My good friend, the Lutheran ex-pastor has put me on the spot again. He’s positing a dichotomy between the 99% and the 1%, when in fact the only difference is that the 99% incite police to violence and use of pepper spray by doing nothing. How can the police withstand that kind of provocation? That’s not the problem though; he exacerbates this artificial division by asking if the 1% is mostly psychopathic as suggested by the Toronto Star: Weeding out corporate psychopaths, which displays the following unflattering photo of the 1%.I felt it necessary to send him this response.
I don’t know how you can make accusations like that. One of the greatest corporate saviors of the century was “Chainsaw” Al Dunlap, who single-handedly saved at least half a dozen major companies. He aptly anointed himself as “America’s best CEO”. A few industry bullies like Bloomberg Businessweek tried to sully his name by calling him “condescending, belligerent, and disrespectful” and some went so far as to call him a “petty tyrant” or “class A-1 asshole”, but they were just jealous.
I fondly remember him from the days when I was in the paper and wood products industry. As a fresh graduate of West Point, he learned his lessons on leadership – very well: it’s the underling’s fault. He broke (paper industry pun) into the paper industry as a factory superintendent at Kimberly Clark and moved on to general superintendent at Sterling Pulp and Paper at the Eau Claire mill, honing his razor-sharp leadership skills. He continued his rise with the executive vice presidency of the Performance Plastics division of American Can. Next, he went to Manville Forest Products Corporation and ran it for 6 months until it went bankrupt (not his fault, though – leadership).
Big Al’s first crack at CEO was with Lily-Tulip, where he immediately fired 20% of the workers, 50% of the headquarters staff, and sold two of their manufacturing plants. As often happens when you sell your equities and lay off workers, the short-term finances improved, and the companies owners quickly unloaded it as an IPO, and two years later, Fort Howard Paper saw an opportunity to eliminate a competitor, and bought the shares for twice the IPO price. Dunlap came out smelling like a rose, and this was the flagship example of the many companies he “rescued”. (Manville was long forgotten.)
His next job was as CEO with General Oriental Securities Limited Acquisition Group, “restructuring” parts of Crown-Zellerbach. Near the end of this stint, because Dunlap was such a swell guy, he helped do the same thing to (sorry, for) Australian National Industries. During this period, Sir James Goldsmith called Dunlap a “barking dog”, which he liked because it got Wall Street’s attention. Al went on to become CEO of Anglo Group, PLC to attempt a takeover of BAT, and he failed miserably – but it wasn’t his fault either. He had a short stint as CEO with GreyStar, Inc. where he shared his voluminous knowledge of management with GreyStar and other companies.
That same year, he became CEO of Consolidated Press Holdings Limited with a mission to unhinder the company from all those diversifications that prevented cyclical earnings swings and got back to basics with the core competencies. Dunlap succeeded in selling off 273 of the company’s facilities, leaving 140 and a pile of cash that needed to be distributed among deserving executives and shareholders. His next big success was as CEO of Scott Paper, where he immediately laid off 11,000 employees. He also sold off Scott’s wholely-owned subsidiary, S.D. Warren for 2 billion dollars, but not before getting rid of one third of their global work force. He then sold Scott to their rival, Kimberly-Clark for 7.8 billion dollars. Again, Dunlap was the share-holder’s best friend (as well as his own, since he had obscene stock options).
His next stop was at Sunbeam, which had an interesting history of its own. It went bankrupt several years earlier in 1988, and it was purchased in 1990 from its creditors by Price, Steinhardt, and Kazarian, who installed Kazarian as CEO. Kazarian’s business practices were too conservative and risk-free for his good friends Price and Steinhardt, who then relieved him of his duties, and he was replaced by GE’s Roger Shipke, who was more than willing to take a few risks. He expanded Sunbeam until it was too big to fail. He was planning to make major push into Mexico, but his business went south when all his best-layed projections didn’t work out.
Enter your Savior and mine, Big Al. He immediately got rid of half the workforce [after all, what do they do but just work?] and sold 80 of Sunbeam’s 114 plants. Sounding familiar? It’s good fiscal policy. He also fired all but two of the original executives and replaced them with his own. Just to keep things on the safe side, he replaced the entire board of directors but one. Everything was nearly complete. In 1997 he reported record earnings for Sunbeam by under-reporting the earnings for 1996. There was only one problem though. He couldn’t find a buyer for his dead horse as late as 1998, and the carcass was getting a little ripe. It had worked every time before — why not this time?
Then he had a brilliant idea. He bought Coleman (maker of camping gear) and Signature Brands (maker of Mr. Coffee and First Alert). He was able to meet payroll with revolving credit. His marketing genius led to abrupt increases in sales. He was selling to retailers at huge discounts. [How do you make up for selling at a loss? Volume!] He also billed sales and shipped them to third-party warehouses. He had a firm grasp of how capitalism works.
Two months after pushing Sunbeams stock to an all-time high of nearly $53, majority stockholder, Michael Price sang Dunlap’s praises saying that he “is an outstanding executive and Sunbeam is fortunate to have him.” A week later the stock had dropped to $16, and the board of directors noticed that the dead horse wasn’t smelling any sweeter, and the ungrateful bastards fired him. The stock quickly went from $16 to being worthless.
The SEC held a quick investigation (also finding unspecified “irregularities” at Scott Paper) of how Dunlap made his 100s of millions of dollars and socked him with an undeserved overwhelming punitive fine of $500,000. Just trying to drag his good name further through the dirt, Nitec Paper accused him of massive accounting fraud when he was their president – just as the press is doing to Herman Cain.
Dunlap wrote a book while he was going from Scott Paper to Sunbeam entitled Mean business: how I save bad companies and make good companies great. Two reviewers said “He’s been fixing companies for more than 20 years … his strength is being able to look at troubled companies objectively.” [and then squashing them? Is this where Ayn Rand came up with “objectivism”?] followed by “His outspokenness is refreshing … workers and shareholders alike will applaud his approach to high-salaried CEOs whose companies are crumbling.” [Is that because he takes even more outlandish stock options than anything former CEOs could get in salary? Do workers applaud because they know they’re going to get kicked out on their asses and that they’ll have to maximize their potential to be as good as they can be at flipping burgers?]
I could go on about how great “Chainsaw” Al was, but I remember one heartwarming episode in my career when our company got a new vice president. He was the very model of a modern major general … well maybe just a manager. He was a great practitioner of MBWA (Management By Walking Around). He inspected everyone’s desk at 8:00 every morning to see who wasn’t there. If they weren’t, they were permanently gone. In addition, we had a guy who showed up before 7:00 every morning and worked past 5:00. He took an active role in making sure that no machinery in his section failed, and he even held a couple work-related patents. Guess who was already down on the shop floor away from his desk at 8:00. Our very model of a modern vice president even tried to fire a couple people in our section (not in his jurisdiction), and he met up with our very obstinate manager and his even more obdurate vice president. I’m sure it’s occasions like this that Ayn Rand used to rail at where the movers and shakers are prevented from doing their work.
I just hope that you weren’t referring to these outstanding examples of capitalism at its finest, ex-pastor. After all, it’s a win-win situation. The CEOs and stockholders make out like bandits and the former employees only get stronger in character for their experience. Well almost everyone wins. Crybaby socialists, taxpayers, and the 99% minority are never the right people to make these decisions.