Manning the Switch Featured

8:00pm EDT July 28, 2005
Union Switch & Signal Inc. is poised to roll out a new technology that will be a head-turner in the industry, a leading edge solution that has the potential of saving the rail industry hundreds of millions of dollars every year, says Ken Burk, president and CEO.

That’s the kind of innovation that earned Union Switch & Signal Inc. a reputation as a leader in the rail industry for its signaling and switching technology, something it had built a solid reputation for since George Westinghouse launched it in 1881.

But during his first year or so at Union Switch & Signal, Burk got a taste of why the company, if not derailed, had been diverted from its traditional path of success during its recent past.

When Union Switch & Signal completed the first phase of its work on the Copenhagen (Denmark) Metro light rail system in 2002, the six-year project was a triumph for the company. The driverless system, controlled by Union Switch & Signal’s automatic train control system, is one of the most advanced in the world and the first of its kind to achieve the valued CENELEC certification issued by the European Committee for Electro-technical Standardization.

That project has led to other similar opportunities, including a contract for the 900-employee company to build a driverless system in Italy and serious interest from potential clients in Finland and Greece.

But while things were rosy in Denmark, there was less to celebrate at Union Switch & Signal’s headquarters. Extreme attention to the cutting-edge Copenhagen project drained the company’s resources and, ironically, took attention away from innovation in other areas.

“The Copenhagen project cost the company quite a bit,” says Burk. “It was very, very expensive to do what we did, especially the certification part.”

And the Copenhagen project wasn’t the only one that had put a drag on Union Switch & Signal. Not long after the company landed a lucrative $15 million project for the Chicago Transit Authority, things soured with the electrical installer on the project.

“We got started on the wrong foot, but actually, it was a good thing,” says Burk.

That story had a happy ending. Burk smoothed the wrinkles and got the project — and the relationship with the installer and the customer — back on firm footing.

“Now, the customer loves us, the installer loves us and we got repeat business out of it, so it’s probably our best success story,” says Burk.

Burk and his team rescued the job, but the experience, he says now, was a wake-up call for the company, a clear signal there needed to be a change in the way it managed projects. The focus turned to better execution, and Burk spent lots of time with his sleeves rolled up, participating in project reviews to stay on top of jobs and nudge them along, and shuffling per

sonnel to put the right talent where it was needed most.

“I think it was just really focus and discipline rather than process change,” Burk says.

A work in progress
Burk came to a troubled Union Switch & Signal four-and-a-half years ago to engineer a turnaround, a process that, at the time, he thought would take about three years. Nearly five years later, there is still work to be done, Burk says, but adds that Union Switch & Signal has made significant headway.

“It’s really a work in progress, that’s the reality,” says Burk.

Burk’s strategy for returning Union Switch & Signal to pre-eminence in its industry has been essentially to emphasize improved project execution and to realign management to allow it to focus on four key functional areas: developing product solutions, supply chain excellence, customer focus and innovative excellence.

“We have an executive in charge of four very important areas of the company,” says Burk, “so they’ve got plenty of room to run, but not so much that it’s uncoordinated.”

A new team
“I’ve worn two hats over the last four years,” Burk says. “I’ve been, the way I describe it, acting CEO and acting chief operating officer and doing 50 percent of the job in each one, and that’s not good enough.”

Over the past year, Burk has assembled an executive team with four new key members — a new COO, CFO, and vice presidents of manufacturing and supply chain management, and sales and marketing — all with experience in their respective disciplines at large companies.

“Basically, what we’ve done is we are positioning the company for growth, so the new people who have been brought on are considered more of an investment in our growth strategy,” says Burk.

The new structure, Burk says, supported by a $100 million infusion of capital by Union Switch & Signal’s parent company, frees him up to spend more time with customers and potential clients, and interacting with government officials, who often exercise decisive influence over spending on transportation infrastructure projects. But that doesn’t mean he’s isolated from the day-to-day operations or unwilling to wade into the details of a project or an initiative.

“I’m a very challenging person to deal with myself,” says Burk. “I’m a very engaged person. I will concern myself with the details when I need to because that’s how I found my own ability to be successful. I need to be able to go deep. I can’t spend all of my time in that world, but I can challenge and engage people so they feel like we match up well, and I think that’s what we’re looking for here, a team that is openly engaged so that it’s not running off in four different directions.”

Burk, whose tenure at the company is the longest of any CEO at the company in the last 15 years, acknowledges that a lot of change at the top in such a short period can create uncertainty and confusion among employees.

“There’s no question that when you bring a number of people in at this level, there are a lot of moving parts, so there is a normal amount of churn,” says Burk.

To counter any ambiguity, Burk says, the company has initiated periodic “press conferences” with employees, voluntary events at the company’s headquarters where executives answer questions posed by employees, sent via e-mail or submitted anonymously. Those meetings are in addition to quarterly company meetings, which all employees attend.

“We’re really working the communications to address this concern about, ‘Gee, we’ve got these new people and we don’t really know who they are,’” says Burk.

Additionally, Union Switch & Signal, privately held by Ansaldo Signal N.V., a Dutch company owned by

Italian industrial conglomerate Finmeccanica S.p.A., shares its financial performance and its strategy with its employees.

“We are trying to build a culture of trust, and that is why we want to share this information,” says Burk.

Renewing innovation
Burk says Union Switch & Signal has redoubled its efforts to be more responsive to its customers and to leverage its expertise in two areas, software that controls rail systems and the switching, and relaying hardware it designs and manufactures to produce complete solutions.

“We’re not a commodity business, but we believe that the company is positioned and is positioning itself to be a leader in bringing solutions to the customer, in some respects custom solutions integrated to fit their needs and, there again, the management change was viewed as important to strengthen this particular area,” Burk says.

To stay at the head of the pack, Union Switch & Signal has to work closely with its customers, says Burk, finding out what their needs are and then devising solutions to meet them.

“It’s more comprehensive solutions that we’re looking to do, and we really want to build relationships in the process ... so that we can be viewed as a technology partner,” say Burk. “Again, we don’t want to be a commodity, we don’t want to sell razor blades.”

The growth factor
Burk says Union Switch & Signal’s long-term goal is to double the company’s size, through both acquisitions and organic growth. Acquisitions, he says, likely will be product lines that will complement what the company is already doing, “so that we don’t have to do it all ourselves,” Burk says.

Another nearly sure bet is a venture in China, where the government virtually requires that any company doing business there to have a domestic business partner.

But regardless of the changes it makes in the executive suite or which acquisitions it makes, Burk realizes that the bottom line for Union Switch & Signal is showing its customers that it can deliver and make the trains run on time, figuratively as well as literally.

Says Burk: “In order to build credibility and restore credibility with our customers, we’ve got to perform.”

HOW TO REACH: Union Switch & Signal, http://www.switch.com