A clean sweep of the world's middle class

May 11, 2009
| By Pete Daly |
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For a global company that has enjoyed sales in Britain for well over 100 years and has made successful inroads in markets in Russia and the oil-rich Persian Gulf, it may sound strange that Bissell Inc. sweepers aren't in Chinese and Indian homes yet.

That's because those countries don't have a consumer middle class like we do — yet.

"That will be a different story in five years," predicts Mark Bissell, chairman and CEO of the family-owned Walker-based company founded in Grand Rapids in 1876.

As the middle class grows around the world, so grows Bissell — or at least that's the plan.

Bissell has a "customer-centric" business model, Bissell said at the Economic Club of Grand Rapids luncheon last week. It constantly works to develop products and innovations with added value, in the eyes of its customers.

"The female consumer is our market," he said, and the company "mantra" is "life-inspired cleaning innovations." Life-inspired ideas that the Bissell company has already implemented include pet-friendly products designed to help pet-crazy Americans keep their homes clean, allergen-control products and "earth-friendlier" cleaning products.

"Pets and children are our best customers," joked Bissell.

Home floor cleaning is approximately a $4 billion industry worldwide, according to Bissell. His family's company has an estimated 19.1 percent of that market, the largest share. Competitors Dyson and Hoover have 15.3 and 11.8 percent, respectively.

Publicly held companies, even privately held companies with a number of unrelated investors, are generally under constant pressure by those owners to perform as quickly as possible, with consistent and acceptable financial returns always an urgent concern. However, family ownership "allows us to take a long-term perspective," said Bissell.

Several years ago, the Seidman College of Business and the Grand Rapids Area Chamber of Commerce, working with its Family-Owned Business Council, raised money to help start the Family Owned Business Institute, housed on the campus of Grand Valley State University. Today the business institute's Web site states that family-owned businesses in general tend to "strategically think and act over the long term (generational) with a greater willingness to sacrifice short-term profitability."

Mark Bissell, the fourth-generation of the Bissell family to head the company, said family ownership enables it to implement new strategies or projects where the planned payoff might be "five years or 10 years out."

Being a relatively small, privately held company, Bissell can avoid the bureaucracy that slows down and even cripples some companies.

Over the years, the company's operating principles "haven't changed," said Bissell. Its teams are empowered to take action: "That's how we get things done."

"We don't have a lot of committees," he said. "We think that's a strategic advantage for us."

Bissell has cross-functional teams, with individuals representing all disciplines, and company-wide communications are intended to make all employees aware of why changes are made and where the company is headed. The Bissell bonus system covers everyone in the same way, from hourly employees to executives, and that has helped.

Mark Bissell posed a question to the Economic Club: Why go global?

Bissell has a global footprint, he said, but its markets in the U.S. and Europe are not growing; they are flat. The growth of the future is going to come from Asia, Africa and the Middle East. The world now is in the midst of the biggest shift in global spending patterns in history, he said, and "the middle class is at the forefront" of that spending pattern.

He cited research in 2000 that indicated that 56 percent of the world's "middle-class" populations lived in developing countries. By 2030, it is predicted that more than 90 percent of the middle class will be living in the now-developing countries in Southeast Asia, India and Eastern Europe.

More and more people in the developing countries aspire to be "brand" consumers, said Bissell. Like Americans and Europeans, they are growing more sophisticated and want "the newest and latest" in products.

This is not to say that the Bissell company does not have a presence in China. It does: a 50 percent joint venture with a company that is Bissell's source for the electric motors in its products.

Bissell has wholly owned subsidiaries in Australia, the Philippines, Canada, Hong Kong and China, plus others, but it also looks for partnerships with contract manufacturers, and is often willing to rely on its suppliers' infrastructure.

Mark Bissell said it is important to "use that partner's capital, their buildings, and equipment." Let the partner spend the time and money on infrastructure, he noted. All that allows the Bissell company to devote more of its energy to focusing on the customer.

Asia is attractive from a cost standpoint, Bissell said, but there are legitimate questions about the level of quality in products made there. Quality, for American firms working with Asian partners, "is as good as you want it to be," he said — "but it can't be on autopilot. It has to be managed."

One thing offshore partners can offer is quick turnaround, and speed in bringing products to market is a key tool for success in the global economy. Bissell mentioned that his company partnered with Samsung on a new product that it brought to the marketplace in eight months. That won Bissell some valuable market share "that we've never lost since," he said.

Research and development, however, is a different matter. R&D is "something we will never outsource." Bissell noted that theft abroad of intellectual property owned by American businesses is frequently talked about now in U.S. business circles, and "we've had a few bad stories ourselves."

So Bissell is going to keep its R&D very close to home — at home, in fact. Right now the company is building a $9 million-plus "innovation center," a conversion of 50,000 square feet of former factory space in Walker, where it will consolidate all its R&D. He said the company expects to have 150 people working in the building by late summer.

Bissell told the Business Journal after the Econ Club talk that the company has been adding 20 to 30 salaried employees to its R&D and marketing functions each year, over the last three years.

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