No one would accuse Underwriters Laboratories Inc. of moving fast.
After watching nimbler rivals grab ever-larger chunks of business from what was once a comfortable monopoly that safety tested everything from hair dryers to medical equipment, UL finally embraced a new concept: customer service.
It took two years to follow through – slow by most standards, but not bad for a 109-year-old behemoth used to doing things on its schedule and on its terms.
Credit Loring Knoblauch for shaking things up. As UL’s first chief executive with a business rather than an engineering background, he has worked to keep the UL safety symbol relevant. The internal changes have been hard: They include UL’s first-ever layoffs and the poor morale that typically accompanies such upheaval.
Knoblauch insists the not-for-profit must reshape itself to succeed against competition that has chewed away at its once-ubiquitous brand. He figures UL’s U.S. market share has fallen from 100 percent in the 1960s – when it had a national monopoly – to roughly 50 percent now.
“We were a monopoly and acted and thought very much like AT&T before the breakup,” said Knoblauch, 61, a pleasant but no-nonsense businessman with gray hair and piercing blue eyes.
He spent much of his career in management at Honeywell International Inc. and, before joining UL in 2001, he headed a privately held manufacturer of industrial processing equipment. None of Knoblauch’s business experience prepared him for the government-scale bureaucracy of UL, where the average turnaround time on projects when he arrived was 76 days.
Intermatic Inc. in Spring Grove used to hire UL exclusively to safety test its electrical and electronics products for sale in the United States. Now the company also uses UL’s Canadian counterpart, CSA Group – particularly when CSA can do the testing faster.
“If a product is ready to go to market and it takes four weeks for approval from one agency and eight weeks from another, we could lose a month of sales,” said Wayne Veach, head of product development.
Veach has noticed major changes at UL in recent years.
“In the old days, if you needed a product approval from UL, you’d send it in with money and a letter, and they’d call you back and tell you when they thought they’d have it done. That approach has changed significantly,” Veach said.
That is what Knoblauch likes to hear. His goal is for projects to turn around in 20 days on average, something that could take another three to four years.
Many clients are so accustomed to UL’s slow pace that they build extra time into their dealings with the company.
One Japanese client was shocked earlier this year when it requested a certification change that used to take UL a month to complete. When UL processed the paperwork in three days, the client wrote back to say it had been counting on the slower process and needed the certification to run for another month.
UL also has begun offering customers the ability to view some product tests in real time over the Internet rather than flying to Chicago to see the tests in person. This can save time because it is easier to schedule online viewings than a client visit.
Such customer-friendly moves reflect fundamental changes that Knoblauch has pushed at UL, where engineers used to run nearly everything, including quoting jobs, taking orders and handling billing.
Now about 500 customer service representatives at call centers worldwide – roughly 120 of them in Northbrook – do the administrative work.
Engineers focus on their specialties, such as determining the safety of refrigerator doors that have been opened and closed 300,000 times and the burn rate of building materials and mattresses.
“Forty percent of the work engineers were doing was administrative, and it really put a burden on them,” said Peter Serrate, director of customer service for UL in North America and one of 25 top-level executives Knoblauch hired to push forward his vision for change.
Those executives have helped him hire about 1,650 people for customer service and other jobs.
They also helped determine which workers to let go. Knoblauch announced UL’s first-ever layoffs two years ago, and he has let go more than 1,700 employees altogether – the last of them expected to go in the next few weeks – leaving the organization’s headcount relatively even at roughly 6,000.
He calls it “part of our cleaning house.” Although some jobs were eliminated altogether, other workers were asked to leave because of poor performance.
“Some had the wrong skill sets, some didn’t have the energy to work as hard and diligently as we wanted them to,” Knoblauch said.
In a recent memo to employees discussing what he hopes will be UL’s last job cuts, he wrote, “These are not fun times for any of us. But, it is time to hunker down and work together. If we do so, whatever happens in the world, our company will remain strong and vital.”
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And there is plenty of work to be done.
Besides reducing turnaround times on testing, UL needs to rebuild its brand with consumers, who no longer look for the safety mark on appliances and lighting fixtures as they used to.
“In the early part of the century, the average housewife knew our brand pretty well, and knew it made sure they didn’t get electrocuted,” Knoblauch said.
As the UL mark became widespread and retailers refused to carry products without the safety label, consumers began to trust the products they bought were safe. Instead of looking for the UL symbol today, most consumers “have probably heard of UL but may not know exactly what it is,” Knoblauch said.
That leaves UL competing for the attention of retailers, manufacturers and people like building inspectors – among the parties who could be held responsible if a product is not safe.
Competitors have taken advantage of UL’s weakened brand and sell themselves as faster and sometimes less expensive alternatives.
“If we convince retailers that our mark (rather than UL’s mark) will not keep product from moving off shelves, why wouldn’t they consider their options?” said Gregg Tiemann, head of sales and operations in North America for Intertek TLC, a London-based company whose ETL label competes against UL.
Still, Intertek has had a harder time selling its safety testing and label for consumer products than for commercial and industrial wares, where the company is better known.
CSA Group in Canada has not faced the same resistance in the United States, which now represents about 50 percent of its revenues. CSA is the UL of Canada, where it had a safety testing monopoly for decades.
Both companies have worked to overcome their long-held reputations as authorities feared by manufacturers who desperately needed their products to be safety approved.
These days, that heavy-handedness “doesn’t get you very far,” said Rob Griffin, CSA’s chief executive.
Nevertheless, some U.S. manufacturers continue to feel the power of UL.
“If they decide to give somebody a hard time about their listings, they can,” said one East Coast lighting manufacturer, who asked not to be named. “Everyone in my industry is afraid of UL.”
Said UL spokesman Paul Baker, “We’re trying to change that perception. It takes a little bit of time.”
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(c) 2003, Chicago Tribune.
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AP-NY-05-15-03 0610EDT
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