By Karen Dybis
Photos by Rosh Sillers
Philanthropy is difficult even in the best of times, let alone in an economy recovering from a recession. So it takes a special kind of genius to figure out how to make goodness pay its own way. By many accounts, Fred P. Keller is that man.
As CEO and Chairman of Cascade Engineering, Keller’s desire to impact the material, social and spiritual welfare of humanity is well balanced with his desire to make aKeller’s long-term and deep-rooted commitment to creating a sustainable company has given him the inspiration to not just change the world, but improve it. And he believes it benefits Cascade’s bottom line, which the privately held company that manufactures and markets engineered plastics systems and components has said hovers right around $250 million annually.
This focus has made Keller a man of contrasts, friends and associates say. He’s too Republican to be called a Tree Hugger. He’s too business savvy to be naÃÂ¯ve about what he can achieve. Rather, Keller is a long-term thinker, a big dreamer and, above all, a Capitalist with a conscious.
“Most people think about (sustainability) as a trade off. ‘I’ll do it when I get wealthy enough or after I’ve created enough value. Then I’ll start doing nice things,’ they’ll say. They think of it as a zero-sum game. They think if they do something good for society or for the environment, it takes away from the growth or financial prowess of the company,” Keller said.
“What I’ve learned is it’s complementary. That you can and should be trying to do both. And that it is not only good for the business, but it’s good for the community,” he added. “It is good for the individuals involved. It is good for the environment. It is good for society. It truly is one of those things that can be a win-win-win.”
Take, for example, his company’s headquarters just outside of Grand Rapids. There, nestled into a small industrial park, sits what seems to be an unimposing structure that serves as the global company’s home base. Upon further inspection, you’ll find it is a platinum LEED-certified building, an impressive designation in architectural and sustainability circles. To receive this recognition, Keller estimates its construction costs were about 10 percent more than they would have been otherwise. Yet he also believes with the savings in productivity and operations, the building will pay for itself in 15 years.
So there is a method to the madness. One less bill means more money toward Keller’s other projects, like the Welfare-to-Career program. A successful product within one of the company’s primary divisions allows him to fund Triple Quest, a joint venture with Grand Rapids-based equity fund Windquest Group, which markets and sells water filtration and related products to developing countries. While Triple Quest is doing the ultimate good - bringing clean water to the masses - Keller will admit it is not profitable. At least, not yet.
Hard work, not luck
In case you think he was born lucky, know this: Not everything goes Keller’s way. He is quick to admit Cascade struggled through two other attempts before finding a way to successfully employ welfare recipients. He has started and funded divisions that never quite find their spark. And Cascade was among those companies that felt the hit when the automotive industry went into freefall. While some may define these experiences as failures, Keller seems to view them as steps toward a higher end.
“When I started the company nearly 40 years ago, there was a real deep desire to demonstrate something about how a company could be successful and be good with and for people at the same time. That came out of my ’60s upbringing. That carried with me,” Keller said.
So did the lesson that you need to have a basic rulebook for people to follow. Keller describes his standards as guidelines for the greater good. Then, around the 1990s, the term “sustainable” started to pop up within the conversation around environmentally and socially friendly business practices. It was then that Keller, who had already found his own version of “First, do no harm” in terms of corporate culture, truly started to define his strategy.
“We certainly have thought about our purpose as an organization. We’ve decided as an organization that our purpose is to make a positive impact on society, the environment and be able to make a profit doing that,” Keller said. “It’s an important element for us as to how that can be a ‘both-and’ scenario. That sets the tone. And our objective as an organization is to be all about sustainability and innovation so we can have those two working hand in hand.”
Cascade started in 1973 with a loan from his father, Grand Rapids businessman Fred M. Keller. Then, Cascade Engineering had six employees and was considered a plastic injection molder. That’s a far cry from the Cascade of today, which employs more than 1,000 people through its self-described “family of companies,” a group of 14 divisions that range from its Automotive Solutions Group to Cascade Renewable Energy to its newest baby, Cascade for the Home, a line of retail products made from recycled plastic and related materials sold in mega stores including Meijer and Whole Foods.
These days, Cascade Engineering is a tribute to this big-picture thinking. As a private company, Cascade has had the time, space and funds to experiment, Keller said. Some within the business community might argue that Keller’s business is far too diverse for its own good. Keller, on the other hand, would tell you that is exactly how he wants it.
“We have a little saying in our house that goes something like this: Everybody says you can’t do everything. We say, ‘Ah, just do it all,'” Keller said, laughing. “That is my rational - if you can become good at something, if it’s something that you can master, then it’s a great competency.”
Keller seems to take pride in the fact that Cascade is not tied down to any single master, especially the automakers. It is clear that Cascade - and perhaps Keller himself - does not want to be easily defined. Consider the careful wording in the company’s own press materials, calling itself “a manufacturer and marketer of products and services supporting a variety of industries.”
“We’re not looking for (division) number 15 or 16 at this time, although it may occur. We do think in terms of innovation happening organically from what’s happening now and also as we do more research and development,” Keller said.
In fact, Cascade is a good example for other companies - and, perhaps, the state of Michigan as a whole - about how diversity is a benefit.
“I think of Cascade as demonstrating something I think can work. So from that standpoint, I like the idea that we’re out in front of some of these things. Of course, there’s the challenge of making sure the business doesn’t get diverted or that (diversity) takes away from the financial prowess of the organization,” Keller said. “In general, I believe there needs to be a little tension between the smooth production of things and being able to create that next new thing out there. If it’s too easy, if it’s too content, you probably need to stir it just a little bit.”
Rebellious? A little. Successful? Definitely. Although Cascade has seen its painful times, things seem to be moving forward pretty well right about now on the revenue side.
“We’ve been very fortunate,” Keller admits. “The growth over the last three years has been good for us. All of the past three years have had double digit growth - close to 20 percent this past year - and it is growth that we’re very fortunate to have.
“A lot of it is because we’re willing to take a look at these new things. BioSand might be a small project right now, but it is introducing us to new players and getting us into new areas. We’re doing some international work now that we would not have without it. We have some interest from suppliers and others that we wouldn’t necessarily have without that project. It all has a way to improving the relationship across the company,” he continued.
BioSand filters are a sand filtration system that removes pathogens from drinking water. Cascade’s lightweight Hydraid BioSand Water Filter is now in use in more than 70 countries worldwide. Their initial goal was to distribute 300,000 of the filters.
Feeling the auto slump
Like most companies that invested heavily in their automotive partnerships, Cascade felt the pinch of both the economic recession on consumer spending on their vehicles as well as the bankruptcies of major manufacturers such as General Motors Corp. and Chrysler. Keller is quick to point out that Cascade is no longer thinking about those relationships in the same way as it did just a few short years ago.
“From our standpoint, automotive has shrunk in its importance to our portfolio. We’re at 20 to 25 percent where we were at 80 to 90 percent at one time. We were not unlike lots of people, having lost 40 percent of our orders in one quarter,” Keller said. “Yet it’s an area that’s still very important to us. It’s one that we want to make sure we have around. But we have to find those niches we can contribute to. As a sustainable company, we need to find those areas (the auto companies) want to have innovation and sustainability involved in.
“There’s a growing awareness now, as they have this new mandate for 54.5 fuel efficiency. We have some good ideas about how we can do that, like our light weighting. We have ideas about how to take the VOCs (volatile organic compounds) out of the coatings. -¦ We want to be on the creative side,” Keller said.
That also is why Cascade has grown into something of an innovator - Keller doesn’t want to be caught off guard again, it seems. Rather than wait for a company to ask for a new product, Cascade Engineering wants to come up with those new ideas, new products, new ways of looking at a problem. That way, Cascade defines the situation and can control what happens to that idea as it moves forward.
“The sustainability notion is something that certainly can drive any organization; it doesn’t necessarily have to result in a lot of diversification. I like doing different things; people accuse me for bending over to pick up shiny pennies. That fits my personality,” Keller explained. “I like the diversity because I think it provides a platform for growth in many different areas.
“And it does mean that we have to get expert in those areas. It’s not just a matter of sprinkling our resources around. We have to demonstrate that we can have in fact good growth in each of those areas. The diversity really comes from an overall desire to want to build a channel to market and then manufacture for that channel,” Keller continued. “So many times when we are manufacturing for an OEM, we are able to get our innovative ideas across but they’re always filtered because we don’t see the end user needs quite as much as we could if we were directly involved in that channel to the market.”
That, in part, is what led to the development of Cascade for the Home. The company wanted to be more in touch with people - the very heart of everything Keller, and, in turn, Cascade stands for as a business.
“In the case of retail, it’s very much involved in us understanding what the consumer needs and wants. As we’re able to get that voice of the consumer, we’re able to provide innovative solution with what we do well as an organization - which is providing those creative thoughts and ideas that meet the need of the customer. We can hopefully be delighting the customer in areas where they didn’t know that they needed yet,” Keller said. “It’s proven to be attractive to consumers. In a retail world, if it sells, it succeeds. And we’re finding it’s selling very well at this point.”
Another project that is near and dear to Cascade employees is the Pink Cart. The rosy-hued recycling container aims to increase breast-cancer awareness, and Cascade donates $5 from every purchase to the American Cancer Society. The idea came from Vice President Jo-Anne Perkins, whose mother and grandmother succumbed to the disease when they both were 51. So far, Cascade has donated more than $250,000 toward breast-cancer research. And it has garnered the company a huge Facebook following through its “Pink Cart” page, which now has more than 45,000 followers.
One fan is Gloucester Township Mayor David Mayer. The New Jersey township purchased more than 20,000 pink carts for its residents last November. Since implementing this system, which allows residents to put all of their recycling into this one container, participation in the recycling program has increased 40 percent, Mayer said.
As a result, he said the township is paying less for its waste removal and receiving additional revenue by selling its recycling. The township’s goal, Mayer added, is to serve as an example of a sustainable community through this and other programs, such as its community garden, solar panels on the township municipal building and energy efficient light bulbs in its traffic signals.
“It was a very easy decision. Fred and his team do a great job in not only what they do for a living but to reach out and promote a great civil cause such as breast-cancer awareness. It’s terrific and they should be commended for that initiative,” Mayer said.
“The No. 1 comment I get from our residents is, ‘I love those carts,'” Mayer continued. “It gets them excited about recycling and they love the idea that we’re tied into this great social cause. -¦ And the carts look sharp. They stand out.”
Listening to employees and valuing their ideas is just one part of Keller’s commitment to what is known within sustainable communities as the triple bottom line: People, Planet and Profit. In fact, the triple bottom line means so much to the CEO that he has it printed on every employee’s badge so it is constantly in front of them.
“It’s really a sound business concept,” Keller said. “We have this wonderful opportunity to make this tremendous positive impact in the world. And we can choose to do that in many different ways. Many define that as making as much money as you can and then giving some of that back. I always like to quip that if you’re giving it back, it means you took it in the first place. The objective here is to be able to intertwine your business model with this positive impact on society and environment.”
A man who ‘walks the walk’
Keller, who will be 68 this year, has woven sustainability into every aspect of his life, personal as well as professional. He drives a Chevy Volt and has received accolades from Grand Rapids residents for “walking the walk” when it comes to reducing his carbon footprint. Keller even teaches a class on sustainability at his alma mater, Cornell University, where he earned a Bachelor of Science degree in material science and engineering. He also has a Masters of Science degree in business management from Rensselaer Polytechnic Institute.
It is his academic work at Cornell as well as his intelligence, temperament and commitment to his moral ground that has impressed Prof. David J. BenDaniel, who originally encouraged Keller to become an educator at the well-respected university.
As Keller tells it, BenDaniel brought him in as a guest speaker. During that classroom exchange, the professor seemed so bemused by the sustainability concept - opposite to the standard business philosophy of getting as much profit as you can and get out - that he invited Keller to share the concept with Cornell’s students by becoming a teacher here.
The part that Keller leaves out, BenDaniel notes, is that it is extremely rare for Cornell to invite anyone outside of academia to teach there.
“He’s a first-class person. He’s as genuine as they come,” BenDaniel said. “He seems to have found some sort of true north that does characterize all of the things he does in his life. -¦ We look at him as not only a good teacher but a role model for the students in terms of his managerial competence and his general commitment to the betterment of society. Sustainability is just one aspect of it.”
That’s not to say that BenDaniel and Keller agree on everything.
“I’m less convinced about the issues under the heading of sustainability than he is,” BenDaniel admits. “I asked him at one point early in the game: Do you use recycled plastics? He told me, ‘No we can’t. They cost 3 cents a pound more and we can’t do it and stay competitive.’ I knew at that point I wasn’t talking to someone who was pie in the sky. He’s someone who knows what he’s doing.”
There are some things Keller may take lightly; there are others where he feels so passionate that you can feel the energy resonating from him as he speaks. One such topic is conservation - or, our nation’s lack of conservation, especially in terms of our oil usage.
“We have a lot of folks in denial about that. We’ve got some pretty rough times in front of us and there’s no simple solution. In the case of oil, it’s not a case of just drilling more holes in the ground. We’ve got like something 2 percent of the world’s resources and 4 percent of the world’s population and we’re consuming 25 percent of the oil. That isn’t going to work, that equation,” Keller said. “Using that as a mindset, how do we as a business think about that?
“We think that we need to be working on things we can impact. In the plastics industry, we can be working on light weighting on making things lighter. We’ve been able to do that in our acoustics business. How do you make things quiet and light? It’s a very interesting conundrum for us that we’ve solved. We’ve got some creative solutions as a result of that. We’ve been looking at renewable energy. So we’ve got a renewable energy division now that is addressing that,” Keller said. “So we think about how we can solve these problems and then we develop our solutions for them. So we’re staying not just even but ahead from the innovation standpoint.”
To some degree, that is where Keller separates himself from other CEOs. He feels fully committed to trying things that will alter not only his community, but his state and world.
“We’re also trying to create some policy around what business can do in terms of solving some of our most retractable problems. With our Welfare-to-Career programs, we’ve demonstrated that we can save on average of $10,000 per person for the state of Michigan. Our retention has been 97 percent plus of our folks who are on welfare who work here stay with us. And that’s something that not many programs can claim,” Keller said. “We say career because we want them to stay with us. We’ve developed a career path for them.”
And he wants every one of his employees to feel that way. That is why he created a strict anti-racism standard. That is why every Cascade employee goes through a week-long orientation. That is why he cares about his Triple Bottom Line - because they are people. His people.
“I want to make sure that everybody who works within Cascade Engineering knows they are valued. They are valued as a human being and they are valued because they’re doing valuable work,” Keller said. “At the same time, we establish the ground rules of what we expect and what the culture is about here. We talk about anti-racism and we’ve decided to be an anti-racism organization. It means that if you act inappropriately it can cost you your job; we make that clear to folks.”
Keller goes so far as to make his commitment to sustainability and his devotion to the common good as public as possible. He was among the first to create an annual report outlining Cascade’s accomplishments in that arena. And the company was the first in the state of Michigan to become a B Corporation, a third-party designation that requires a company by law to “create general benefit for society as well as for shareholders.” Keller believes B Corps are one way that Cascade - and, perhaps, Michigan itself - can separate itself from the pack.
“One of the interesting things about the emerging sustainable economy is that you’re starting to see investors, entrepreneurs and consumers all willing to look at the sustainable world a little more closely. They’re actually willing to buy as well as invest time and money in making this happen,” Keller said. “I think it makes so much sense and I think it’s worth investing in. More people are realizing our resources are not infinite. I think it would be terrific if there were a concentration of B Corps in Michigan or West Michigan. What would that say about the state? Could it attract those folks interested in that for the future? We’re looking for in-migrations, if you were, into Michigan; this could be a real attractor.”