When Generac Power Systems began making backup power generators in Waukesha in 1959, it wasn’t clear how many homeowners might want this new, emergency-ready product.
Six decades later, the company has a global reach, with around 10,000 employees and $5 billion in annual sales, said CEO Aaron Jagdfeld at the Cap Times Executive Breakfast on Wednesday. Moderated by Mark Richardson, founder of Madison career coaching and hiring consulting company Unfinished Business, it was the first installment of the ticketed event series designed for current and aspiring business leaders.
Now, the leading supplier of home backup generators is looking to grow further. Though Generac holds 80% of the market, Jagdfeld regularly reminds his staff that just 6% of all U.S. households own a generator.
“As I like to say, that's 94% of homes that are an opportunity for us,” Jagdfeld said. “Do you know how many houses there are in this country?”
Especially in the South, where natural disasters can easily knock out the electrical grid, generators are often the only option for keeping the lights on. Earlier this month, Jagdfeld told Milwaukee’s WISN-TV that his company’s hurricane response teams would be in Florida for at least two weeks to repair and maintain backup generators after Hurricane Ian knocked out power to an estimated 2.6 million Floridians.
But that disaster also exemplifies one of the greatest threats to Generac’s 63-year-old business: climate change, which is fueling these extreme storms.
“I don't think there's any denying that anymore. The science is real,” Jagdfeld said, noting that gas-powered combustion engines, like the ones that Generac built its business on, are among the causes. “Where does that take us in the future?”
Beyond backup power
With that question in mind, the generator company has in recent years expanded beyond its “core” or “legacy” business, seeking to become an “energy technology company.”
Over the last 10 years, Jagdfeld said, Generac has acquired 28 companies, including 10 in just the last three years. Among those are companies like Canadian smart thermostat company Ecobee.
It’s not easy to wed a traditional manufacturing company, which employs thousands of workers who clock in at 7 a.m. for a shift on the factory floor, with a founder-led tech startup that employs programmers who spend their days writing computer programs at a desk, Jagdfeld said.
“Some of those employees are probably just going to bed after writing code until 7 a.m.,” Richardson added.
Those types of workers tend to work differently and have different demands, but such acquisitions are essential if the company is going to be prepared for the energy changes that could come next, Jagdfeld said.
He points to the example of Briggs & Stratton, the world’s largest small engine manufacturer. The Wauwatosa-based company filed for bankruptcy in 2020.
“Why’d they go bankrupt? Because they didn't see the transition that was happening in their core products,” Jagdfeld said, noting that battery-powered lawn mowers have rapidly gained popularity. “In business, you have to be thinking about the future, and not about the past.”
He recounts the adage that one must always look not for where the hockey puck is now, but for where it’s headed. “You have to be investing and putting your time and effort into where the puck is going,” he said.
To get his managers thinking that way, he likes to pose a hypothetical: “What happens if we woke up tomorrow and internal combustion engines were outlawed? What happens to the company?”
It’s not such a remote possibility, he said, given that the government could implement a ban, new tax incentives or a carbon tax, any of which would reduce the market for internal combustion engines.
Faced with that scenario, Jagdfeld said, many of his staff give the same answer: “Well, we take our ball and go home. That's it. Game over,” Jagdfeld said.
But he sees it differently. He wants Generac to become part of the “home energy ecosystem,” creating products customers use not just when there’s a power outage, but also when they adjust the temperature of their homes, store electricity generated on their rooftop solar panels or sell that electricity back to the local power company.
“We want to be a part of that,” he said, though that means competing with companies like Tesla. “It's going to be a more difficult journey for us, but … super critical to where we go as a company five (or) 10 years down the line.”
Efforts to recruit, diversify staff
Meanwhile, the company has been adapting to other changes too, including a tight labor market and a growing attention to racial injustice.
Like companies across the country, Generac has found that even retaining and recruiting enough workers to keep its current staff size isn’t easy. Attracting the workers needed to grow is even harder.
So while the company used to say that while its pay was on the lower end of the market, it made up for it with opportunities for advancement, those days are over.
“That won't get people in the door the way that it might have before,” Jagdfeld said. “We've had to take our game much higher.”
In addition to improving pay and benefits, Generac has begun looking for ways to diversify its staff. Company leaders, who’d long told themselves that the Waukesha demographics determined who they hired, began to see that attitude as insufficient.
“We were kind of hiding behind that,” Jagdfeld said. “We were kind of making an excuse for why the demographics of … our employee population looked the way that it did.”
Seeking to change that, the company has sought to get its name out in surrounding areas like Milwaukee County and Dane County, including by sponsoring a stage at Summerfest for the first time.
He’s particularly proud of one effort, called GPSEd, Generac’s manufacturing apprenticeship program for high school students. Students interested in a career in the trades spend three hours each morning taking classes with certified teachers in classrooms inside the company’s plant, then work for about four hours at Generac or a nearby manufacturing facility. The program, launched at Generac, now includes other area companies, and could soon expand nationwide.
To further its diversity efforts, the company has also hired a director of diversity, equity and inclusion.
“I'm a big believer that if you want to get something done … you have to have somebody waking up everyday thinking about it. That's got to be their job,” Jagdfeld said.
“It’s been quite a journey. We have a long way to go.”
