You've made some major strategic moves in running Emerson, and you're making more. What's the big-picture thinking behind those changes?
For a company to stay viable and relevant, you have to continuously rebuild. My predecessor ran the company for 26 years. He did it three times. I'm on my second go-round. We're going through businesses that we can continue to invest in and move the company forward, but you have to constantly look at what you have and say, "This car doesn't work anymore. We need to move on."
It is not easy. I went to the board my second year on the job and said I wanted to sell the founding business of Emerson [electric motors]. The board looked at me like I had three heads. But I said the business no longer can generate the growth or returns or cash that we need to make sure we stay competitive and viable. So we found the right buyer, a Japanese company, and moved on.
A large trend that's important to you involves data centers, these vast quiet rooms with no moving parts. Where's the opportunity for Emerson?
You have to manage the power, cooling, and reliability of the data center. And we've built a business over the past 25 years to serve this industry. The trend now is hyperscale-size data centers based on the Googles (GOOG, Fortune 500) and the Facebooks (FB), and the technology there is how to make them more energy efficient and more reliable and try to get as much inside a footprint as possible without using a lot of power and heat. And that's what we do. Simplistically, I want to see energy used, and I want heat generated, because we're going to generate that electricity, and then we're going to cool it.
I would think the outlook for cooling and refrigeration globally must be strong.
It's very strong, especially in emerging markets. In places like China and India over 35% of the food is wasted because it's not properly stored or cooled. So we've developed cooling and refrigeration technologies to help those countries. It's been a huge marketplace for us.
Another Emerson business is making products for homes, which gives you a great interest in the U.S. housing market. Where is it headed?
We're recovering off a very low base. We've been in housing for a long time, making things called garbage disposers. We make 6 million a year in Racine, Wis. We're now working with cities to figure out how to reduce food waste by grinding it and then processing it for energy and fertilizer. Rather than garbage going out into landfills, we're changing the grind, and we're going to send it through a processing plant.
We just made our first investment in China doing the same thing because one of their top five issues is food waste. And by the way, the grinder for China is different from the grinder you have in your house.
The food's different in China. You have rice, and you have more stringy vegetables. So the grinding mechanism is different. It's a unique technology that the average person would never think about.