3 min read March 2023 — In an interview with Invest:, Tod Carpenter, chairman, president & CEO of Donaldson Company, discussed the main challenges in the market, strategic priorities and shifts in demand. Carpenter emphasized the importance of incorporating DEI and sustainability within the company’s operations and noted his concern about the Minnesota business environment.
What do you see as the main challenges in today’s market?
The labor challenges in the United States were a major concern over the past couple of years. Finding manufacturing talent was a challenge, especially for a company like ours with a physical presence in 40 countries including 19 manufacturing plants and multiple distribution centers spread across North America.
We also faced inflationary pressures, which we worked hard to pass on to our customers through price increases because this bout of inflation was unprecedented. At Donaldson, we are seeing inflation start to level off, which is putting us in a more stable position.
Where do you see the organization’s strategic priorities?
As a technology-led filtration company, we specialize in inventing solutions to solve complex customer problems in the filtration space. We’re experts in the field, starting from understanding raw materials to developing media-based solutions for our customers. We’re always looking to diversify our portfolio and are expanding into life sciences, including the food and beverage, medical, biopharmaceutical and chromatography-based filtration industries.
Have there been any shifts in demand considering the current economic landscape?
In certain businesses, such as mobile and industrial solutions, we’ve seen steady growth over the past couple of years. Our fourth quarter is typically a slower period, as customers bring down their inventory levels to manage year-end balance sheets. This year, the slowdown was not as significant as in previous recessionary periods but rather a flattening. We would describe the situation as a little bit softer but not enough to indicate a significant change.
Are there any particular innovations that you are excited about?
We have some cool inventions in our life sciences laboratories. One relationship I can highlight is within life sciences and with the company called Wildtype. Wildtype focuses on cultivated seafood and they are currently growing salmon protein in bioreactors. We provide the bioreactors and associated filtration. Wildtype has been working with the FDA for several years and is expected to have large-scale production of cultivated salmon ready for human consumption within the next year. Our partnership is a large, strategic one and it has been fantastic. Our board of directors enjoyed trying Wildtype salmon at the last meeting.
Another cool thing we’re working on is chromatography with Purilogics, a recent acquisition. We’re filter geeks and we work on media-based solutions. Our goal is to either filter out or retain something for separation purposes. Purilogics was ahead of Donaldson in media-based chromatography, so we joined forces. The typical chromatography process uses resin beads inside a circular column (~5 feet tall and 3 feet in diameter) to absorb a protein of choice. Purilogics displaces the traditional resin beads and instead uses a membrane-based cassette to separate what is inside the column and this new method is able to capture five to ten times more of the desired protein. Capturing a desired protein quickly and efficiently is important for biopharma, including for making vaccines. Soon, we will bring this to market. These are just two of the exciting things we’re doing in the life sciences space, both of which align with our corporation’s technology strengths.
How are you incorporating sustainability and DEI into the organization?
I believe having a strong culture of governance is the first, fundamental step for making a lasting change in diversity, equity and inclusion (DEI), as well as sustainability. At Donaldson, we take great pride in having a strong, ethical, values- and principles-based culture. We take an integrated approach to sustainability. Sustainability is not a standalone initiative or goal. It is built into what we do and how we create value for our stakeholders.
We do this by setting goals and action plans that are aligned to our company principles and sustainability priorities, one of which is DEI. Three years ago, we prioritized our DEI initiatives to further enrich and deliver programs, processes and policies that make our company stronger. We are committed to integrating DEI into our operations not just because it is the right thing to do, but also because it drives innovation, helps meet our customers’ needs and adds value to our organization.
Some of our technological advancements in the digital realm contribute to sustainability. For instance, we have patented sensors and algorithms that can tell you how much life is left in a filter, which was a major challenge to achieve. We also have sensors that can tell you the cleanliness of your hydraulic fluid, leading to reduced energy consumption, which is beneficial for the environment.
Our purpose of advancing filtration for a cleaner world resonates with our employees, customers and investors. We work toward this goal in all areas of our business. It’s our approach to everything.
Any final comments?
The business environment in Minnesota is undergoing a transformation. New regulations passed by city and state governments are impacting company benefit packages by requiring a larger share of costs to be fixed, leaving less room for flexibility in what is a finite pool of available costs. I am concerned that the legislators may not fully comprehend, or worse, care about the ramifications of these changes. Large companies based in Minnesota have long been known for their outstanding benefit packages, but these recent regulations are making the state less attractive for businesses. Despite the many positive aspects of the state, I am concerned about this shift, as companies in Minnesota may make decisions to move operations quietly over time.
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