A Talk With The Man Who Got Rayovac All Charged Up

Rayovac Corp., the perennial No. 3 in U.S. battery sales, is shaking up what once was a cozy business. Gillette Co.'s No. 1 Duracell and Ralston Purina Co.'s Energizer have long divvied up sales, offering similar products at similar prices. But in Sept., 1996, Boston investor Thomas H. Lee took control of Rayovac and installed new management. Since then, the Madison (Wis.) company has been gaining ground rapidly--mainly at the expense of troubled Energizer--by offering batteries for as much as 20% less than the leaders charge. In the quarter ended Dec. 31, Rayovac's earnings jumped 39%, to $13.9 million, on sales that were up 34%, to $214.8 million.

But the competition is getting fiercer. Ralston Purina is spinning out Energizer this spring as a separate company in hopes of improving performance. Duracell has a hot new battery that lasts longer in many applications. And Wal-Mart Stores Inc. has decided to sell batteries under its own name. Speaking with Thane Peterson, a contributing editor with Business Week Online, Rayovac CEO David A. Jones explains how smart manufacturing and common sense helped turn the company around:

Q: How important is efficient manufacturing in Rayovac's financial turnaround?

A: Very important. We originally had eight factories in the U.S. and Europe. We took that down to four. And we've increased capacity and the number of products flowing through those four. That has had a dramatic effect. Three years ago our gross margins were 43%. Today we're running at 48% to 49%. That's giving us more dollars to spend on advertising and brand-building.