EY alumn Ron Armstrong spoke with us about the transformative age, sharing a glimpse of what innovation looks like from his vantage point.
Ron Armstrong is focused on innovation at PACCAR, a global technology leader in the design, manufacture and customer support of commercial trucks under the Kenworth, Peterbilt and DAF nameplates. He joined the Bellevue, Washington-based Fortune 500 company in 1993 as Assistant Division Controller for the Peterbilt division, and in 2014 he took the wheel as CEO, a role that had been held primarily by members of the founding family since 1905.
In 2017, PACCAR shifted into high gear, launching its Silicon Valley Innovation Center to coordinate next-generation product development and identify emerging technologies to benefit vehicle performance over the long haul.
How did your time at EY affect you personally and professionally?
I spent the first 16 years of my career at EY in my hometown of Oklahoma City, and a lot of building blocks were formed there. One of the things that I recall quite vividly is the quality of the training that I received — initially, as a young audit professional, and then as I progressed up through the ranks and was able to take management training courses. I was a pretty good accountant, but some of the things I learned about management were especially important for me.
The office had a very collegial atmosphere, and I learned a lot about how professionals can work together to get things done. I came to understand the importance of consultation and getting input from others who may have more knowledge or a different perspective. And I got to do things beyond accounting and auditing, which helped me appreciate that while a task may stretch you beyond what you’re comfortable with, when you’re able to work through that and accomplish things, it gives you confidence to take on the next challenge and the next.
In fact, I believe that my experience as a senior manager at the firm, getting involved in and exposed to corporate governance at the Board and Audit Committee, was a key enabler for me as I was considered for the opportunity to become PACCAR’s CEO.
Who are some of the EY people who influenced you?
There are so many, but one team that I was on early in my career was especially influential. I spent two winters in a row at a client in Wichita, Kansas, supporting engagement partner Harold Russell, who was really sharp technically; audit manager Ron DiPietra; and senior Bob Dean. They were all just great to work for. I built a lot of valuable skills learning from those guys.
After Harold retired, we had an excellent group of partners — Rick Corn, Joe Rigsby and Duane Thelen — all of whom have since retired. They stood for something that was special, and they didn’t compromise. And seeing that kind of leadership helped me develop my thoughts about management and leadership and has influenced the leader I am today.
On the personal front, Greg Price and retired partner Mike Sanders remain good friends of mine. Greg and his family’s trucking business is one of Kenworth’s best customers. Those relationships were built early and have flourished over time.
As a leader in the commercial vehicle sector, how do you see the industry transforming?
The speed and breadth of technological advancement requires us to be working on many different things simultaneously. We continuously invest in new technologies to reduce greenhouse gas emissions, and there’s a lot of discussion about electrification of the power train.
Right now, the economics of electrification for commercial vehicles, particularly heavy commercial vehicles, don’t make a lot of sense. But we have to be working in that electrification arena to make sure we’re ready as that transition starts to occur.
Another thing that’s happening is connectivity. Every truck that we build now in North America has a black box that monitors and communicates what’s going on in the vehicle, to provide the driver and the fleet owner with information on how the truck is performing.
That connectivity is giving us diagnostic information, and we’re in the process of translating that diagnostic information into prognostic information. A truck down for our customers is lost revenue, so it’s all about keeping that truck up and running.
And of course, we’re testing autonomous vehicles. We’re years away from that becoming a reality, but we’re working with technology companies and industry companies on developing that capability.
How did that focus on innovation lead to the creation of PACCAR’s Silicon Valley Innovation Center?
You always have to be investing and thinking about what the future’s going to hold. Some of our engineers and IT people had visited with companies in Silicon Valley and, as time went on, the feedback they brought us grew richer.
So in October 2016, we had one of our senior executive meetings there. We visited technology companies that had a big presence in the automotive arena, and it became clear that there was a lot of development work on autonomy — and Stanford has a program that focuses on this. We realized that to keep tabs on developments, we needed to have a presence in the Valley.
In September of 2017, we opened the center, and it has been great for us because we’re the only dedicated commercial vehicle company in Silicon Valley. A lot of companies are developing technology, but they need a platform on which to test it and demonstrate it. On the commercial vehicle side, PACCAR has become the platform of choice.
How soon can we expect to see some autonomous technologies in the market?
The limiting factor on a lot of these technologies coming to market will be driven by society and what the regulators and the insurance companies think. There are a lot of questions about what these technologies mean and who’s going to take responsibility if something goes wrong.
It will take years for that to sort itself out to the point that you could have a full integration of autonomous with non-autonomous vehicles operating on the same street at the same time and each feeling secure that they’re going to achieve whatever their purpose is. It’s a pretty experimental time, but the technology will probably be ready before the regulators and society are ready to accept it.
Where do you think the industry will be 20 years from now?
We’ll definitely see a greater level of autonomy for vehicles. The power trains will be very clean, very efficient; whether they’ll be electrified, powered by hydrogen fuel cells, or use some other technology, I don’t know. But you’ll get more miles per gallon or watt.
I also think we’ll see a higher degree of 3D printing for vehicle components, which I see becoming a more viable technology option going forward, particularly for lower-volume application. Right now, we use 3D printing in the design effort for both plastic and steel prototype parts. It’s not ready for mass production, but if you’ve got a truck that’s 20 years old, and the parts are no longer available, we may be able to provide you that part through a 3D printing process.
What’s it like to drive a PACCAR truck?
Depending on the truck, it can be very relaxing or very challenging. Manual transmissions require double clutching, and if you don’t know how to do it, you’re going to grind a lot of gears — at least I do. But manual transmissions are fading away in favor of automated transmissions, which are not much different from driving your car — except when you’re driving a tractor with a 53-foot trailer, you can’t take a turn the same way. You’ve got to factor that trailer in. And some of us have learned that lesson the hard way (laughs).
These days, we’re all constantly learning. You’re innovating in the office, too, creating open workspaces to foster collaboration. How are your people responding to that change?
Our younger people especially seem to enjoy it, and even longtime employees have been surprised at how much they like the new space. One gentleman who’s been with the company for more than 40 years told me: “After so many years here, I would never have even thought about sharing the details about my workspace with my family. This is so cool and different, and it makes me excited to come to work, so I took pictures to share at home!”
That’s nice to hear from someone so rooted in the company. The basic philosophy of the company doesn’t have to change, but within that culture, we can be more flexible and adaptive.
How do you approach hiring and development in this time of perpetual change?
Employees still want opportunities to progress. That’s no different from when I joined EY 41 years ago. People want to do a good job, they want to be recognized, and they want to have the opportunity to build a career. If you can provide that, you’ve got something to offer. I’ve learned that when it comes to hiring, you don’t settle. You can always find somebody who can do a job. But at PACCAR, like EY, we also want them to be able to do the next job and the next.
More about Ron Armstrong:
- He’s been married 42 years to Pam, with whom he has two children and two grandchildren.
- Family comes first! His granddaughter’s dance recitals are a calendar highlight.
- Ron loves to play golf, especially with his son and son-in-law.
- He is a member of the Business Council, based in Washington, DC, which provides a venue for the world’s top CEOs to engage in discussing key global business developments.
- He’s a member of the Board of Directors of the United Way of King County (Seattle area).
- Ron is a director of the Washington (state) Roundtable, a group of CEOs who work together to effect positive change on public policies important to state economic vitality.