When Fred Rockwood, new president and chief executive of Hillenbrand Industries Inc., rang the closing bell on the New York Stock Exchange in late January, it marked more than the Batesville, Ind. company's 30th anniversary as a publicly traded company.

        It also symbolized a new era for the funeral services and health-care company. For the first time since John A. Hillenbrand bought the ailing Batesville Casket Co. in 1906, the company is being run by someone other than a member of the Hillenbrand family.

Fred Rockwood, chief executive of Hillenbrand Industries, speaks in a showroom of the company based in Batesville, Ind. (Gary Landers photos) | ZOOM |

        But Mr. Rockwood, a one-time business consultant and Harvard Law School graduate who was named to succeed longtime chief executive Gus Hillenbrand late last year, is no stranger to Hillenbrand Industries.

        He's worked for the company for almost 25 years and was the founder of its successful Forethought Financial Services unit, a leading provider of funeral planning insurance.

        And Mr. Rockwood is taking the helm at Hillenbrand as the company's business and stock price are on an upswing.

        Mr. Rockwood, 53, said he's not intimidated by taking the reins of the $2 billion holding company. The company also includes Batesville Casket Co., the leading casket and cremation urn maker, and Hill-Rom Co., a leading provider of hospital beds and related patient care products.

        “In all candor, I probably should be (intimidated), but I'm not,” he said in an interview last week. “I feel almost like a member of the family. I know the family very, very well. And I love these businesses.”

        Wall Street analysts sense a new tone at Hillenbrand. In the past, some analysts say the company hasn't been forthcoming with information about what it's doing, and that's hurt investor interest.

        But Mr. Rockwood said: “I intend to be real open with folks. We want to let shareholders know what we're doing. We want to be thought of as the type of company that can build expectations and meet them.”

Changeable casket corners can show off a particular interest of the deceased. | ZOOM |

        Mr. Rockwood said he wants to bring a more disciplined, rational approach to the company's efforts to increase shareholder value.

        To do that, he said he's focusing on three major initiatives:

        • Asset reallocation.
        • New revenue initiatives.
        • Creating a leaner corporate center.

        Darren Lehrich, analyst with ING Barings LLC in New York, said, “I think he's trying to bring a strategic discipline to how the company thinks about its business.”

        And Bill Burns, analyst with Johnson Rice & Co. in New Orleans, said, “I think he wants to delegate a lot of authority to streamline the management process.”

Finances brightening
        Hillenbrand's profits and stock price are on an upswing.

        The company recently reported a 24 percent increase in net income for fiscal 2000 to $154 million, or $2.44 a share, on record revenues of $2.1 billion.

        The company's stock, which traded at less than $36 a share as recently as September, has rebounded to about $50 a share recently, reflecting a recovery in health-care spending squeezed by cutbacks triggered by the 1997 federal Balanced Budget Act.

        Still, there has been recurrent speculation that Hillenbrand is interested in selling all or part of its health-care businesses. One frequently mentioned suitor is General Electric Co., whose medical systems business was formerly headed by Finneytown native Jeffrey Immelt, GE Chairman Jack Welch's designated successor.

Customized embroidery and keepsake drawers inside caskets offer more options to the bereaved. | ZOOM |

        Mr. Rockwood said he won't comment on rumors.

        “This is a small town. You could fill all the scandal sheets with all the things you hear,” he said.

        Mr. Burns discounts the possibility of asset sales.

        “I don't think they are less committed to the health-care business. All the blood and tears are behind them,” he said, pointing to the improved expectations for hospital spending.

        Mr. Rockwood said the company's strategic initiatives are aimed at increasing shareholder value.

        Asset reallocation — what Mr. Rockwood calls “weed and seed,” to use a gardening analogy — was reflected in last week's announcement by Hill-Rom. That unit said it was eliminating about 200 jobs, including about 100 in Batesville, in a restructuring that eliminated some special beds for the home-care and long-term care markets because of sluggish Medicare reimbursement.

        “We have been, in the past, loathe to discontinue products,” Mr. Rockwood said. Because of various options and features, Hill-Rom can offer thousands of different beds.

        “The idea is to optimize our product mix,” he said. “As product lines become obsolete, we retire them and bring in new stuff to replace it. That's given us an opportunity to exit product lines that are not returning their cost of capital to us, and redeploy the people and resources to those areas that can create even more value to the shareholder.”

The Totalcare Pulmonary bed allows a nurse to elevate a patient to a standing position. | ZOOM |

        Reflecting the company's emphasis on new revenue sources, Mr. Rockwood points out that more than 42 percent of Hill-Rom's $1.1 billion in revenues last year came from products introduced in the last three years.

        One example: Hill-Rom's TotalCare Pulmonary bed system, introduced a couple of years ago, was the industry's first allowing a nurse to elevate a patient to a standing position with the touch of a button.
       

New ideas
        Product and service innovation has also been important at Batesville Casket because stable death rates have kept the demand for caskets relatively flat.

        Personalization is a growing trend in the funeral industry. Mr. Rockwood said Batesville Casket is focusing on showing its funeral home customers how they can cater to them — by displaying photos and mementoes that were important to the deceased.

        Batesville also has introduced features aimed at personalizing its caskets. Those include memory safes, which allow the bereaved to leave mementoes with the deceased; customized embroidery; and interchangeable casket corner designs to reflect the deceased's interests, such as golf, fishing or patriotic themes.

        Hillenbrand's corporate headquarters has about 320 workers of the almost 4,000 the company employs in and around Batesville. Mr. Rockwood said the company has examined every function it performs, looking to eliminating those that weren't needed or moving them to one of the operating businesses if that made more sense.

        “The corporate center has become more of a strategic architect, where in the past we've been a little bit more operationally oriented,” he said.

        For example, while in the past the headquarters had about 15 people devoted to its continuous efforts to eliminate waste throughout the corporation, about 10 of those positions have been moved to the operating businesses, he said.

        At the same time, some other functions, such as information technology, have been consolidated at the headquarters so that the total head count has remained basically unchanged.
       

Servicing an industry

        One thing that hasn't changed at the Hillenbrand companies is an effort to get close to customers to understand their needs.

        Hillenbrand operates a fleet of six business jets and a 66-room hotel and corporate conference center at the former Hillenbrand family farm in Batesville to cater to the thousands of customers who visit the Hill-Rom and Batesville Casket operations annually.

        The conference facility annually serves about 34,000 meals to customers of Hillenbrand's businesses. But Mr. Rockwood said the customers' visits, which typically last from one to three days, aren't junkets.

        “These are working trips,” he said. “They come in and have meetings all day. And when they're packed and ready to go, another group is coming in.”

        The visits include tours of the company's plants and meetings with its engineers. They are designed to help the company understand what customers want and show customers what the companies can do for them.

        “We can't just call them up and say what is it you want, because many times, they don't exactly know,” he said.

        But by bringing them to Batesville, he said, “we can talk to them and say, "Well, what if we did this — or, what if we did that?' That is the source of most of our new product innovations.”

        What really sets the Hillenbrand companies apart is their ability to make a difference in people's lives, he said.

        “We can do things here for people that can make a real difference,” he said, “either because we made a product that helped them get better in the hospital or deal with the loss of a loved one.”

        To outsiders, Mr. Rockwood said, Batesville might seem like a quiet, little Indiana town, but — mostly thanks to Hillenbrand — “this is really a vibrant place.”

Cinergy in merger talks again
Cinergy involved in Tristate
A new day at Hillenbrand
He wrote book on company's pre-arranged funerals
Laser surgery clinic on mend
Sears keeps moving upscale
Stocks plunge on warning
Delta on-time record still poor
HIGGINS: Personal Finance
Savvy Strategies
Your tax questions
Your Taxes
Business Digest
Tristate Business Summary
What's the Buzz?