A New Look For Bell Helicopter
With cuts in defense spending on the horizon, CEO John Garrison is jump-starting commercial business.
With its in-house Starbucks, flat-screen monitors on the walls, and flexible meet/relax areas bathed in natural light, the new, open-plan Lawrence D. Bell Employee Center is an outward sign of the changes John Garrison has been bringing to Fort Worth-based Bell Helicopter.
The president and CEO of Bell, which produces military and commercial vertical-lift aircraft, says he decided the 1950s-era headquarters campus needed a makeover. He came to this realization after a young engineer prospect, who ultimately decided to go elsewhere, told him Bell’s facilities reminded him “of a high school he was glad he didn’t have to go to.”
The employee center and a second building—headquarters offices currently under construction—come as part of a wider, $250 million push Garrison has been making to modernize Bell’s systems, processes, and facilities. At the same time, he’s also pushing to increase the commercial portion of the company’s business in an era when U.S. defense expenditures are likely to shrink.
“We’re creating an environment that is far more conducive to collaboration and cooperation, in engineering and our other groups as well,” Garrison says. “We challenge our teams to do incredible work. I’m passionate about having the right operating environment, the right physical environment.”
The energetic Garrison, 52, was named president and chief executive in August 2009, after a period in which the company saw six CEOs come and go in nine years. Bell, in the words of spokesman William Schroeder, “was struggling for a while, and needed to reinvigorate the way it did business.”
Three years later, Garrison is drawing praise from people such as Fred Buttrell, CEO of Lewisville-based Med-Trans and its parent, Air Medical Group Holdings. They are Bell’s largest commercial customer, with 170 Bell helicopters in a nationwide fleet of air ambulances.
Buttrell says he had grown tired of Bell overcharging for parts. Instead of “jacking prices” every year, as had been done in the past, Garrison began stressing supply-chain management and quality-control methods known as Six Sigma. And he passed the benefits on to customers, Buttrell says.
“A customer is always going to have issues, but with John, I get a sense he’s going to do the right thing,” Buttrell says. Referring to Bell’s Providence, R.I.-based parent company, he adds, “When Textron made John Garrison president of Bell, it was one of the best moves they ever made.”
‘Learning All The Time’
Looking back, it would appear that Garrison’s background, personality, and career all propelled him to the job he now holds. But the route he took was anything but direct.
“I’ve moved a tremendous amount, starting when I was a kid,” the CEO says in a recent interview in his office. Garrison is dressed this Friday in cowboy boots, jeans, and a gray button shirt with a Bell logo stitched above the pocket. In a voice as youthful as his full head of sandy brown hair, he says he’d rather talk about the company.
But first, he’s asked to talk a little about himself.
Garrison’s father was a career Air Force pilot, and his mother, who’s also an Air Force veteran, was a nurse. The couple had five children in six years and moved frequently. Young John was a stand-out athlete from an early age, playing football, basketball, and baseball and using team sports as a way to make friends and fit in when the family moved.
“You learn how to adapt, how to assess a situation relatively quickly and figure out how you’re going to contribute,” he says of his nomadic childhood. “You’re learning all the time.”
By age 12 his father, who retired as a lieutenant colonel, had taken him flying in a Cessna 172. But when it was time for college, Garrison initially balked at a flight career and a slot at the U.S. Air Force Academy.
As a Division I-quality football player, Garrison was recruited by all three service academies and some of the weaker members of the Big 10—Illinois and Northwestern, rather than Ohio State and Michigan. A scholarship was essential for him to get to college.
“The Air Force Academy was on my list, but I didn’t have great eyes and I have a long torso and they’re about flying. It’s a technical skill,” Garrison recalls. “At West Point they said, `We’re going to train you how to be a leader.’ That had a strong allure for me and, after I visited, I cancelled the rest and said that’s where I’m going.”
Garrison lettered in football all four years at the United States Military Academy, playing outside linebacker. He was also a Dean’s List student. “When I go to school, go to a class, I strive to be at the top of the class,” he says. “I’ve always been willing to put in the hours, to pay the price for what is required to be successful. People who work with me say I work hard.”
It’s a quality he says he learned from his mother, who earned her master’s degree in nursing while working fulltime and raising her family.
Jim Sharman, who played football and graduated with Garrison from West Point in 1982, said Garrison was quickly singled out as a leader at the academy. “He was commanding about 25 percent of the student body,” Sharman says of Garrison’s selection as regimental commander. “He had a staff who worked for him. John was like a CEO back in those days.”
Now a managing partner of Truecast Capital, a venture capital firm, Sharman says he and Garrison have remained close friends, fishing together over the years on family vacations in Florida. His best, if not most revealing, story about Garrison involves an early-morning bass fishing expedition to Popolopen Lake during their cadet days.
“It was serious fishing,” Sharman remembers. “John cast his lure into a tree and it stuck up there. It was a five-dollar lure and John wasn’t going to lose it, so he says, ‘I’m going to go up there and get it.’ He starts climbing this 30-foot tree and as he’s going up it topples over and crashes into the lake. John got wet but he got his lure. It was all over for the fishing. That scared fish all over the lake.”
Over the course of what became a 10-year military career, Garrison trained as an airborne qualified Ranger, commanded an artillery unit in Korea, and met his wife-to-be, Janet Estes, on a blind date at the Brown Derby restaurant in the Fort Worth Stockyards. He was taking advanced training at Fort Sill in Lawton, Okla., at the time.
The two got married in Abilene, Janet’s hometown, and spent their honeymoon driving to Cambridge, Mass., where Garrison had been admitted to Harvard Business School.
He had been selected to teach at West Point and, with the Army sponsoring his advanced degree, he thought he’d committed to an Army career. Three years later, however, he found himself stuck teaching at West Point while his peers were fighting in Operation Desert Storm, the first Gulf War.
“I had several senior officers requesting I go, but West Point wouldn’t release us,” Garrison recalls. “Anyone in the armed forces will tell you that you don’t want to watch a war on CNN when you’re a professional solider. That was hard for me. That was tough, I’ll be honest.”
Facing what looked like limited opportunity in the peacetime military of the early 1990s, Garrison bit when the Army began asking for volunteers for a reduction in force. “I had the itch,” he says. “I had gone to Harvard and done well and figured I could compete in the private sector.”
So which opportunity came calling? For Garrison it was Enron, not then a disgraced household name but an up-and-coming Houston outfit filled with some hard-charging executives, one of whom was in his class at Harvard.
Rebecca Mark, who ran several Enron international subsidiaries, had told Garrison that if he ever left the service she’d be interested in hiring him. She made good on the promise and hired Garrison at Enron Power Development Corp. “It was a small group that developed power plants and pipeline projects all over the world,” he recalls. “I worked there three years, principally in South America developing pipelines. The early 1990s were an interesting time to be in Columbia.”
Garrison by then had two young children and was traveling about 250 days a year: “My wife said you should be looking to do something different.” He agreed and moved to Case Corp., a heavy machinery company based in Racine, Wis. “It was a turnaround, and I was brought in as part of a whole new management team,” he says. “I was running their North American business, which was their biggest business unit.”
In 1999, though, Mark came calling again. By that time, Enron had become the seventh most valuable company in the country, and Mark was regularly making Fortune’s list of the top 50 women executives. “She made me one of those offers that was impossible to refuse,” Garrison says. “In hindsight, maybe not.”
Mark’s Azurix Corp., which Enron formed in 1998 to buy a large British water system, was spun out into the market in June 1999, with Enron holding a third of the stock. Garrison signed on as managing director as it set out to buy assets from governments and privatize their water businesses.
Accounts of Enron’s demise such as The Smartest Guys in the Room, by Fortune writers Bethany McLean and Peter Elkind, detail how Azurix overpaid for key assets, encountered political opposition at most turns, and underperformed badly from the start. Only five months after it went public its stock dropped from $19 to $7.75 a share. In the McLean-Elkind account, the seeds of Enron’s collapse—the bankruptcy in December 2001 and the prosecution of several top executives for fraud—were sown when the parent company pushed Azurix’s billion-plus-dollar debts onto off-balance-sheet entities.
Azurix’s losses led to Mark resigning in August 2000, and Garrison taking over as CEO. He describes his three years at the water enterprise as “18 months of trying to build the company up, and 18 months closing it down.
“It was clear the market wasn’t evolving as fast as forecast and capital was constrained,” he says. “A couple of acquisitions could have gone better, but the business model was ahead of its time. At that time, the privatization of the water business just wasn’t going to work on a global basis.”
Assessing his tenure with the only failed business he has been associated with, he says, “You take what you inherit and see what you can make of it. You work an organization through a really tough period and you learn how to communicate bad news. I got a Ph.D. in business in about 18 months.”
In 2002, an executive recruiter in Fort Worth introduced Garrison to Textron, where he took over running its E-Z-Go golf cart division, taking it from losses to profitability. Then he was promoted to president of the Textron Industrial Segment. Seven years later, after managing his unit through the worst of the 2008 financial crisis, Textron promoted him to the CEO post at Bell.
At Bell, a 77-year-old company with more than 12,000 employees, half of them in North Texas, Garrison says he’s made customer satisfaction an integral part of the company’s mission. In setting strategic priorities, importantly, he has emphasized re-establishing its commercial business.
Bell’s V-22 Osprey multi-task military aircraft, a joint project with Boeing being produced primarily for the U.S. Marine Corps, has ramped up production and will peak in 2014. Bell and Boeing have contracts to deliver 40 V-22s in fiscal 2013, and 37 in fiscal ’14. Bell’s other military mainstay is the H-1 attack helicopter. Contracts call for the company to deliver 25 H-1s this fiscal year, and 27 in 2014.
With two wars under way, in Iraq and Afghanistan, until recently, Bell’s military business has been strong for a decade. In fact it accounted for 65 percent of the company’s revenue in 2011, the latest year for which figures are available. But Garrison concedes that Bell’s commercial business, which accounted for 35 percent of revenue in ‘11, had been struggling.
“BeIl isn’t going to be just a military company,” he says. “We’re going to grow our commercial business. If you think about the history of Bell, it has always had a balanced portfolio. It’s really going back to the heritage of the company.”
While Garrison expects to extend the existing military contracts after 2014, he concedes that any extensions are likely to be accomplished in an environment of dwindling Pentagon budgets. Military budgets will be cut, he says, while the commercial market is tied to global economic growth. At the same time, “the market has moved to Europe,” he says, and Bell stands as No. 3 in the world in commercial helicopter production.
The company, which had $3.5 billion in revenue in 2011—a little less than a third of Textron’s total revenue—saw its commercial business grow in 2012. Still, Garrison says, Bell needs to expand its commercial product line. Toward that end, it has invested “a lot of research and development dollars” and is developing a new 16-seat commercial helicopter, the 525 Relentless, which is expected to have its first flight in 2014.
“We’re not going to be a me-too company,” he says. “We must be differentiated.” He points out that most military missions flown for the first time were accomplished in Bell Helicopters. He doesn’t mention another fact: a 1947 Bell 47, with its distinctive plastic bubble cabin, is such an iconic helicopter design that one is on permanent display at the Museum of Modern Art in New York.
These days much of Bell’s new business is coming from China, India, and Brazil, and he’s on the road “a lot” to those regions, as well as to Washington, D.C., and to six major international air shows every year..
On a typical work day, Garrison says, he gets up around 5 in the morning and works out for “an hour, hour-and-a-half” with running and strength training. When he’s in Fort Worth, where’s he has built a new home on the city’s West Side, he arrives at the office around 7:30-7:45 and leaves about 6:30-7 at night. After dinner at home he answers email. “It’s a 24-hour job,” he says. “We have operations around the globe.”
To relax, Garrison says he likes to go to Winslow’s Wine Café “and have a pizza and watch football.” That’s likely to be a Texas Christian University game, where his 19-year-old daughter is a sophomore and he sometimes guest-lectures.
“I love to teach,” he says. “When it’s time I see myself being an adjunct professor somewhere as a third career.” His son, 22, is a senior at Sewanee: The University of the South.
Some of his other favorite Fort Worth spots also run to the casual side: The Tavern, or The Original for Mexican food. For upscale dining he likes Del Frisco’s downtown and Grace. He’s more than comfortable in Fort Worth and, for his wife, he says, it’s next to heaven. “She’s one of those Texans who thought the world ended when you crossed the Red River.”
Bell, he says, “can be successful as a global company with our home being right here in Fort Worth.”
And, he’s not shy about saying Bell needs to be competing with companies in the Silicon Valley for the next crop of outstanding engineers. Engineers like that young prospect who decided to work elsewhere after touring Bell’s “high-school-like” campus.
“We need the best minds to win in a brutally competitive marketplace. You have to have world-class engineering. At the core that’s what we do. We build highly engineered products,” Garrison says. “We shouldn’t be losing engineering talent to Apple or Google, which is creating algorithms to find information we don’t need, faster. Apple makes gadgets. They’re great gadgets, but they’re gadgets. We make these incredible machines.”