Our exclusive podcast Interview Series recently welcomed Dan Adley, CEO of coatings and corrosion engineering and inspection specialist KTA-Tator, Inc. (Pittsburgh, Pennsylvania, USA) and a member of the NACE International Board of Directors.
In the episode, Adley shared business updates and considerations for the corrosion industry in 2020 while also exploring the important roles of leadership and strategic planning during these uncertain times. Tune in, and see below for a complete transcript.
[This podcast was recorded on July 24, 2020.]
Ben DuBose: Dan, welcome to the podcast. How are you?
Dan Adley: I’m doing well, Ben. Thank you for the gracious introduction.
BD: No problem. I’ll start by letting you give some background on yourself and the company for anyone who isn’t aware or not familiar. Tell our audience a little bit about yourself and also something about KTA-Tator.
DA: I’ll start with KTA. In the broadest sense, we’re a consulting engineering firm. Our mission, if you will, is to use customer-driven information to drive innovation and introduce new technologies into the industry. Combined with that, we strive to have world-class service delivery. Our ultimate goal is protection of our clients’ assets and the world’s infrastructure. Operationally, we deliver on this through the largest group of NACE-certified coatings inspectors working for a third-part QA firm in the world, and we’re really proud of that.
We have a sister operation that provides steel fabrication, non-destructive examination, and concrete fabrication inspection services. We have a full range of the higher-end corrosion and materials engineering and CP-type services, which were wonderfully complemented with our acquisition of Elzly Technology Corp. last year. Those are all supported by our ISO-accredited laboratory operations that support both our forensic field investigations as well as our material testing operations. Finally, we have an ISO-accredited instrument sales and service group that sells, services, maintains, and calibrates instrumentation, and of the instrumentation required in the corrosion protection industry. It’s a really diverse but complementary set of products and services. The key thing that links them all together is asset protection or integrity-type services.
Personally, I’ve been in the business world, at least, for 40+ years. Undergraduate degree in chemistry, master’s degree in occupational health, and diverse experience in insurance, risk management, consulting engineering, design engineering. For the last 25 years I’ve been working with KTA in various capacities and became the CEO in 2012, shortly after we became employee owned. That’s a bit about the company and myself.
BD: What draws you to the leadership positions that you hold? Not just within KTA, but you're also active within NACE, our boards here. Certainly, you've been effective in your role for KTA, but you've taken on some responsibilities in the broader industry as well. Clearly, it’s something that you have a lot of interest and skill in. If you could, just explain what’s drawn you to leadership and what you try to do, the responsibility to help steer the corrosion control industry.
DA: Throughout my 40+-year career, I’ve always had an interest in helping others achieve their goal, whether working on them one-on-one or as part of a team. There’s no doubt that, in the early days of my career… I was focused on advancing myself. But I didn’t see those things as mutually exclusive. In fact, I saw a real synergistic effect between developing leadership skills parallel with development of my technical skills. That’s what I sought out to do. I found it very effective. I became an avid practitioner of servant leadership and continue to consciously promote that and all those principles, especially within KTA, but even when I work with the board and those types of things.
Eventually, I began to focus more on management as an actual career path. I expanded my interest into finance and business practices, especially strategic planning, which is a tool that I’ve used almost, at least through 30 years in my career. That’s actually where I found my home at NACE, helping to facilitate the creation of compelling, significantly different vision for where NACE as an organization might go, and then creation of a road map for how to get there. My role, I suggest, was to facilitate it. I’ve worked with all the boards since the 2013–2014, shortly after becoming CEO at KTA.
I guess in hindsight, it’s interesting looking back on it. I’ve always had an interest in lifelong learning, and what I’ve now come to realize is the more you learn, the more you realize how little you know. I believe that leads to intellectual humility and that, to me, is the cornerstone of leadership and why I do and get engaged with what I do because I learn so much from the act of being involved with our business, but also with a wonderful association like NACE. I’ve learned so much and gotten more out of it than I’ve ever given. That’s what I’ve learned, then.
BD: Turning our focus to 2020, what’s been the biggest leadership challenge or challenges that you've seen? Certainly, everyone’s under a certain degree of business pressure. But there’s also a lot of person components to what’s gone on this year with the rapidly changing work environment, even though there’s no lockdown anymore as we’re chatting in late July. Most of us are still working from home, more virtual things. We don’t have the travel. So when you look at 2020 from a leader’s perspective in the corrosion control industry, what’s been the biggest challenge or maybe two, as you see it, in your role at KTA and perhaps also your role as someone with NACE and sort of overseeing the industry?
DA: I think it’s easily stated that we’re living in unprecedented times, Ben. I think everyone recognizes there’s nothing that compares, in recent history for certain, to the pandemic we’re facing. COVID-19 has rocked every aspect of our nation, our economy, our business, the communities we practice in and live in, and most importantly our families. We don’t have any playbook for how to lead or manage in these times.
Our KTA leadership team, with the onset of COVID, quickly aligned around what we ultimately defined as our 4 R’s of Organizational Health. These are the things that we feel are essential, that we have to address with intent, in phase. The first was Respond. So the challenge there was, for an analogy, it’s triage. We had to stop the bleeding, assess where we were, make immediate changes, to respond to both our needs of our internal employees and our clients. It was really an amorphous environment that we’re trying to make those decisions.
That moved into the second phase, which was to Respond in a far more meaningful way, when we had a little bit of a chance to assess what was really going on. That’s when we engaged in a lot of interaction with our clients, finding out what their needs were, facing these challenges. And reciprocally, looking into our employee and asking them, our co-owners, what the challenges are and what concerns they had, and those types of things. We started to address them in the Response phase. We’re currently in what we call our Return to scale, and it is as the name infers. We’re assessing where we’re at with respect to where we had expected to be in our strategic vision and planning, and outlined a series of corrections, new things we need to do, including new ways of reaching out and touching our employees and maintaining a higher sense of connection.
Ultimately, that’s leading into the final R, the final phase, management practice that we’ve adopted: Reimagining our company. I think we’re going to emerge from this extremely strong, but it’s going to be different. Our relationship with our co-owners is going to be different. There’s an overused, perhaps, expression now about the new normal. That’s what we’re looking at. We’ve just started into that part of the journey. These are all unprecedented challenges. We’ve gone at them very methodically, and we’re sitting in a pretty decent position because of that.
BD: From talking to other people at your company or even in the broader industry, what are some of the success stories of 2020 as it pertains to leadership? What are some positive examples of leadership done right in the current environment?
DA: I think the current pandemic, and every company’s (probably) response to it, has really stepped up the game on communications and the importance of communication to what you’re coining “leadership done right.” It can’t be overstated, the need for what we call closed-loop communication, giving out information, getting information back.
Central to all that is building trust. Quite frankly, we’re not in a real trusting environment right now, so we have to build that and maintain it. We’ve used a lot of different tools and processes, not unlike what many companies have used. Weekly “fireside chats.” Forums where it’s an open forum for many of our co-owners that log on to ask questions, and I attempt to offer clear, factual, and honest answers to their questions and inquiries.
We’ve complemented that with weekly email updates and monthly, more detailed approaches or updates on the progress we’re making on those 4 R’s of Organizational Health that I discussed earlier. We’ve done the virtual happy hours and coffee clubs.
But none of this — I don’t think — answers your question of leadership done right unless you focus on building and maintaining trust. I believe, on a personal basis, that the reopening of our economy and the subsequent — I’ll just summarize as — adverse consequences we’re seeing, it really undercut, in many people’s minds, the sacrifices they gave in the March, April, May period of time frame, when they were sheltering at home and working 100% remotely. I’m seeing massive quarantine fatigue. I see people are being bombarded with frequently misleading, certainly conflicting, and at a bare minimum complicated information, and it really doesn’t translate well to the popular media, the sound-bite coverage that we get.
So, to kind of overcome those, our communication is always focused on factual, science-based, health-based perspective, and we have open dialog about it. We absolutely demonstrate, don’t just use the words, that our first and foremost interest is in the protection of the health of our co-owners and their families. This is a unique thing, dealing with an infectious disease. The source of the infection could be at work, it could be out in the field when we’re working on the field, it could be when our co-owners are out in the personal business, if you will. It doesn’t matter. This disease affects all of it, and you have to deal with it in that type of an integrated fashion.
We’re driven by protecting our employees and their families’ health, and also the client sites that we work on. We’re really open and honest about the impacts of this on our business. We are 100% employee owned, and these are our co-owners, so we share the financial impacts and the operational difficulties we’re confronting. Our motto through all this is, “Plan for the worst, hope for the best.” That’s how we’re driving our enterprise forward. I’d like to think that that’s leadership done right. I’ll only know that in hindsight. But as of now, it’s had some really significant positive impacts.
BD: Transitioning to the business side of things, which you touched on briefly, certainly it’s been a challenging year, within corrosion control, protective coatings, what are some of the market trends that you've seen in 2020? Are there certain segments of the business, the industry that are doing better than others? Have you had any noteworthy feedback from clients on that front?
DA: Yes, this is a great area of discussion. Maybe I’m different in my perspective of this, but I think it’s almost dangerous to suggest that there’s any true trends out there in the broader markets. I personally don’t see it. Economists talk about market sectors where there will be a V-shaped recovery. In other words, a sharp decline in the market in that sector and then a sharp recovery over some finite period of time, and there’s lots of debate of whether that’s a six-month, eight-month, nine-month, or a year.
But they’re generally talking about a V-shaped recovery. They also talk about market sectors where there will be more a U-shaped recovery, and the depth and the length of that bottom out varies. For instance, economists talk about the long recovery cycle within, say, the airline industry and more specifically, perhaps, air transportation. That’s certainly true. They are going to be in a U-shaped recovery. United, American Airlines, all of them, their struggles are well documented. But when you look at the air transportation side, it’s a similar thing. You see airport projects like Pittsburgh and Tampa and Chicago, all of which have been delayed or even shelved. But at the same time, within that same sector, you've got Denver, you've got LaGuardia, and you’ve got Baltimore, others that are marching on.
So that’s where I suggest then that you really can’t look at the market any longer in sectors and make broad, brushed conclusions. Oil and gas — certainly it’s a tough industry right now, but there are multiple projects that are progressing at significant strides. In the transportation industry, we’ve just received recent statewide concrete inspection services agreements with PennDOT, a five-year, multi-year, large contract to do all their prestressed, precast concrete inspection. Coatings inspection contracts, multiple, for Texas DOT and others. However, we also have client in the DOT arena that are scaling back. They’re telling us 30% — easy — entrenchment because of huge losses in fuel tax revenues.
At the end, I guess I conclude that we can’t be painting with any type of broad brush right now. We need to look at the market sector in general, and certainly we’re going to avoid hospitality or something and look to those sectors that might be recovering. But even that, that’s just too broad. You have to dig down into it and see which specific entities within that sector are faring — I won’t say well, but faring better in this COVID era.
BD: So within what you can control, tell me what the remainder of 2020 looks like with KTA. Certainly, the business, we’ve talked about that. I also know you guys have been working on a new HQ, although that’s an interesting timing. You didn’t know when you started this process in 2019 that it was going to be built during a pandemic. If you could, just update that and also just what the rest of 2020 looks like for you guys at KTA.
DA: Well, I’ll take those in reverse order, then, Ben. When we first confronted, when we were in that initial response phase to COVID, we did a quick assessment of what the marketplace looked like for us and what our backlog looked like. It was substantive, the decline. We reached out to clients, we decided what projects might move forward, those types of things. We were looking at a 15–20% reduction off the top line. That’s a huge hit. With our Return to Scale initiative, we have significantly improved optimism on that. We’re working diligently to blunt the depth of the decline, but there’s no doubt that 2020’s going to be an off year, and it will not achieve anywhere near budgeted expectations.
But we’re going to be fine. We’re financially extremely fine and structurally sound, and we’re looking to build a significant backlog going into 2021. We would expect to recover fully and make some additional strides by the end of 2021. We will have lost maybe one year of the trend of continuing growth that KTA has enjoyed for the last 10 or 12 years. So we’ll have a break in that stride, but it’s going to come back and we’ve got a great team working throughout the industry and the country, if not the world, driving us toward that. We’re cautiously optimistic, I guess, would be the summary.
On the building side, that’s exciting as it could be. It’s been a long road, well over two years. Finding a site. We entered into the design-build method of construction management. We have a great team of a contractor and architect team together working with us. We hired a project management firm from Jones Lang LaSalle to facilitate the process with us. Very involved with our employee workforce to influence the design, the layout, the architecture, if you will. Yes, we’re building a 48,000-square-foot, state-of-the-art…. It’s going to be an integrative office environment, laboratories, R&D, training, instrument calibration, recording studio, all those types of things. It was moving along on time, on schedule, on budget, and within scope. Even though we had expanded and enhanced the scope, we were still in budget. Everything was going great.
COVID hits, and then Governor Wolf, unlike some governors — I’m not disputing the actions, right, wrong, or indifferent, I’m just stating a fact — he shut down construction across the state. So we suspended operations overnight for 42 days in April and May. That, unfortunately — our original move-in was supposed to be November 2. We didn’t just tack on 42 days at the end, because now that delay has put us into Thanksgiving, Christmas, New Year’s, and something very important in Pennsylvania, hunting season. So we’ve tacked on at least 65 days or so onto the other end. We’re probably going to open between January 11 and 18. We’re really excited.
We’ve incorporated a lot of things that were already in there by happenstance that they’re putting in the new infectious disease control practices but now all the architects are talking about. We already had them in. It was by chance, but we’ve also added significantly new ones so that it is a really safe and healthy environment as well. It’s an extremely exciting time for us. Certainly the largest investment, other than buying the company, that we’ve ever made.
BD: Dan, before we let you go, for anyone that wants more information from you or the company, what’s the website? What’s the best way to get in touch with KTA for any of our listeners that want to learn more?
DA: You absolutely want to go to www.kta.com. In there, you certainly can learn all about the services and the company and what drives us and motivates us. But an important link that I’d encourage everyone to consider is KTA University: https://kta.com/kta-university. We’ve got a wealth of knowledge and information, video learning, micro learning sessions, webinars, those types of things. A library that’s indexed. And it’s all available to the corrosion industry free of charge. Please avail yourself of it.
BD: Sounds good. Dan, thank you so much for the time, and look forward to catching up with you again down the road.
DA: Thank you, Ben. It’s been a great opportunity.
More information on KTA’s services is available at kta.com and ktauniversity.com.