John Michael Paz’ name is almost synonymous with Godwin Pumps. Known for his enthusiasm and passion for Godwin products and pump rentals, many in the rental industry were surprised by the recent acquisition of Godwin by White Plains, N.Y.-based ITT Corp. In this exclusive interview with RER’s Michael Roth, Paz explains his reasons for selling the company, the growth of pump rental and the future of the Godwin brand.
RER: Congratulations on the acquisition, which came as a surprise to us.
Paz: I’m sure it’s pretty shocking to a lot of people. I’m still a young guy and very passionate about my work, and I spent my entire life pursuing it. But it’s time to move on to another era and try something a little bit different. I’ll be around for a little bit, I’ll be consulting for ITT to help them get going, but my official last day will be when we close. I won’t be retained on a day-to-day basis, just on a consulting basis.
According to an analyst’s report I read, they were paying quite a bit, eight to nine times earnings. So I guess they wanted you a lot!
It wasn’t quite that high, coming off the recession, but they’ve been chasing me for a long time. It came in my mind a year or two ago, [thinking about] what I was going to do eventually. I didn’t want to work until the day I get carried out of here in a box. I built this company from zero to where we were pretty close to $300 million in 2008 with both entities, here and in the U.K., and then the recession hit and it affected us as well as everybody else. We were down a little bit. I had put some feelers out in 2008. It was a decision that I made that I was ready for a new stage in life.
Any clues about what you want to do next?
I retain ownership of all the real estate, and I’m going to be leasing back 23 properties. So I’m automatically in the real estate business. So I’ll be opening up a small office to manage that. And I may do some writing; I’d like to write a business book, I’d like to write about what I did here. I’d like to do some motivational speaking about business and the growth of successful companies.
Can you tell us about ITT’s fluid technology business? We know they are in the pump business with Flgyt and Grindex.
Those are the two you would be familiar with in rental. They have a number of very large successful brands under the ITT flag. They have a mantra that they want to grow ITT into the world-leading pump company; they already are a world-leading pump company. But they want to make it even bigger and better and be prepared for the world’s future water needs. A lot of substantial work years down the line by this company, which is pretty impressive.
Godwin will remain the Godwin brand. It will run as it is for the foreseeable future. All the existing management is staying in place, except for myself and, after a three-month transition, my CFO, who will be going to work for me after that. Grant Salstrom, Godwin’s chief operating officer, will be here, six regional managers that run the branches will be here, all the major senior staff in Bridgeport will be here. They will bring in a new CEO.
Does ITT have big plans to grow the rental division or develop more pump lines, adding new types of products?
They haven’t really shared a lot of what their growth plans are, I know they are in growth mode, [and our Bridgeport headquarters] will be their global headquarters for dewatering, pumping and services. The Godwin brand has so much potential. I’ve grown the company to a large degree but it still has a ton more to grow, globally as well as domestically. I think ITT has a serious eye on global expansion. [And they want to expand] in the mining industry, they have a lot of established distribution with some of their other companies, and they may look for some synergies there.
John, did you at any point look around and think you had so many plans and ideas but might have difficulty obtaining the capital to do them all?
I’ve never had a capital problem; we’re a really strong company with very little debt. This isn’t about that at all. [The challenge was] more about having people and the logistics to do it than it was the capital. Some people have called me to ask if I had health issues. I don’t have any serious health issues. It’s just about a life decision on my part. I’m stepping away to enjoy life a little bit. Because in the end, what’s it all about?
I work a lot and now I’d like to look at some other things. I have a vested interest in a company you know well, Trico Lift, Kenny Pustizzi’s company, I’m an equity partner there, since three years ago, and so I’ll help out over there. So I won’t get the cold turkeys from being out of the rental industry that so many guys get. But I’m not looking to go over there to manage or implement.
I’d like to be on a couple of boards of directors, I’d like to use the experience and knowledge I have as opposed to being in the trenches doing the implementation. I started Godwin Pumps when I graduated college. I’ve been here 33 years, that’s a long time. It’s been my life, but I’m taking a shot, I want to do something a little different, I want to see things in a different light. It’s going to be nice to wake up every day and not think about how I’m going to support 800 employees.
Was there a lot of back and forth negotiation getting this deal done with ITT or did it flow pretty easily?
It went very well. I think they were surprised at how well run the company was, not being public, not having layers of management bureaucracy. At the end of it, I think they were really more impressed with the culture that I’ve built. It’s the culture of our people that guided them to do the right things, not necessarily a boss that’s got a rule and a process.
Can you take us back to how Godwin Pumps got started?
My father was in civil contracting, Paz Brothers Inc. It was his brainchild to found the company. He started it, we incorporated in November 1976, and I took over in May of 1978. He had a partner who was a pump rental guy. After the first year it wasn’t working very well, and that’s when my father came to me when I was at Dickinson University, and he said there is an opportunity here, somebody has to take it and run with it. He said “this has a lot of potential and I’m sticking with the contracting, but I really think that as a pump rental company and sales company we have a lot of opportunities.”
So I decided to forego graduate school and come out and go to work. For many years, I thought that was a bad decision. It took me seven years to get to my first million dollars in sales, from ‘78 to ‘85, it was a long uphill battle. So it wasn’t a flash-in-the-pan success, it was ‘grind it out, build it up, get a good base.’ There’s a lot of history to it.
What did you study in university?
I got my degree from Dickinson University in Carlisle, Pa., just west of Harrisburg. I got a liberal arts degree in economics. It’s pretty much a school that sets you up for the next level, I think about 80 percent of the students there go on to graduate school. It’s a very good school. It prepared me very well, quite frankly, it taught me how to write and think. I had some accounting courses there, but it was very liberal arts based, but that gave me the foundation for what I needed to do. I had a certain business sense, working with my father my whole life, and I learned a little bit of moxie from him, so I had a great education.
You grew up in the business helping out as a kid, as a teenager?
Yes, I started working at the construction company when I was 12.
So you knew a lot about dewatering from the beginning?
I wouldn’t say I understood it very well when I took it over, but I learned quickly. I was watching pumps that my father’s company rented and owned. The reason my father got into it was he was renting a lot of pumps from pump rental companies, and he saw the opportunity. Our growth coincided with the growth of the rental industry.
You guys could see that a lot of the companies that rented pumps weren’t necessarily pump specialists.
Exactly, that’s exactly what it was. We saw a need and an opportunity. We turned the whole face of that contractor pump rental market around, when I got into it.
Godwin Pump of America really changed the face of contractor pumping in the United States without a question. Ninety-five percent of the market now does automatic priming, like our Dri-prime. That was Godwin Pumps of England’s innovation. We were a distributor as you recall. My father didn’t manufacture pumps. We were a distributor for Godwin Pumps in the U.K. And in 2001 I bought the factory, then we became the global headquarters, and that’s when I got familiar with and got a real education in manufacturing. The Dri-prime first went to market in 1970. We’re celebrating the 40th anniversary of the Dri-prime this year.
Any parting thoughts?
Just my appreciation for the rental industry and the success that it’s brought to me, and, most importantly, my employees. Our mantra was “great pumps, great people,” that’s really what made this company; we have a great product, but the great people are really what made this company what it is. And I think that continues for the survival of my legacy.
I hope so, because a lot of times companies are acquired and the culture changes.
I don’t think you’re going to see a lot of major changes here. There’s definitely going to be changes in the culture, because you’re going from an entrepreneur-driven business to a corporately held business. But I like the sense I get from ITT.