Edward Doheny: Joy Global Is Committed to Mining; The CEO’s Take on the Slumping Industry-and His Own Beginnings

March 13, 2014 Leave a comment

Edward Doheny: Joy Global Is Committed to Mining

The CEO’s Take on the Slumping Industry—and His Own Beginnings

JAMES R. HAGERTY

March 9, 2014 7:47 p.m. ET

Edward “Ted” Doheny, chief executive of the mining-equipment maker Joy Global Inc.,JOY -0.53%

has been in training to be a CEO since he was a teenager, when he ran fruit and vegetable stands in suburban St. Louis to help pay for his education.

After college, Mr. Doheny was put on a fast track for managers with high potential atIngersoll-Rand, IR +1.01% a maker of air conditioners, pumps and other equipment.

At one point early in his career, he wrote down his ambition: to be a CEO by age 50. He nearly made it, becoming chief executive of Milwaukee-based Joy in December at age 51.

Mr. Doheny was just in time to preside over a deep slump in orders for mining equipment amid lower prices for coal and other commodities. He is reminding investors and employees of the world’s long-term needs for more energy and minerals, while pushing Joy to increase its sales of replacement parts and supplies to owners of its equipment. He also is trying to reduce Joy’s heavy reliance on coal-mining equipment, which accounted for 62% of revenue last year, by increasing sales of products used to claw such metals as silver and gold from hard-to-reach deposits.

Here are edited excerpts from our interview with him.

The Market for Mining

WSJ: Is mining equipment the wrong place to be now?

MR. DOHENY: We’re not running from mining. Some of our competitors, more diversified, are saying, “We’re not all that much in mining.” Good news or bad news, we’re all about mining.

WSJ: Are you too reliant on the coal industry?

MR. DOHENY: Our strategy is not to run away from coal, but [to look at] how we can bring our mechanized mining to other minerals. Hard-rock mining today [used to extract metals] is primarily done through drill and blast, through dynamite—a fairly inefficient process. We believe there is a huge opportunity for mechanized mining methods to help in hard rock.

The minerals of tomorrow are going to be tougher to get than in the past. They are not just lying out there in an open field. Mining companies have to go to deep, dark places. They’re going to have to use some incredible technology. And we have to be investing in those solutions now.

WSJ: What is it like competing with a global giant like Caterpillar Inc. and with scores of emerging companies in China?

MR. DOHENY: Caterpillar is a tremendous company. We wake up every day thinking they’re doing something that we’re not and we should be doing. The Chinese have a cost structure right now that we can only dream of. We wake up every day and worry that they are going to be working harder than we are.

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WSJ: Joy bought a Chinese mining-equipment company, International Mining Machinery, for $1.4 billion in 2011. How is that working out?

MR. DOHENY: We bought it when the market in China was booming. We paid a premium for the business. Strategically, the same reason we bought it is still there, even more so. Nearly half the world’s coal is produced in China. We wanted to buy a leading local manufacturer.

What we’re doing is injecting [our own] process, people and products [into the Chinese company], but we’re doing it a different way. If you force a Western product into China and try to sell it as a local product, it’s very, very difficult. So, we ask our Chinese colleagues: What can we do to modify those products to give you competitive advantage?

We have to win in China. We have to look like a Chinese company. But we have to be a Chinese company that’s world class.

WSJ: Some people say the Chinese won’t pay a premium for higher-quality equipment, even if it lasts longer and would save them money in the long run. Is that a problem for you?

MR. DOHENY: As they get more data-driven, they’re looking at their total costs. The Chinese customers are getting very sophisticated.

WSJ: How long will the market for mining equipment remain weak?

MR. DOHENY: I don’t know. We’re planning for the worst and hoping for the best.

Being a Boss

WSJ: How did running a fruit stand help you with your executive career?

MR. DOHENY: Adversity defines you early in your life. While my wealthy friends were doing other things in the summer, I was working to pay bills and pay for school. It was a tremendous opportunity.

WSJ: What is your approach to developing tomorrow’s leaders at Joy?

MR. DOHENY: You take your best people and put them on your biggest problem and your greatest opportunity. Who you hire and who you promote are the two most important things a leader does. Surround yourself with people who are better and smarter than you. People smirk when you say that. I truly believe a great leader has to do that and be confident about it.

I’m not big on telling people what to do. If I find myself telling them what to do too much, I don’t have the right leader in place.

WSJ: What are some of the attributes of great corporate leaders?

MR. DOHENY: They are fiercely competitive, but humble. They can make fun of themselves. They know they can constantly get better. Their biggest fear is they aren’t working hard enough because someone else is.

WSJ: What’s an example of bad leadership you’ve seen?

MR. DOHENY: People doing something privately that is different from what they would publicly state as the right thing. A leader bragging about firing someone. That’s always bothered me. Firing people is a very difficult process. It’s horrible.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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