INTERNATIONAL: Dee Kapur brings own brand of boldness to International

By Lyndon Finney
The Trucker Staff

8/10/2007

WARRENVILLE, Ill. — When he was ready for high school, Dee Kapur’s parents made a decision that would have a direct and long-lasting impact on his life — and although they didn’t know it at the time — the American automotive and trucking industry.

And they didn’t even live in the United States.

“I finished high school in India. It was a boarding high school where you are a Catholic boy in an all-male school,” said Kapur, now president of the truck group of International Truck and Engine Corp. “It was up in the mountains and you were sequestered for nine months of the year and your parents would visit maybe two or three days during that time. So you sort of develop a drive to break out in some fashion and do something different.”

And break out he has, deciding to leave his native country as a young man and seek his life’s work in the U.S.

Coincidentally, it was a decision that no doubt was made easier by another aspect of his educational background.

“The first school I went to when I was 4 or 5 was the American International School in Vienna, which is where my dad was stationed back in the 1960s,” Kapur said during an interview in his office at International’s headquarters in this Chicago suburb. “So for a couple of years you are in that environment and you gain some of that belief system and that thinking and so I’m sure a seed was planted way back then.”

He began his post-high school education at the India School of Technology in New Delhi, but after two years received an opportunity to transfer to Stanford University at Palo Alto, Calif.

By that time, he was at least giving thought to a career in the transportation industry, although not necessarily trucking.

“I don’t know about [considering a career in] trucking, but automotive for sure,” he said “I remember that my dad’s younger brother was in the Army in the late 1960s and went and bought an MGTC from the 40s. He thought that was a great sports car and it was at the time in India, where there were very few choices, and he got this off some privileged person. We worked on it and somewhere there a bug was developed. An interest in cars was not hard to develop.”

There weren’t many cars available in India at the time, he said.

“There was a dated Fiat, there was a dated Triumph and there was a car called the Ambassador,” he recalled.

But Time and Life magazines were available and all the brand new, “fantastic” models coming out every year helped whet his appetite for cars.

After graduating from Stanford and then earning his MBA at Carnegie Mellon, he never really gave much thought about returning to India, he says now, because there just weren’t many opportunities there.

But Ford Motor Co. did come calling and Kapur went to work there two months after he earned his master’s.

At Ford, Kapur made an impact on the American automotive market.

Although modest about his accomplishments there, according to a published article from the Wharton School of Business, Kapur ran the most profitable line of vehicles in the U.S. and was part of the group at Ford that helped transform the SUV and pick-up truck from a service vehicle to a lifestyle vehicle.

“There were so many highlights of my career at Ford,” he said. “Off the top of my head two or three come to mind. One, I was stationed in Japan for three or four years (during his lifetime Kapur has lived in seven different countries) and that was a great growing and learning experience for me. I worked in body engineering and seat and switch systems and ended up patenting a few of those. That was a real achievement. And then in the later part of my career in general management [I was] working on the F-150, the Expedition, the Navigator and saw those models become very profitable — back then. They are probably still profitable today, but less so.”

It was a combination of influences that led him to International in 2003.

“Ford at the time had elected to collapse their trucking division, which is where I worked, and integrate it with cars. “We long-time truckers sort of felt like we got the short end of the stick on this one. So there was a little bit of personal anguish. That was one ingredient. I was 48 at the time and thought, ‘well what do I want to do. If I stick around here, I’m going to have to stay here another six or seven years and then I’m in my 50s and it becomes even harder to move.’ Then this opportunity sort of presented itself.”

Through his work at Ford, he’d become acquainted with Daniel Ustian, then head of the engine group and now president and CEO of Navistar International, the parent company of International Truck and Engine.

The two talked about Kapur coming to International, and although there were mixed emotions about leaving Ford, he took the job at International.

International’s history, as much as anything else, sold him on the company.

“I did a little research and I found that the roots of this company went way back,” he said. “Almost like Forrest Gump, this company found itself at crucial historical points when decisive events occurred. I found that really fascinating and enjoyable. Then I looked at what was going on and the opportunity to do something pretty dramatic was there. So I thought, well I’m 48 and I have many good years left, let’s see what we can do.”

But sometimes, a company’s long and storied history can lead to complacency and when he got to International, Kapur found he had some real work to do to return International to its appropriate place in the commercial vehicle market.

“[When I got to International], I found several ingredients I expected to find. It is a very proud company with longtime loyalties and relationships — a huge pool of owners out in the marketplace,” he said. “But I also found a company that had been playing defense for a long time, and probably justifiably so based on the wrenching time of the mid 1980s. And that’s where I said, ‘okay, I could go to a company such as GE that’s hugely prosperous and a steamroller and keep going on that and ride that strength. Or I could go to a company that’s kind of shrunken down a little bit’ and then you can really see what you are made of. You could see what kind of leadership skills you could apply and bring it back to blossom – which I believe is happening.”

Was the company relying too much on its history and traditions?

“Yes, I think for sure there was a piece of that,” Kapur said. “As they gathered themselves up from the quote-unquote ashes of the old International Harvester and started to look at the new world, I think they struggled for a while to figure out what are we about and how do we focus and what do we do.  Now, we’ve got a plan that’s making customers take notice.”

So before he could be concerned too much about building new trucks, Kapur set out to change a mindset.

“The first thing I did was to try and build a team again and get people to appreciate their roles on the field,” he said. “I had to build an expectation that we had to build a defense for sure, but we have to throw some passes, too. We have to gain some yards. And getting that shift in mindset from not losing a lot to winning a lot was a big cultural shift and it’s still going on, frankly. So getting the mindset changed was the first thing.”

It didn’t take him long to get his team off defense and onto offense, and by early 2004, Kapur was ready to take on probably his first real truck manufacturing challenge.

Not since the early 1970s had International introduced a fully-new Class 8 platform, and in April 2004, Kapur found himself standing in front of the International board ready to ask for $300 million to develop a new truck.

“As we looked at the total product line-up, we had a pretty new truck in our medium truck business, but we had an extraordinarily dated truck in the heavy truck arena,” he said. “Thanks to Ustian’s thinking even before I showed up, we had already come to the conclusion that we couldn’t exit the heavy truck market and be a player in trucks. It was the biggest market, albeit the most cyclical and competitive. It was the most visible brand wise and at times potentially the most profitable. So when we looked at our heavy truck line-up and compared it to the market, it was clear we had to do something. We said, “it’s almost at the point of nothing to lose, we have to go do something.” So we took the thinking that had already been in place and tried to shape it and formalize it and make a business case around it and that resulted in the ProStar.”

The ProStar is now the company’s flagship in the Class 8 market.

Developing the ProStar was part of Kapur’s nature as a risk taker.

“It was not an easy job to go to the board and say I want $300 million for a truck in a business that we hadn’t made a lot of money in, where we were kind of the odd man out for some years and our dealers in some cases had checked out,” Kapur said. “That risk was something I embraced. Yes, it’s a risk, but I think it’s something we can manage and we can shape and so here we are. I think the Big Bore engine that we are going to introduce in six months is another risk. To do a proprietary Big Bore engine at the emissions levels that we have heading to a new emissions level in a relatively short period of time and to go up against the big boys, I think that is risky. I think that’s going to pan out fabulously for us.”

As much as introducing a new truck, the development of the ProStar was good for the company in other ways, Kapur said.

“What we looked at the ProStar for was to change the game from the drivers’ standpoint and then from an owner’s standpoint,” he said. “So [during the development process] we tried to incorporate into the driving experience some of those attributes you would expect from your personal pick up truck or your SUV. So we focused a lot on ride comfort, steering, wind noise, NVH, ergonomics and we built that foundation. We said, ‘okay, that’s good for the driver, now how do we make the operating costs as efficient as possible?’ Obviously fuel efficiency, obviously time for scheduled maintenance and obviously reliability and durability. So those two things wrapped in an appealing package were kind of the genesis for the ProStar. It was the first time we’d done something this big in a long time, so getting people to just recalibrate their thinking in this way was just as much of an exercise as doing the product.”

Kapur and his associates are still awaiting a final verdict from customers.

“It’s too early to say, but I have to tell you anecdotally, it’s [customer response] been great,” Kapur said. “The testimonies we hear from drivers, from people who just deliver trucks and from some of our major customers who have done some good testing on things like aerodynamics, has been very, very heartening.”

So almost four years into the job, Kapur feels International is definitely headed in the right direction.

It’s his management style to set high expectations and he’s pretty demanding, he said.

“But I try and get to the goal through a combination of persuasion and cajoling and getting alignment and integration. But I’m not very happy if we are not getting there,” he said. “So a lot of our leadership respects that, but there is still some apprehension with respect to the old way of you scratch my back and I’ll scratch yours and we’ll take care of each other and now if something is missed, I’m looking for an explanation and why it’s not going to occur next time. So my style is a little bit of being demanding, being fastidious, expecting — especially on the product side — some really, really crafted work.”

And, he likes the results he’s been seeing.

He describes the company as a group of highly motivated people with dependent relationships built on an anxious desire to do something bold.

“We have very loyal people and long timers. I think there is somebody here who’s been working here 60 years.  I think a lot of eyes have opened in recent years what with Ustian’s ascension and my coming here and other changes that signaled ‘okay the time is now to do something pretty dramatic.’”

It’s a group of people and a company that Kapur believes reflects the U.S.

“This company almost as old and it’s been part of the building of the country from agriculture to construction to infrastructure,” Kapur said. “I don’t think a lot of companies can say that. So we have this huge, I believe, obligation to our heritage to say we are going to continue to build and continue to reflect the innovations and the hard-working spirit and provide the service for our customers that is inherent in our American culture.”

Kapur has a strong vision for where he wants to take the company. Where does he want International to be five years from now?

“We want to have a pre-eminent, rightful historical position back in the public consciousness and be a global player, clearly seen as a pragmatic innovator with a great working culture. Very spirited, very forward thinking.”

Forward thinking also means an improved market share.

While it’s improved over the past three years, it’s less than 20 percent, and Kapur said International is taking several steps to move the share upward (see story on truck sales on Page 37).

One thing’s for sure. Kapur’s strong vision, coupled with his personal motivation means it won’t be another 30 years before International introduces a new Class 8 platform.

Kapur’s goal is to lead International to a $25 billion market cap.

“I think PACCAR is at $21 billion, Volvo and others are in the 30s,” he pointed out. “I go back 10 years and look at these companies. I look at Caterpillar. In 1993, Caterpillar had a market cap of $3 billion. That’s not that long ago. Today, they are at 60.”

He leaves no doubt the company will get there, and can quickly point to three key ingredients to make that leap.

They are: “An exquisite product that is tailored to hit the sweet spot of what the market needs, even if the market doesn’t know it needs it, but will appreciate it once they begin to see it and feel it; global growth (see related story on Page xx) and taking advantage of all the developments in all parts of the world that have been sheltered for a long time; and a great culture of bold people. [This is] a group that has the right belief system that really is energized and motivated and works together.”

He says he enjoys working with people who are making a difference in the marketplace.

“I think we’re on a path where we haven’t seen the real results and won’t for a couple of years until all of this really sinks in,” he said. “It’s really exciting, what we are doing. Even more so perhaps than in the personal use business because you can see what effects you have. In the car business, the company was 10 times the size of this one. You couldn’t see the battleship move. This one is not a battleship. It’s a cruiser and you can see it change direction.”

And with Kapur at the helm, no doubt headed in the right direction.