[Executive Forum] Dave Morris

After years of steady growth and strong balance sheets, basic manufacturers found themselves playing “defense” for much of the past year. The industry suffered through another disappointing termite season in 2007. The cost of bringing new products to market continues to escalate. And the steady flow of post-patent pesticides has taken market share – and perhaps even more important, significant profit margin – from many of the industry’s leading product suppliers, profits not easily replaced in an industry so dependent on the housing market, which currently finds itself in the doldrums.

Yet despite these challenges, Dave Morris, commercial leader, U.S. Urban Pest Management, is optimistic Dow AgroSciences will continue to be a long-term contributor to the pest control marketplace. “There’s no question the industry has its challenges, but Dow AgroSciences is committed to this market,” he said.

While business conditions have become more challenging in recent years, there continues to be significant opportunity for PCOs and manufacturers alike, according to Morris, thanks to the slow, but steady growth of the industry and a number of emerging and re-emerging pests that are making the phone ring in pest control offices throughout the country (e.g., bed bugs, ants, fleas, etc.) “Even with all the changes that are occurring in the marketplace,” he said, “it remains a good business for basic manufacturers, perhaps not as profitable as it has been in the past, but still a good business.”

And Morris should know. After all, he’s spent virtually his entire adult life affiliated with the pest control industry, joining Dow AgroSciences following graduate school at Virginia Tech, initially working as a sales representative in the Northeast. A graduate of the University of Delaware where he earned a bachelor’s degree in entomology and plant pathology, Morris, 49, was the first member of his immediate family to attend college. “My parents always believed in education, but neither attended college,” he said. Nonetheless, “it was always assumed I would go to college.”

Morris was much less enthusiastic about the prospect of graduate school. “As I approached my senior year at the University of Delaware, I had it in my head I was going to graduate and get a job, but my major professor recommended I go on to graduate school. I asked, ‘Who’s going to pay for it?’ He said, ‘I can get you an assistantship that will cover your tuition costs and apartment, but you’ll need to cover your own living expenses.’” Although he did so with reservations, Morris followed his mentor’s advice, and the decision has paid off handsomely for the Dow AgroSciences executive.

Like most grad students, there wasn’t a lot of money left over for luxuries, but Morris, who was 22 at the time, didn’t seem to mind. “My roommates and I literally had lawn chairs in our apartment and I got a bed from the YMCA,” he recalled. “Fortunately, I didn’t need much money to survive.” And although the apartment had cockroaches, one of the benefits of being a graduate student studying entomology was ready access to a wide array of experimental use products (i.e., second-generation pyrethroids). “We had the newest products at our disposal so controlling the cockroaches was never a problem. We were sweeping them off the kitchen floor!”

It also proved to be an excellent training ground for the young entomologist, who was recruited out of Virginia Tech into Dow Chemical’s sales training program, initially working the phones in a sales support role. “It was a good way to get introduced to the industry,” he said. “You never knew what questions you were going to be asked so you needed to be well versed in all areas of the business. It also forced you to interact with all kinds of people, which paid off when I went into field sales a few months later.”

Following a successful field sales career, Morris moved through the ranks of the company quickly, filling a variety of positions before being named commercial leader, U.S. Urban Pest Management, in 2007.

PCT magazine visited Dow AgroSciences headquarters in Indianapolis earlier this year to interview Morris and learn more about the company’s plans for the pest management industry under his leadership.

PCT: As part of your new role at Dow AgroSciences, how has the business been restructured and what were the reasons behind the restructuring?

Morris: Previously, we had a global business unit dedicated specifically to the pest management business, but it essentially functioned as a marketing and sales organization in the U.S., unable to take full advantage of the synergies offered by our various specialty product offerings. Combining our pest management unit with our turf, ornamental and technical product division creates greater synergy within Dow AgroSciences and with our channel partners. What we realized in evaluating our previous structure is that these businesses are very similar from a customer standpoint. The distributors are not the same players, but the way we approach each of these market segments is similar enough that we believed there was value in bringing them back together. What this will allow us to do over time is gain efficiencies in the way our resources are deployed and in how we bring new products to market. It also allowed us to bring our best people together to more intensely concentrate on these important market segments, enabling us to be even more dedicated to insect, weed and disease problems in urban environments.

PCT: Do you manage the pest control portion of your business any different from the turf and ornamental side of your business?

Morris: The mission is the same for the two groups and that is to provide innovative solutions for our customers that enable them to enhance the value of their businesses. Dow AgroSciences spends a significant amount of money on research, but we must make sure we’re receiving a reasonable return on that investment. And quite frankly, with the introduction of post-patent products and a wide array of “me-too” products, the value proposition in the pest management industry isn’t very strong right now. If we’re going to pursue a new product opportunity, it must be innovative technology that offers a compelling value proposition to PCOs that will enable us to secure significant market share. Those types of innovations don’t come along very often, which is why we have not pursued a lot of new product introductions in recent years. We would rather focus on those things that have proved beneficial to both Dow AgroSciences and the pest management industry over the years such as the Sentricon® System, Vikane® gas fumigant and ProFume® gas fumigant. All of our product technology is based on innovation, not simply on developing another product offering, and that’s the approach we plan to continue to take in the future.

PCT: Do you think that has led to the perception that Dow AgroSciences is no longer a leading product innovator?

Morris: I don’t think so. We may not have introduced new product chemistry to the pest control industry in recent years, but we have continued to aggressively sell and steward our existing products. As much as I’d like to introduce new products to the pest management industry, I can’t bow to pressure to introduce something if it doesn’t make economic sense for the company. Ultimately, I must make the enterprise successful for the company, its shareholders and PCOs. It has to be a good deal for all of us. Having a bunch of “me-too” products that don’t provide much value to Dow AgroSciences won’t do any of us any good in the long term. People forget that we’re the biggest company in the industry with the most limited product portfolio, but we’ve always had a limited portfolio. It’s just that Dursban® was so effective against such a broad range of pests that it appeared we had a very large product line. We simply had a lot of formulations of the same active ingredient. It’s like what currently is being done with imidacloprid and fipronil. Unfortunately, the odds of stumbling across the next blockbuster, broad spectrum product – while not impossible – are still very long. So, while we’re actively looking for the next blockbuster product, we’re not counting on it.

PCT: Dow AgroSciences has experienced its share of “ups and downs” over the years, most notably the loss of Dursban in the late 1990s, as you’ve already noted. You were a key member of the team that managed the Dursban product line at that time. What do you remember most about those days?

Morris: I remember the quality management team we had in place at the time, people like Dick Holzschu, Bruce Miehle and others, who really understood the pest control industry and had a great deal of strategic insights. I learned a lot from them. I also enjoyed working on the business plans for Dursban and Vikane, two of the best known brands in the structural pest control industry. Since they were such well-established products with such stellar reputations in the marketplace, a lot of people thought it was easy for us to manage the products. But what may look easy from the outside isn’t always easy from the inside. Just because you have a strong molecule, doesn’t mean you’re automatically going to be successful. We laid a lot of the groundwork to launch Dursban TC into the termite market, and even after sales started to grow dramatically, we invested a significant amount of time and money into being good stewards of the product. We managed the growth of Dursban TC and Dursban insecticide quite effectively during those days, and when sales began to wane as a result of the regulatory climate at the time, we worked hard to make sure the product remained profitable for the company. The key is not just to ride the wave up, but also to properly manage the products in your portfolio as they approach the end of their life cycle, and I think we did that effectively with Dursban.

PCT: Was that one of your greatest professional disappointments, watching Dursban – the foundation of Dow’s success at the time – being taken off the market?

Morris: I wouldn’t call it so much a disappointment as a business challenge. Every product has a life cycle and the challenge is to manage that life cycle properly. The toughest thing for me to cope with during my career has been the recent restructuring we went through as a company. Despite what people may think, it’s never easy for management to go through a restructuring of a business because in the end some of the people you’ve worked side-by-side with over the years – people you care about – are going to have to go home.

PCT: Does the fact you don’t have a broad spectrum, general-use insecticide in your portfolio hurt how your company is perceived by the marketplace?

Morris: It makes our job more difficult, but perception isn’t necessarily reality. It’s true, we’re not in the general pest control market, but we have a significant presence in the termite and fumigation markets. And we’re supporting the industry broadly despite the fact that we’re involved in only two market segments through our active involvement in Responsible Industry for a Sound Environment (RISE), the Professional Pest Management Alliance (PPMA) and the National Pest Management Association (NPMA). If something was identified at our lab that offered broad spectrum control and a strong value proposition, we would certainly pursue it, but as I said before we’re not basing our business future on it.

PCT: Would you consider rounding out your termite portfolio – which currently consists of Sentricon, a bait, and Vikane, a fumigant – with the addition of a liquid termiticide?

Morris: Currently we’re not looking for a new liquid termiticide. We still believe baits, specifically Sentricon, is the best technology out there. I have research money available to me, but I’m not spending it on developing a liquid termiticide. I’m spending it on improving the bait side of our business by investing in product enhancements for the Sentricon System (i.e., ESPTM technology and HaloTM Electronic Termite Detection), and I don’t see us changing our research model. Basic research on new active ingredients still happens at the corporate level rather than at the business unit level. We have broad targets as a company – i.e., developing sucking insect insecticides, chewing insect insecticides – but we’re not actively seeking a new liquid termiticide. 

PCT: So, you’re continuing to spend most of the research dollars available to your particular business unit on the Sentricon franchise?

Morris: That’s correct. There’s a significant amount of money going in that direction because we want to continue to support our Authorized Operators to add the innovation and value that makes the Sentricon System profitable. People tend to forget that the introduction of this unique technology changed the business model for termite control and dramatically improved its profit potential. The growth of the termite sector and the enhanced profitability were a direct result of the Sentricon System, so we want to protect and expand the brand by continuing to invest our R&D dollars in it. Unfortunately, there’s been significant value taken out of the termite market in recent years due to a variety of factors, but we want to do what we can to hold onto that value for everyone’s benefit.

PCT: Has the animosity associated with Dow AgroSciences’ decision to partner with a select few PCOs during the rollout of Sentricon waned over time? How do you think the average PCO feels about Dow AgroSciences today?

Morris: I don’t know how the average PCO feels about Dow. The ones you tend to hear from are vocal and negative, but there are a significant number of PCOs who like us very much and appreciate how much we support the industry. I just hope they understand the rationale behind our business decisions. Even though they may not have been selected as an Authorized Operator during the launch of Sentricon it was simply a matter of wanting to make sure we rolled out the product successfully and managed the process efficiently. Unfortunately, there are a number of folks who feel like, ‘You did it to me, so now I’m going to do it to you.’ We live with some of that on both the pest control and distribution side of the business, but that was a risk we were willing to take to remain true to our business model.

PCT: Now that you’re in a leadership position, what are your plans for the pest management industry moving forward?

Morris: We have three pillars to our strategy. The first is innovation. We are continuing to invest in innovation throughout the company, but particularly as it relates to the Sentricon, Vikane and ProFume product lines. Second, we’re continuing to invest in stewardship. We want to make sure we don’t compromise our principles based on current market dynamics. I’m not willing to compromise our technical success and stewardship to make a quick buck. Obviously, I have to make sure we’re financially successful to satisfy management and our stockholders, but before launching a product I want to be sure it’s going to work, otherwise I’m not going to bring it to market. And the last piece of our strategy is providing value. We need to provide value every time we interact with the customer, whether that’s in a sales role, a stewardship role or an education role. What I’ve tried to do since I’ve been here is to ensure that those three fundamental parts of the equation don’t change now or in the future. We’re not going to give up on innovation because the market is tough. We need to be innovating constantly, identifying new opportunities for growth and providing long-term sustainability for the company.

PCT: How has the influx of post-patent products impacted your business?

Morris: It’s affecting the fumigation side of our business, but we’re dealing with it. Although we’re not taking a direct hit from generics on our Sentricon System business, it is impacting the overall value of the termite market, and it will continue to do so in the future, particularly when fipronil goes off patent. Fortunately we still have the higher value umbrella, but it’s definitely negatively impacting the termite market.

PCT: What else are you doing to remain price competitive?

Morris: The key for us in the fumigation market, where Vikane is competing against post-patent products, is to strategically differentiate our portfolio from something that looks like us, but isn’t like us. We’re continuing to invest in stewardship to differentiate ourselves, but the reality is you have to remain price competitive. You have to have a realistic understanding of what your point of differentiation is worth to the customer. So far, it’s going pretty well, but it’s not easy. In a generic environment it gets pretty tactical, sometimes coming down to a knife fight at the customer level. Ultimately, however, what’s most important is the relationship you have with the customer, and that’s where we think we have an advantage based on our long history of product stewardship and industry support.

PCT: Given the dearth of new active ingredients, what are some of the major product opportunities that are not currently being addressed in the pest control industry?

Morris: Most of the discussions at the basic manufacturer level are very broad. However, I think opportunities exist for “combination” products and those products that complement the industry’s existing portfolio. There are obviously discussions going on throughout the industry and we’re involved in many of those discussions, but management wants us to concentrate on maintaining our current enterprise, while identifying additional growth opportunities as they develop.

PCT: Could those discussions result in merger talks between any of the industry’s leading manufacturers?

Morris: I don’t see a major merger or large acquisition occurring at the basic manufacturer level in the near future, but that doesn’t mean it’s not going to happen. I just don’t think it’s going to happen in the near term. In any business you need to take calculated risks, but not implode the enterprise, so Dow AgroSciences is exploring a number of joint ventures and new product opportunities both inside and outside the industry. As they say, “You can’t steal second with your foot on first base.”

PCT: Some of those discussions have occurred with a company called Exosect. Can you tell us a little about this relatively new relationship for Dow AgroSciences?

Morris: Sure. Exosect Limited was formed in 2001 to commercialize innovative pest control technology developed at Southampton University’s School of Biological Sciences in England. Focusing primarily on R&D, we recently extended our joint product development agreement with the company, which will allow us to continue to work together to research, develop and bring to market attractants and active ingredients formulated with Exosect’s patented powder carrier systems. This technology isn’t currently available in the structural pest control industry, but since Exosect specializes in IPM-based, environmentally acceptable pest control products, the market for this innovative technology is quite broad, including public health, crop protection (agriculture and horticulture), stored product and landscape. We believe the relationship offers great promise.

Dave Morris Timeline

1980 — Dave Morris earns bachelor’s degree in entomology/plant pathology from University of Delaware

1982 — Morris earns master’s degree in entomology from Virginia Tech

1982 — Morris joins Dow AgroSciences as a field sales representative

1982 — Dursban TC termiticide launched

1985 — Morris named Marketing Research Analyst for Specialty Products

1986 — Morris named Product Manager for Dursban TC and Vikane gas fumigant

1989 — Morris named District Sales Manager in the Midwest for the Pest Management and Turf & Ornamental businesses

1989 — Dow Elanco formed by joint venture of agricultural businesses of Dow Chemical and Eli Lilly & Company

1991 — Morris named Human Resources Manager

1991 — Dimension specialty herbicide registered

1994 — Morris named Group Marketing Manager for Turf & Ornamental business

1994 — Dow AgroSciences moves into new global headquarters in Indianapolis

1995 — Sentricon System commercially launched in U.S.

1997 — Morris named Global Business Leader for Telone Soil Fumigant

1997 —Dow AgroSciences formed when assets of Eli Lilly & Company were acquired by The Dow Chemical Co.

1999 — Morris named Global Business Leader for Spinosad insecticide

2000 — Morris named six sigma champion

2000 — Dow AgroSciences voluntarily agrees to phase out residential uses
 of Dursban insecticides

2001 — Dow AgroSciences acquires Rhom & Haas

2002 — Morris named Global Commercial Process Leader

2004 — Morris named Commercial Leader for Pest Management

2004 — ProFume gas fumigant registered in United States

2005 — Hex-Pro Termite Baiting System introduced

2006 — Halo Electronic Termite Detection System introduced

2007 — Morris named Commercial Leader Urban Pest Management Business, which combines Turf & Ornamental and Pest Management businesses

The Dave Morris File

Title: Commercial Leader, U.S. Urban Pest Management

Age: 49

Career Accomplishments: Graduate of University of Delaware, bachelor’s degree, plant pathology and entomology; master’s degree, Virginia Tech, entomology; filled a wide array of management positions at Dow AgroSciences; active in association affairs, including the National Pest Management Association and Responsible Industry for a Sound Environment; board member, Professional Pest Management Alliance.

Family: Married to wife Page for 25 years; three children – James, 19; Alyson, 17; and Sam, 14.

Interests: Golf, music, reading, baseball, football and his children’s extracurricular activities.