Bright transition

Executive Summary
Company. Sun Hydraulics Industry. Manufacturing Key. Company has worked on a leadership transition for several years.

Fresh out of college in 1989, Wolfgang Dangel, a native of Stuttgart, Germany, faced an unusual obstacle to landing a job: the Berlin Wall.

That's because the wall's collapse not only freed people from communism. It also opened the floodgates for thousands of Germans who sought work in a western society for the first time. These Germans, while not familiar with freedom and capitalism, were trained in engineering and other technical fields. That made getting a job a crowded proposition.

So crowded Dangel, then 27, moved to South Africa, where he found work with a crane and parts manufacturer in Johannesburg. Dangel has since held executive positions for fluid power and precision manufacturing companies worldwide. He was president and CEO of hydraulic giant Bosch Rexroth North America and he was president of Schaeffler Automotive Group, which makes engine parts and components. He's also been a board member of the National Fluid Power Association.

Dangel's latest stop is Sarasota, where he was recently named CEO of screw-in valve manufacturer Sun Hydraulics. The publicly traded company, with more than 900 employees, including 675 in the Sarasota-Bradenton market, is one of the largest employers in the Sarasota-Bradenton region. Dangel, 52, has been on Sun's board since 2009.

“Sun is an admired icon in the industry,” says Dangel, in his first media interview since being named CEO. “Sun is doing very well, and I don't intend to make big changes.”

The beginning of Dangel's CEO tenure, which officially starts April 1, marks the end of the executive career of Al Carlson, Sun's previous chief executive. Carlson, 65, joined the firm in 1996 and was named CEO in 2000.

The company has some noteworthy growth lines under Carlson's leadership. That includes: a 150% increase in annual revenues, from $80 million in 2000 to $200 million last year; a 1,315% rise in stock price, from $2.41 a share May 19, 2000 to $34.11 March 10; and annual profits that have more than doubled, from $21.4 million in 2000 to $49.23 million in 2015.

In addition to growth, Sun also stands out for its unique operations structure, which is based on a flat, or horizontal management system, where there are no titles and hierarchy. Sun's success with the model, where teams of employees have wide latitude in making decisions, has been written up in several books and the Harvard Business Review. Dangel's business card even omits his new title; the CEO designation is for public filing requirements.

With clients worldwide, Sun makes and sells high-performance screw-in hydraulic cartridge valves and manifolds that control force, speed and motion in fluid power systems. Clients are mostly industrial equipment and machinery manufacturers, and Sun products can be found everywhere from train cars nationwide to 800-ton dockyard gates at a shipbuilding facility in England. The firm was founded in 1970, and went public Jan. 9, 1997.

Carlson, even with the firm's 15-year run of success, has no intention of being a retired CEO who will jam his opinion around everywhere. He says will pursue other interests, including possibly buying a boat. And Carlson, a Milwaukee native who grew up on a dairy farm, joined the board of Mayville, Wis.-based supply chain firm Mayville Engineering Co. in January. The firm has a suite for board members and executives at Lambeau Field — an especially key perk for Carlson, a lifelong Green Bay Packers fan.

Carlson will also stay on Sun's board. “My role is to be available to answer questions,” Carlson says. “I'm not going to direct Wolfgang to go to the right or go to the left.”

Shadow approach
The transition from Carlson to Dangel, say both executives, has been deliberate, paced and smooth. Carlson's retirement and Dangel's appointment were both announced in September.

Dangel has spent a chunk of the months since shadowing Carlson. He's met multiple area executives and economic development officials, and the pair, who share low-key, personable and candid leadership styles, also went to Japan and Korea together to meet with customers. Says Dangel: “I'm following very closely what Al does.”

Dangel has also set up employee meet and greets. Through early March he estimates he had met with about 150 Sun employees, to learn about their personal lives and their perspective of the company.

In 2011, when Carlson turned 60, he and Sun's board members began to methodically think about succession. There wasn't a 65-and-out mandate, but the goal was for Carlson to exit, with a new CEO in place, by that time in spring 2016. Carlson came up with a 10-bullet point list, written on a cocktail napkin, of the attributes the next CEO should have.

Sun's board began to look for a replacement. The firm hired a recruiter, and looked at a few candidates.

“But pretty soon it became really clear that it was a challenge to find the right person,” Dangel says. “If you are not familiar with the culture of this company it could be hard to step right in from day one.”

Dangel, named vice chairman of Sun's board in December 2012, was then flattered, and surprised, when a few board members approached him in 2014. The question: Would you consider replacing Carlson?

'Sweep the floor'
Dangel, whose parents ran a textile business in Germany when he was growing up, has some familiarity with his new home, outside of Sun. He lived in St. Petersburg in his early 20s, part of a student exchange program with Eckerd College. He's also owned a condo in downtown Sarasota for several years, for a place to stay during Sun board meetings.

One part of Sun Dangel says he will steadfastly protect is the company's counterintuitive long-term outlook in a Wall Street world where short term is often king. Dangel recalls how impressed he was early on in his board tenure, when, on an earnings conference call he heard Carlson tell analysts a quarterly drop wasn't much of a concern. Carlson instead focused on more positive long-term trends.

Carlson says the long-term approach goes back to 1997, when he and other executives talked with the Wall Street investment bankers from A.G. Edwards taking the company public. One savvy banker, says Carlson, told Sun officials “'if you stay the course you will get the investors you deserve.' And that was great advice.”

Proof comes in several Wall Street firms, including T. Rowe Price, that have held on to Sun's stock, at some level, for at least a decade.

Carlson's current task, to find his next life chapter — beyond rooting for the Packers — has the potential to be significantly more pleasant than quarterly earnings calls. He's been involved in multiple community organizations, including a prominent voice with Junior Achievement, for many years. And he's been working in one form or another for nearly 50 years, so doing a bit of nothing has its appeal, too. Says Carlson: “The challenge is to be busy on day one, but not too busy on day two.”

The other major force in his life, Sun, is in good hands, he says. Not only with Dangel at the helm, he says, but also with a loyal and dedicated workforce. “People here make good decisions,” Carlson says, “right down to sweeping the floor.”

Stick with It
When Al Carlson took an executive marketing job at Sun Hydraulics in March 1996, he didn't think he would be CEO in four years.

His rise in the firm is more a case of good timing and a commitment to a right-people-in-the-right-seats strategy at Sun. When Carlson got to Sun, according to a chapter in the 2014 business book, “Reinventing Organizations,” by Frederic Laloux, the company had problems shipping products on time, not in marketing. “Carlson found himself spending most of his time pleading with customers to cancel just their order, but not the relationship,” writes Laloux, who spent a few weeks with Sun researching his book. “The urgent need was to fix delivery times in manufacturing, not to market the products better.”

Carlson was going to leave Sun, and seek a marketing job with another manufacturer.

But then-Sun President and CEO Clyde Nixon suggested Carlson probe the Sun manufacturing process for solutions to the shipping issue. Carlson did that. He eventually oversaw a shift to a new manufacturing system, which “involved disbanding the scheduling department,” Laloux writes.

Sun started shipping on time, and Carlson found himself in line for the CEO post by spring 2000. Writes Laloux: “Having made himself a reputation for getting things done using self-managing methods, even in an area where had no prior expertise, he became the new CEO when Nixon retired three years later.”

— Mark Gordon

At a glance: Wolfgang Dangel

Position: CEO, Sun Hydraulics

Born: Stuttgart, Germany

First job: Industrial merchant

Education: Degree in marketing and international business from the University of Applied Sciences in Rosenheim,
Germany.

Global experience: Has worked 10 years in Asia; six years each in the United States and Europe; and four years in South Africa.

Leaders he admires: People who have made a long-term impact on others, such as Nelson Mandela and Mikhail Gorbachev. “I admire people who have made sacrifices and who have the guts to do the right thing,” he says, “even if it was very painful personally.”

Hobbies: Follows the NFL and European soccer. He's also a big NHL fan, especially of the Tampa Bay Lightning and Chicago Blackhawks. He has been to Amalie Arena in Tampa many times for games.