WOOSTER: Leaders of two of Northeast Ohio’s largest employers can show they know a thing or two about dealing with change.
Ward J. “Tim” Timken, chairman of $5 billion bearings and steelmaker Timken Co. in Canton, and Delos “Toby” Cosgrove, chief executive officer of the Cleveland Clinic health-care system, shared stories and insights before several hundred people at the first Wayne Economic Forum. The program was held at Ohio State University’s Shisler Conference Center in Wooster.
Timken, the first speaker, talked about the impending spinoff of the steel business from his family’s namesake company following pressure from large, activist shareholders. Timken said he is genuinely excited about the new steel company that he will run once the spinoff is completed next year.
“This is not the death of the Timken Co. This is the next step in the transformation of the Timken Co.,” he said. “The Timken Co. will survive. That’s the message I would like you to take out of the room.”
Timken noted that the company has had to change since its founding about 115 years ago. Just 10 years ago, company leadership decided the business needed to diversify beyond tapered bearings and specialty steel, he said. Those subsequent successful changes put Timken on the radar of activist shareholders, who then pushed to split the business as a means to increase value, he said.
In the years he has been involved as a top Timken executive, company leadership had considered spinning off the steel business four times but never acted, he said. A new analysis spurred by the shareholder push indicated it was time to separate the businesses, he said.
Timken said it was an emotional decision for him.
“This is happening on my watch,” he said.
But Timken said he also realized that the spinoff is the right thing to do.
“It won’t be easy,” he said.
There are 520 “entanglements” connecting the steel business with the rest of the Timken Co. that need to be severed, Timken said. “Ultimately, it’s like separating Siamese twins. ... It’s going to be an extraordinarily long year. It’s going to be a very complex year.”
The spun-off steel business will be, by steel industry standards, a relatively small niche business, he said. The intent will be to keep it independent, he said.
“We’re a century-old startup,” Timken said. The company still has not settled on a name for the new steel company, he said.
Cosgrove, the forum’s second and final speaker, talked about the evolution of the $6.2 billion Cleveland Clinic system and health care in general.
“We’re in a very interesting period,” he said.
The pace of change is speeding up dramatically, Cosgrove said. He paraphrased a quote from Russian revolutionary and politician Vladimir Lenin, saying, “We’re in one of those periods where decades will happen in the next year or two.”
Health care is growing to where it now makes up about 18 percent of the gross domestic product and threatens to crowd out other needs and wants, he said.
Demographics show an aging population, with about 10,000 people a day turning 65, he said. And technology is evolving and imposing health-care changes as well.
Health-care payments will increasingly become outcome based, not fee for service, he said. Health care will also become increasingly transparent, meaning people will know the quality of care and price before they buy, he said.
Consolidation will continue as well, he said.
“Anxiety in the health-care system now is palpable,” Cosgrove said. “I am asked on a regular basis, ‘Am I going to be fired?’ ”
Nonprofit systems such as the Cleveland Clinic can learn from for-profit health-care providers, Cosgrove said. That’s in large part why the Cleveland Clinic developed a relationship with publicly traded, $13 billion Community Health Systems Inc., to acquire Akron General Health System, he said.
Tennessee-based Community Health Systems has been very good about driving down costs, while the Cleveland Clinic is very good about improving quality, he said.
“So, we learn from each other,” Cosgrove said.
One major way to reduce costs is to reduce disease, which largely means tackling obesity, sedentary lifestyles and smoking, he said.
“We’ve learned how to change and to change fairly rapidly,” Cosgrove said.
The audience asked him about the impending implementation of the Affordable Care Act.
Cosgrove called it the biggest change in health care in decades. He said it was necessary but doubts it will work perfectly.
“We don’t know the outcome of this experiment,” he said.
The public can expect photo-booth-like health-care kiosks will be placed in places such as shopping malls where people can step in and where technology will do such things as weigh them, measure blood pressure, detect heart beats and let them interact live with a health-care provider via computer screen. In addition, businesses such as pharmacy company Walgreen’s will begin offering primary care in their stores, he said.
“It is a changing landscape,” he said.
The forum got many thumbs-up reviews from audience members.
“I liked the information each speaker gave,” said Ed Haudenschild, a retired Wooster resident.
Wooster Mayor Bob Breneman called the forum a success. “I was very impressed,” he said. “You have two successful speakers that have grown their own businesses.”
Andreas Schmid, who works at digital marketing company Birdeye Design in Wooster, said he hoped the forum becomes an annual event.
“We’re at a point in business today where changes are drastic,” he said. “We have to prepare.”
Discussions have already started on making the Wayne Economic Forum an annual event, bringing in other partners and expanding its scope, said Justin Starlin, president of the Wooster Area Chamber of Commerce that sponsored the event.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org