years they’ve done better than I did in the five or six years just before they took it over. They have done very well.”
The Importance of Networking
Richards is an enthusiastic supporter of the Valve Manufacturers Association. “From day one I’ve been a big believer in trade associations,” he said. “The opportunity to get together regularly with competitors and related companies leads to friendships and helps avoid adversarial situations. The networking helps members become educated as to what’s going on in the industry and it gives an opportunity to work together on common problems.
“We joined the VMA very early, and I hardly ever missed a meeting after we joined. My successor, Bruce Boxterman, feels the same way. In fact, he actually became chairman of the VMA, although his term is over now.”
Richards made a special point of complimenting current VMA President Bill Sandler. “You know, Bill took over VMA several years ago when it was in a down period. He and the boards have built it up tremendously, and I really want to congratulate him. He has done a tremendous job, and he has a good staff there, too.”
Industry has Changed
“When I came in to this business in 1954,” reminisced Richards, “it was mostly family-owned companies. Today it is still a lot of family owned, privately owned, but there are also many major public corporations in the game. There are many conglomerates now who have taken over the smaller companies. Another big change since I started is the kind of valves that are dominant.”
He pointed out that back in the 1950s, the industry was dominated by gate, globe and check valves. Then, the ball valve came into the picture, and Richards believes it is probably now the dominant type of design with hundreds of companies making nothing but ball valves now.
“The other major change I’ve seen is the globalization of the marketplace,” continued Richards. “When I came in, our horizon was the USA and Canada. My estimate is that in those days that 85% of the world market was in the USA, 15% in the rest of the world. Today, it strikes me that the numbers are reversed.
“Another thing about globalization, we’re not only selling overseas; we’re also purchasing. With our company, when I came in, we purchased nothing from outside of the USA, but today, about 50% comes from offshore. We do buy castings, components and some complete valves that have been made to our design. It’s the only way to stay competitive.”
And what does Richards see for the future? “When I first started looking at China 20 years ago, their labor costs were about 3% of our labor costs. It’s changed now, but still it’s only 10 to 15% of our labor costs. However, I believe that we will see Africa opening up as the next low-cost labor market. One thing for sure, there will continue to be changes.”
A Busy Retirement
While Richards is still tuned into what’s happening in the valve industry, he now can do so from either of his homes, in Ohio or Florida. “I play a lot of tennis, and I go to the gym. I like to stay active, but I’m also glad that I don’t have to wake up to an alarm clock anymore,” he joked.
He and his wife have six children between the two of them, and nine grandchildren who are scattered around the country. “When I was working, and most of what I did was sales and marketing, I estimate that I was on the road 35% of the time in my entire career. I have traveling in my blood, and I like to go see all the kids and the grandchildren at least twice a year,” said Richards.
Richards also has his pilot’s license, an accomplishment he started when he was 60 years old. “I saw this ad on a bulletin board in a supermarket for lessons at a local airport. I decided to go for it, and now I have two planes, one a small amphibious airplane and a Cessna 172. I go flying a couple times a week.”
Gil Richards has put on many miles in his busy career, so we asked for an observation about the journey.
“I just think that in the trip through life, what we try to do is make the world a better place,” said Richards. “If we’ve done that, then at the end of the day, I think I’ve had a good trip.”