Donaldson Co. Inc.: Staying Close To Customers

Filtration manufacturer parlays global presence into a strong bottom line.

Donaldson Co. Inc. knows the power of proximity. Indeed, more than 20 years ago Donaldson Co. Inc. opened its first Chinese manufacturing facility in Hong Kong. Additionally, the Minneapolis-based maker of filtration systems and replacement parts has more than three-dozen plants around the world.

And recently, the company -- one of IndustryWeek's IW 50 Best Manufacturers for 2006 -- opened two additional manufacturing plants in China. This more than doubled manufacturing capacity for the company's engine and industrial filtration businesses in China. A technical center also was built to support new product design and development.

The company's product mix includes air and liquid filters and exhaust and emission control products for mobile equipment; in-plant air cleaning systems; compressed air purification systems; air intake systems for industrial gas turbines; and specialized filters for such diverse applications as computer disk drives, aircraft passenger cabins and semiconductor processing.

"The market for new filtration products is growing rapidly in Asia, particularly in China," said Geert Henk Touw, senior vice president of Asia Pacific at Donaldson, in a Nov. 30, 2006, statement. "We continue to invest around the world for our future growth and to support our commitment to stay close to our customers."

Being in the neighborhood has its perks.

Donaldson Co. Inc.
At A Glance


Donaldson Co. Inc.
Minneapolis, Minn.
Primary Industry: Machinery
Number of Employees: 11,000
2005 In Review
Revenue: $1.6 billion
Profit Margin: 6.93%
Sales Turnover: 1.44
Inventory Turnover: 7.39
Revenue Growth: 12.77%
Return On Assets: 11.04%
Return On Equity: 20.13%
The company's first-quarter sales and earnings, which ended Nov. 27, 2006, were strong. Net income was $36 million, up 11.8%, compared with $32.2 million last year. Sales were $446.4 million, up 10.7% from $403.4 million in the first quarter of 2006.

"We are pleased to start the year with continued solid sales growth and an operating margin of 12%," said Bill Cook, chairman, president and CEO. "Sales in both our engine and industrial products segments were up 11%, and our incoming orders remain strong. Our plants around the world are operating very well. The start-ups at our new plants in China and the Czech Republic have been completed, and they are now up and running per our plans. Overall, economic conditions remain good for most of our businesses around the world. As a result, we are on course for another year of record earnings, our 18th consecutive, in fiscal 2007."

However, one thing will not remain on course -- the position of senior vice president, Asia Pacific.

Geert Henk Touw, senior vice president of Asia Pacific, will retire at the end of fiscal 2007. Touw joined Donaldson in 1986 and was promoted to his current position in 2005. David W. Timm will replace Touw effective March 1. Timm was recently promoted to vice president, Asia Pacific.

"I'd like to thank Henk for his 20 years of devoted service and contributions to Donaldson," said Cook in a Dec. 6, 2006, statement. "Henk has been one of our best managers in driving growth and delivering financial results. Henk created a vision of a pan-European organization, implemented it and realized an amazing track record there. Henk then took on the challenge of aligning our Asia Pacific operations to capture the significant growth opportunities in the region."


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