Jagdfeld: Coronavirus brings increased demand and new challenges to Generac

Last updated on April 14th, 2020 at 02:10 pm

In a normal year, this would be a slower part of the year for residential products at Waukesha-based generator maker Generac Holdings Inc.

The spring is an in-between time from the winter storms and hurricane season that both drive interest in Generac’s standby generator products.

This, of course, is not a normal year.

“Seasonally, it feels more like the summer season,” said Aaron Jagdfeld, chairman, president and chief executive officer of Generac.

When the coronavirus hit and states began instituting shelter-in-place orders, Generac saw an increase in demand for its portable generators. That interest has now shifted to the company’s standby models, which Jagdfeld attributed to consumers giving more thought to their power security.

“There’s just an overarching anxiety,” he said. “I think everybody has a much higher level of anxiety these days and what happens in that residential business is when we see anxiety levels go up, people tend to think about generators and things like that a little bit more.”

Residential products accounted for almost 52% of Generac’s $2.2 billion in net sales last year. The other major part of the company, commercial and industrial, accounted for 39.5%. The C&I (commercial and industrial) side of the business has seen a more complicated response to the coronavirus outbreak. While the company’s products are in demand in health care and telecommunications markets, the need for generators used for the mobile products industry in oil and gas and construction markets has fallen off.

“It’s almost like the spigot got turned off overnight,” Jagdfeld said, adding the company will need to keep a close eye on the rest of its industrial business.

“As we’ve had pullbacks in the economy before, the way it impacts our industrial business is … generally a couple months from now we would see a pretty good sized air pocket there,” he said.

Managing through a spike in demand for its residential products is also nothing new for Generac, the company regularly sees increased interest following major storms and hurricanes.

That doesn’t mean it is easy.

“Crisis management is difficult, that’s just the reality,” Jagdfeld said, adding that early on during the outbreak the management team identified that the conditions felt a bit like managing through another major event. “Everybody’s got a higher sense of urgency, you’re scrambling.”

Generac actually had to hire at its Whitewater facility to help keep up with demand, which meant holding a virtual job fair for the first time. The company also has seen increased absenteeism after encouraging employees who might be at a higher risk for coronavirus to stay home if they need to.

The outbreak has also brought a digital element to the sales process, which usually involved an in-home consultation between a dealer and a potential customer. Generac had already been working on a virtual sales process but was yet to launch it.

“We were afraid to roll it out because we think in the sales process it is really important to have that kind of physical contact,” Jagdfeld said, adding that before the coronavirus there was no real pressure to launch the offering.

He was also skeptical it would be more successful than the traditional process, but the early returns suggest dealers are seeing better close rates and saving on time spent commuting to a customer’s home.

“It’s working much, much better than I would have ever thought,” Jagdfeld said, adding the early performance could be a result of customers’ willingness to work online right now and a heightened level of anxiety, including around power security. “It could just be circumstantial right now but it is interesting to me because I would not have believed it unless I had seen the data with my own eyes.”

Like many companies, Generac has also gone virtual with many of its employees working from home. Around 75% of professional and technical staff in the company is working remote and rotating through the office one week per month to handle tasks that can’t be done remotely. The change amounts to 1,000 people changing the way they work on a daily basis.

“This is one of those areas where if I had been a betting person, I would have said we’re going to struggle with that, but actually the teams adapted really, really well,” Jagdfeld said.

He credited Generac’s familiarity with crisis management for easing the transition, noting the company has protocols in place to communicate in high stress environments. The difference is usually Generac is focused on helping customers through crisis situations but now employees are personally impacted by the challenges.

“Managing through this is all about engagement, it’s keeping the employees engaged, making them understand also why we’re still open,” Jagdfeld said. “As much as we have employees who love to be part of the solution and helping people, we have a lot of people who are like, ‘Hey look, I’m putting myself and maybe my family in harms way by continuing to work, you’ve got to explain to me why.’”

In most cases, Jagdfeld said it would be ideal for a company to manage by having policies and procedures to make sure everyone is treated the same way. With the coronavirus, he said it is better to have guidelines to help tailor the company’s approach.

“Not every person is dealing with this in the same way and so therefore we can’t manage the way we might normally manage with a policy or a procedure,” he said.

Jagdfeld added the challenge of remote work isn’t purely technical.

“Just saying take your laptop, go work from home, that’s actually not hard,” he said. “The hard thing is managing from home or leading from home.”

He has encouraged managers to hold daily meetings with their teams and use video whenever possible to keep people connected. The company has also had to help train managers, Jagdfeld said, noting leaders know how to go stand by someone’s desk and have a conversation, but working through a difficult situation remotely adds a new challenge.

“That’s a different kind of skillset and we had to bring people up that curve as quick as we can over the last 30 days,” he said.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.