Willard Oberton

Willard Oberton

For Board Service to Donaldson Company

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Bill Cook, CEO of Bloomington-based manufacturer Donaldson Company, calls Willard Oberton “a fountain of new ideas.” Cook’s take can be trusted: He’s known Oberton since 2005, a few years after Oberton took the reins as CEO of Fastenal Company. Cook had just become Donaldson’s chief executive, was aiming to foster a peer network of business leaders, and had heard glowing reviews about Oberton. A casual lunch soon confirmed the truth of those reviews.

It also sparked a lasting relationship. A year later, Cook asked Oberton to join the Donaldson board, and both CEO and company have benefited from his service ever since.

Experience in the industrial market allowed Oberton to quickly grasp Donaldson’s operations and begin offering his insights. “I understand the landscape that Donaldson sells into very well,” he says. “We also share a similar culture—Midwestern, results-oriented, not a lot of fluff, not a lot of politics.”

Donaldson manufactures air- and liquid-filtration systems and replacement parts, as well as products for controlling emissions. Its diverse portfolio includes filters for everything from heavy-duty truck engines to jet engines to large-production printers. It has more than 140 sales, manufacturing, and distribution locations in 44 countries, including China and the Czech Republic.

Other Current Board Service

  • Fastenal
  • Live Well Winona

Past board service includes:

  • College of St. Benedict (2004-2010)
  • Merchants Bank (1996-2005)
  • Winona Health Services (1997-1999)

Oberton joined Donaldson as its management team was formulating a plan to become a $5 billion company by 2021. The Great Recession soon stifled many companies’ growth initiatives, but Oberton tasked himself with ensuring Donaldson remained on track. “The board is listening and encouraging management to be out there—not beating them up for the next penny,” he says. “They’re a strong company with a strong balance sheet. We talk long-term versus quarterly results.”

Oberton lent his expertise in several areas. For instance, he invited Cook’s team to Fastenal’s Indianapolis distribution center and shared warehousing practices that helped Donaldson improve on-time delivery, reduce inventory, and trim costs.

Since the recession ended, Donaldson has experienced steady growth. The company, which employs 12,500 worldwide, saw sales skyrocket 22 percent in 2011 and climb another 9 percent to $2.5 billion for the fiscal year that ended July 2012, making it one of Minnesota’s 25 largest public companies. Fiscal 2012 profits, meanwhile, soared more than 17 percent, to $264.3 million.

In recent months, ongoing economic uncertainty and weakness in certain end-markets have hindered sales. For the first nine months of its latest fiscal year, revenue dipped 2 percent, to $1.8 billion; earnings, meanwhile, slid 10 percent, to $175 million. But Oberton is helping Donaldson keep its eyes on the road far ahead, by pushing for the company to follow through on planned investments in technology, research and development, and new international facilities.

“Will specifically has helped me keep the vision and make sure that while we navigate through the short-term cycle, we’re also making the right decision for the long term,” Cook says.

Oberton also has supported domestic investments in technology infrastructure, such as a recently announced $10 million upgrade that will outfit Donaldson’s Bloomington laboratories with new equipment to improve testing capabilities. This new equipment, in turn, will boost efficiency and cut costs.

All told, Oberton jokes, Donaldson’s story has been a boring one—but boring can be good. Since he joined the board, “there haven’t been great big product breakthroughs; they’ve made a couple of acquisitions, but nothing that really moved the needle,” he says. “They’re hitting singles and doubles—they’re not hitting home runs. But it’s singles and doubles that win the game.” Oberton notes that investors have long benefitted from Donaldson’s average compound annual growth rate of about 17 percent: “Not many companies in the Twin Cities can say that.”

Donaldson has benefited from Oberton’s insights, but the benefits work both ways. Oberton says his board service has made him a better leader at Fastenal, a $3.1 billion company. “It gives me a great perspective on things,” he says. “[Donaldson] is much larger on an international scale than we are, so I get a better update on what’s going on in China, Europe, and other [regions] they’re located in.”

Oberton, who has also served on the boards of the College of St. Benedict, Merchants Bank, and Winona Health Services, learns from his fellow board members. He thinks that the diversity among Donaldson’s 11 directors—who include leaders from industrial backgrounds, like Toro Company CEO Michael Hoffman, as well as many other fields, such as its latest addition, U.S. Bancorp Chief Financial Officer Andrew Cecere—is key to the board’s strength. “You bring smart people together, and steel sharpens steel,” he says, adding that he often “sits back to listen and learn for a while.” That said, Cook notes that while Oberton may be quiet, “when he says something, people sit up.” That sharpness is key to a successful board, Oberton thinks. His advice for building a board: “Work very hard to find people who will speak their mind constructively—you don’t want to fill your boardroom with only people that agree with you. Your company will only get stronger if you challenge it and challenge yourself.”

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