Thomas W. Swidarski became president and chief executive officer in December on the same day his predecessor, Walden O’Dell, abruptly resigned. The company’s earnings had tumbled during O’Dell’s tenure, and its image was damaged by politics — including questions and shareholder lawsuits focused on Diebold’s electronic voting machines.

Diebold’s elections business, which had been under Swidarski since 2002, improved last year. But that business is less than 6 percent of the bottom line. It was the company’s core ATM and security businesses that did badly.

“Those are the neon signs saying to me you need to change the way you’re doing some of your fundamental business,” the 47-year-old Pittsburgh native said.

Diebold watchers are tentative.

“Maybe he’s the one who realizes the problems more than anyone and so understands what it takes to fix it,” said Mark Lanyon, an equities analyst who tracks Diebold for Morningstar in Chicago.

But “the negative way to look at it is he is one of these guys who was at the helm of an underperforming business.”

THE FUNDAMENTALS
Swidarski said the $100 million cut in costs will come over three years and can’t be done without getting back to basics.

The first challenge is to make sure he has the right people in the right places. Swidarski said he’s pleased with appointments he’s made, and the management team around him, a number of them promoted in the last year.

He said he’s been able to make some changes right away because he’s been at Diebold for 10 years. He knows many of the workers, he added, because he likes to walk around the facilities and talk with people.

“Anybody in any position at this level of a company this size can’t do it all themselves,” he said. “Anybody who thinks they can solve all the world’s problems from a single chair is absolutely wrong.”

He also believes — from the e-mails he’s received since December — that he’s working with a lot of people who care about the company.

In the past, “our reaction was not to address the heart of it, our reaction was to try and fix these things short-term.

“Our financial performance was poor last year. There’s no doubt about it, by any measure,” he said. But the disappointment was keener because expectations were so high. “You’re still a company making a hundred-plus million dollars,” he said.

He identified five priorities for improvement on his first day as CEO. He talked with board Chairman John Lauer about them, keeps them on a board in his office, and sent them out in an e-mail to all employees.

PRIORITIES
The first is customer satisfaction. “To me, everybody in every function, everywhere at Diebold needs to recognize that we’re here because of customers. I want to measure customer satisfaction and know how we stand, how we’re going to improve.”

Next comes product and service quality, ensuring it’s “world class.”

Swidarski said Diebold has the premier ATM in its Opteva with Agilis software, and has 3,500 to 4,000 service technicians in the United States, but it needs “to have a process in place and a monitoring, a measuring device in place, that I can be assured that a community bank in Idaho can get the same service as a bank in Canton, Ohio, as a bank in New York.”

“People can make and design a product, and sell a product. But who’s going to take care of the product, 24 hours a day, seven days a week?”

MAJOR PROCESS
With Diebold’s emergence as a global company, its supply chain became an issue, Swidarski acknowledged.

“We need manufacturing capacity, assembly capacity, in every region of the world.” And because every region has its own characteristics, “you need to have the ability to make the last 10 or 15 percent (of an ATM) unique ... on each continent.”

Diebold is upgrading factories in France and Shanghai, China.

The length of time it takes from placement of an order until it’s filled and paid for has Swidarski’s keen interest. That’s where he thinks the company has had trouble lately.

The process starts with selling and placing orders, he said. Anything wrong with the original order or the manufacturing, “all the way to collections on the other end” slows the process down, and that hurts customer satisfaction.

Swidarski’s goal is to cut 30 percent from the time in that process.

Diebold also needs to improve communications, he said, with customers and among employees. He said the e-mail about his priorities that went to everyone in the company on his first day as CEO underscored, “Hey, guys, the world is changed, that’s what this is about. The world changes every day, here’s what’s going to happen. Here’s some thoughts on that.”

His last priority is improving profits. Success with the other priorities, he said, will accomplish that.

“If you focus on this, you’ve missed the underlying issues of how you improve this. I don’t want to start making quarterly decisions that are inconsistent with where we want to take the thing strategically.”

Decisions made only to make short-term profits “come back to bite you,” he said.

“I’ve got to invest,” Swidarski said, and that means adding people, tools and technology.

That’s why he said global headquarters here isn’t likely to see job cuts. “As a matter of fact, it probably is adding a few headcount here,” he said. “This is the nerve center of Diebold.”

So where will cuts come?

Part of cutting $100 million will be making sure Diebold is “in the right locations in every area of the world,” with Europe a prime consideration. Diebold comes in third in the ATM marketplace there, Swidarski said, so European manufacturing, service and management all need to be addressed.

Diebold’s elections business is another piece that’s being evaluated, Swidarski said.

When Swidarski took that end of the Diebold business over, he had no experience with electronic voting machines. The division quickly drew public fire.

O’Dell, Swidarski’s boss, took heat in 2003 when he invited people to a fundraiser for President Bush with a letter stating he planned to help “Ohio deliver its electoral votes to the president.”

Swidarski donated $2,000 to the Bush re-election campaign in 2003 but says he has no political connections now. Diebold now bars its top executives from making political contributions.

“He made that donation as a personal decision. A lot of other Diebold execs made a similar decision when Wally O’Dell was an active fundraiser,” said Mike Jacobsen, Diebold spokesman.

Swidarski said he feels good about the product and its capability, but the voting business is a wild card.

“The issue of politics ... is very different than the other businesses we’re in, and so I have to determine if we can handle that aspect of it.”

Reach Repository Business Editor Pat Kelley at (330) 580-8323 or e-mail:

pat.kelley@cantonrep.com.