Employees also helped come up with ideas for acquisitions that could make the existing businesses stronger.
“We created a regular review process of looking at our markets that we served and adjacent markets to look for the opportunities that we had. And through a regular process of strategic planning sessions, we prioritized those that we would look to invest in,” Bauer says.
Today, L.B. Foster has more requests for funding new ideas and additional services than it can keep up with, given resource and funding constraints. But Bauer says that’s exactly the problem the company wants to have.
“It is, in my view, one of the things that our people look forward to, because it’s the time when we can talk about the growth prospects and what we can do to make ourselves better. Bringing forward new ideas — I think people always get excited about that,” he says.
L.B. Foster wants innovation to be a part of what everyone thinks about every day. That’s why when the company hires, one of the six core values it looks for is innovation.
To encourage continuous improvement, the company also shifted to a comprehensive approach with better performance measures and a disciplined review process.
“The prior method of the project-by-project basis sometimes used particular individuals to go start up and run a project, but to get to the goal that we had set for continuous improvement, we wanted it to be in the DNA of everybody in the company,” Bauer says.
Adding service to the mix
Its business is spread around the globe, and L.B. Foster identifies markets it can compete in and in which it can carve out a strong position. To grow and improve its competitive position within those marketplaces, the company decided to offer more services, Bauer says.
For example, L.B. Foster sells friction modifiers — most people think of them as lubricants — to manage the interface between a railcar’s wheel and the rails. Managing the friction between those two can lengthen the life of those components and save railroad operators money.
Through its innovation process, L.B. Foster identified that railroads weren’t as effective as they could be and would occasionally discover empty tanks and systems that weren’t working, Bauer says.
“We created a new business model whereby we furnished the equipment and provided all of the service people to install, maintain and manage the performance of all of it,” he says.
L.B. Foster promised uptime performance guarantees of 90 to 95 percent, but it wasn’t easy for the railroads to take those maintenance services away from their employees.
“It’s really substantial to go from selling equipment to a service business model, where you take complete ownership for everything,” Bauer says.
Not only did L.B. Foster have to make sure the service was attractive to customers, it also had to create the model and determine how to transition to it, price it and staff it.
“All of the resources were put in from scratch. It really became a new business for us,” he says.
Because the changes were so significant, L.B. Foster established multiyear agreements for the first time, in some cases, for as long as seven years. Today, L.B. Foster has more than 40 field service technicians embedded within the railroads, which helps create a closer relationship with those customers.
The company also added greater service components to established businesses, acquiring a European company with automation solutions expertise and a small service business.
“By bringing that together with what we already had in the U.K., we expanded service operations to provide more services for projects like the London Underground expansion, where we’re involved in the integration of things like driverless control systems, passenger information networks and operator controls that have to interface to the signaling systems,” Bauer says.
Checking the boxes
L.B. Foster has made six acquisitions since Bauer joined the company in 2012. They were in all three segments — rail, construction and tubular — but tubular has shown the most growth. Previously, it accounted for about 10 percent of sales; today it is about 25 percent.
And while rail remains approximately half the total business, the product offerings now include more services.
When considering potential acquisitions, the company lays a filter over any opportunities, Bauer says. To pursue a company, all boxes need to be checked, helping L.B. Foster stay focused on businesses that truly add value.