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Squeaks in China, Russian Rust Aid WD-40

From its modest beginnings as the Rocket Chemical Co. in 1953, WD-40 Co. has grown into a global operation with a product used worldwide.

Today, at least 55 percent of the public company’s sales are outside the U.S., and the foreign market is growing.

“There are lots of markets outside the U.S. that are not as developed,” WD-40 President and Chief Executive Officer Garry Ridge said. “There are lot of squeaks in China and lots of rust in Russia. We started off this strategy back in 1999. Our goal was to expand and build our business by brand and business channel. The non-U.S. part of our business has been one of our strategic drivers for a long time.”

The company, which markets three multipurpose maintenance product brands, WD-40, 3-in-One and Blue Works, and eight cleaning and home care brands, recently reported that fiscal 2010 earnings per share is expected to meet or exceed the top end of its guidance issued on July 7. The company previously expected net income of $34.4 million to $36 million and diluted earnings per share of $2.05 to $2.14 for fiscal year 2010 based on an estimated 16.8 million weighted average shares outstanding.

Listed as WDFC on Nasdaq, WD-40 previously announced guidance for fiscal year 2010 net sales of $313 million to $319 million, or growth between 7.2 percent and 9.2 percent versus fiscal year 2009. On average, four analysts polled by Thomson Reuters expected the company to report earnings of $2.13 per share on revenues $317.39 million for the fiscal year 2010, according to a news release.

Ridge, a native of Australia, joined the business in 1987. Initially, he was responsible for company operations throughout the Pacific and Asia. Moving up through the ranks, he became president and CEO in 1997. The San Diego-based company has more than 300 full-time employees. Ridge noted that the operation began with only three employees. The goal of the founders was to develop products to fight condensation and corrosion for the Atlas space rocket.

40th Time’s the Charm

When the WD-40 product was under development, “There were 39 really good formulas,” Ridge said. “The 40th one was the best. That’s how it got its name as WD-40: Water Displacement 40 Formula.”

Ridge’s background is in international marketing. WD-40 is the No. 1 brand among multipurpose maintenance products worldwide, he said. The brand is sold in more than 160 countries.

“We only see one market, and it’s global,” said Ridge, whose business competes with The Dow Chemical Co., The Clorox Co. and DuPont, among others. “One of the things that is very important to us is we don’t say we have a domestic and international business. We are a global company that happens to be in San Diego. The mindset isn’t ‘us and them,’ it is ‘We are all one.’ We do not live in a suburb of the world. That is the way we look at our business. We manufacture WD-40 in many countries around the world. We sell it to many end users who speak many languages.”

Many local companies are moving into the global marketplace, said Ruben Barrales, president and CEO of the San Diego Regional Chamber of Commerce.

“San Diego has grown up as a center for trade and international travel, not just to Mexico and South America, but to Asia and the rest of the world,” he said. “What is happening around the world influences business decisions right here in San Diego.”

Thinking Globally

The ability to enter the global marketplace can mean the difference between success and failure during hard economic times, said Alan Gin, an associate professor of economics at USD.

“It definitely is important for a company to diversify its markets,” said the University of San Diego professor, who also compiles the data for the Index of Leading Economic Indicators for San Diego. “When one economy is weak, other countries may be doing well.”

In addition to having a solid marketing strategy, a company needs to invest in its employees, said Ridge. He has co-written a book called “Helping People Win at Work” with Kenneth Blanchard. Ridge said one of his jobs at WD-40 is “helping people perform personal magnificence on a daily basis.”

Ridge added: “In our last employee survey, the No. 1 positive response with a 99 percent rating was ‘At WD-40 Company I am treated with respect and dignity.’ Workers know what is expected of them and are encouraged to share differing points of view.

“We don’t make mistakes, we have learning moments,” he noted. “Fear is the biggest disabler in life.”

After more than a half century in the marketplace, the WD-40 brand name frequently turns up in popular culture. In the 2008 film “Gran Torino,” the character portrayed by actor Clint Eastwood praises the versatility of WD-40 when making repairs around his home. Watching the film in a theater, a surprised Ridge was pleased to get the free publicity.

“We are in the memories business,” he said. “We are about creating positive lasting memories with three constituents groups: our end users, our tribe or people who work for WD-40, and our shareholders who trust us with our investments.”

Emmet Pierce is a freelance writer for the San Diego Business Journal.

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