When he was made head of Electrolux (ELUX) in 1997, Michael Treschow inherited a mess. The company just hadn't kept pace in cutting costs. "Restructuring is a part of daily life," he says. "If you don't do it every day, [the mess] piles up."
Known as Mack the Knife, Treschow is one of Europe's toughest turnaround guys. And at Electrolux he has been making up for lost time. Since his arrival, the Stockholm-based appliance giant has shed some 40,000 jobs, a third of the workforce. Electrolux' operating income rose 8% last year, to $760 million, on sales of $12.4 billion. But Treschow, 57, isn't satisfied, because profits slumped in the last quarter. His goal: to increase profits consistently by 8% or more a year.
Treschow took on the Electrolux assignment after a long career at Atlas Copco (ATLBY), the heavy-equipment maker. It, like Electrolux, is controlled by Sweden's Wallenberg family. Treschow impressed the Wallenbergs by keeping up margins at Atlas Copco even when sales dropped 25% during the recession in the early 1990s.
Treschow appears ready to put away the knives, at least for a while. To raise profitability, he must boost Electrolux sales because, he says, cost-cutting can only go so far. Although he says Electrolux can't afford to be a niche player, he is looking at the high end. He has some nifty new products such as a robotic lawn mower and a prototype robotic vacuum cleaner. He's also trying to take the "white" out of white goods with a line of Italian-designed appliances from subsidiary Zanussi in red and sunburst yellow, as well as 1950s-retro refrigerators in shocking orange.
Then there's the Smart Fridge, with a built-in computer screen and Internet access. Treschow is betting that the Smart Fridge will become the new millennium's answer to Post-It notes on the refrigerator door. Family members can leave each other messages as well as check their e-mail. The system can also record what's in the freezer, keep track of what needs to be replaced, and send an alarm signal to a mobile phone if the door is left open. No date has been set for commercial introduction of the fridge, which could sell for $1,250 to $2,500.
A golfing and hunting enthusiast, Treschow has been a salesman all his life. He earned his first kronor selling flower pins on May Day. Treschow admits that he relishes taking over troubled companies and revamping them. But for now, he thinks Electrolux should stick to the businesses it's got. The turnaround guy still has work to do.