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Texas Gal
Chapter Thirty-Five Born to Shop!
Saturday began with a communal bath, followed by breakfast and then a long ride before the heat of day drove everyone to look for shade. We spent the afternoon either inside the house or on the front porch with cold iced tea or lemonade handy. Sunday was similar, except that we attended services instead of going for a ride.
Early Monday morning Mary and Judy headed back to their jobs, with Mary leaving extrta early because she had to drive to Abilene. When I left with Auntie for her office, Susan was packing her bags. The plane was scheduled to pick her up at 8:30 to take her North so that she could continue the inspections.
I spent the next two weeks working with Auntie. Most of the time was spent in her office studying sounding reports, USGS topographic maps, and reports prepared from drilling samples. We also traveled to drilling sites in Auntie's Cessna 206 a couple of times, and I sat in on several meetings with her employees, one with her accountant, and one with a potential drill site land owner. Auntie was still very busy with the ranches that she had signed up when I first came to Texas, but she was also talking with other people who had heard of her environmentally friendly drilling practices, and signing with some of them.
I had been away from Vermont for three weeks so I felt that it was time to return after my two weeks working with Auntie. On Sunday the Gulfstream II picked me up and took me to the Rutland airport where Earl was waiting. Earl had driven for hours to be there to chauffeur me and I thanked him. As usual he said that it was nothing. He said that he loved to drive and the air-conditioned comfort of the limo made it pleasurable place to be.
The guards still saluted when I passed the booth at the plant entrance and Earl dropped me off in front of the office building as the first shift was starting. I was greeted by everyone that I passed on my way up to the executive suite and I stopped to talk to Nancy for a few minutes before continuing on to my office.
My desk was piled high with papers, and after I put my things away and prepared a cup of tea, I waded into the paperwork. Much of the material was employment forms for the employees at the two Maine plants and the Gorham plant. After reading through each form, I retrieved the key from my desk and took the forms out to the file room off my outer office. My desk had become too crowded with the forms and I had asked Nancy to set up one of the file cabinets in the room.
I found the file cabinet that she had set up, figured out how she had arranged the drawers, and began filing the new forms. It didn't take too long because she had already filed the forms from all of the other plants. She had also taken my list of people who had separated from Piermont and moved their forms to a separate file drawer.
It was about eleven o'clock when I finished filing the almost three hundred new forms. I know that I could have had someone sent up from the pool to do it, but it would help fill my day. I made myself another cup of tea and sat down at my desk again. The remaining paperwork consisted of a typed draft copy of the master plan, a stack of mail, and the letters offering companies for sale. I went through the regular mail first. Nancy had already presorted out catalogs and junk mail. The trade magazines were already over on the coffee table by my sofa. It only took me about ten minutes to look through the rest of the mail. Some went into the garbage, and most of the rest went into a pile for Bob's review. The few that remained went into my file drawer, now almost empty without the employee forms.
I decided to leave the master plan draft until later and picked up the folder containing offers. There were thirty-six letters in the folder, no doubt a result of the recent trade publication articles about the Maine and Gorham acquisitions, on top of all the past articles. I immediately separated out the small companies and the international offers.
That left twelve others. There was one offer each from companies that manufactured matboard, formed paper products, cardboard, and roofing material, and one that did custom forms printing. There were three offers from a paper plants producing soft goods, and four making newsprint, Kraft, and bleached paper manufacturers.
I moved the matboard, formed paper products, and soft goods offers to the reject pile. I had no interest in getting into those areas yet. We also had plenty of capacity in our three cardboard plants so that one joined the others in the reject pile. That left the roofing material manufacturer, the custom forms printer, and the four paper manufacturers.
It was lunchtime so I took the reject folder out to Nancy and went down to the cafeteria. The room was just starting to fill up and I got in line for food. I was content to wait for my turn, but the people in front of me kept insisting that I go ahead of them so I moved up quickly, thanking each as they stood back allowing me to pass.
I picked up a small salad, and an orange on my way to the hot foods section. Today's special was fried chicken with mashed potatoes, gravy, and mixed vegetables. I took my food after being waved through by Beatrice and returned to my office.
As I ate, I studied the six offers that were left from the original thirty-six. One of the paper manufacturing offers was for a plant in Pennsylvania. I noticed that a Texas building products company had sent it, so I assumed that it was the one that Grandma had mentioned. Most interesting about it was that the plant wasn't operating. It had apparently been passed along in two buyouts during the past five years. Losing money when a windows manufacturer acquired it in the first buyout, the plant was closed down. The new owner had no interest in opening and operating a paper plant that was losing money so they were looking to sell it off, as is.
Next I read the offer from the custom forms printing company. They were located in Illinois and appeared to be about the size of our Danbury plant. The asking price was 21 million, which was about seventy-five percent more than we paid for Danbury just two years ago.
The roofing material manufacturer's offer looked interesting. They made tarpaper and shingles. It was an entirely different product group from our normal lines, but it fit into the construction areas serviced by Ameri-Moore's lumber and forestry division who made a great variety of lumber and wood products. Even our own sawmills, acquired in the Appalachian acquisition, made board lumber and plywood products, although I expected that we'd be transferring them to Ameri-Moore at some point.
The next offer was from a paper producer that dealt mainly in recycling paper products. This was something that I was considering for the future but I added it to the reject pile. The market for recycled products was new and still a bit small.
The last two offers were from paper manufacturers in the Northwest. Both were single plant operations, one in Orofino, Idaho, offering newsprint paper and the other in Wenatchee, Washington, offering bleached papers such as we made in Brandon.
I cleaned my dirty dishes and then sat back down with the five offers spread out on my desk. Except for the one plant in Pennsylvania, none of the other offers seemed to have the potential for being a great deal.
The custom forms manufacturer seemed overpriced. It's true that I was valuing our Danbury operation at 25 million now because we had doubled the volume of business since we had purchased it, but if I was going to spend 21 million to increase our forms business, it might be better to put in it into the new plant that I had included in the master plan. Still, I left the offer on the desk instead of putting it into the reject pile.
The roofing materials manufacturer represented a whole new business and I didn't know if I should even be considering it at this time. They didn't even make the paper that they used in their manufacturing process.
The phone interrupted my concentration. It was Bob asking if I was available. I said yes and he said that he'd be right over. A couple of minutes later a knock at the door preceded his entry.
"Hi, boss."
"Hi, Bob, how have you been?"
"Great. Sorry I didn't stop over earlier. I've been tied up all morning."
"No problem, I've been busy with paperwork. I see that you wrapped up the Gorham deal already."
"Yeah, it went through fast. We've brought the note current and the bankers are delighted. Bill's working on the accounts payable and we'll have all the supplier's bills brought current in a week or two, as soon as all the statements and invoices are reconciled. I haven't heard anything from South-Core yet. I wonder if they've managed to lift their jaws up off the floor?"
"After the South Shore deal they probably don't want anyone to know that we snatched another deal out of their hands before they had a chance to close it."
"It'll come out eventually. Too many people know about it already. Nedermyer was pretty bitter towards South-Core. He might talk to the press himself."
"Could be. I'm sure that they've contacted him already. As soon as word gets out about a buy-out the reporters get on the phone so they can develop their stories."
"Speaking of buy-outs, anything interesting in the latest offerings?"
"We've got one from a wood products distributor in Texas. They acquired a defunct paper plant in the buy-out of a windows manufacturing operation. The windows manufacturer had itself acquired the company in a buyout, and closed it down because it was losing money. I don't know what kind of shape the plant or the equipment is in. The plant is in western Pennsylvania."
"How much are they asking?"
"They say that we should make an offer."
Bob nodded. "Anything else in the offers?"
"We have a custom forms printing operation in Illinois being offered, but it looks like they want top dollar. There's also a roofing paper manufacturer looking to sell out."
"Roofing paper? Are you considering that?"
I shrugged. "They need tons of paper to make that stuff, as I understand the process. We have a lot of excess paper making capacity right now, but I'm not sure what the requirements are for the paper that they use, or if we can produce on any of our present lines."
"Where are they located?"
"Western New York State."
"Is that it?"
"No. I also have letters from two paper producers in the Northwest. Both single plant operations. One makes newsprint and the other makes Kraft."
"The Northwest? That's a long way off."
I smiled. "Just five or six hours away by plane. We certainly couldn't look the plants over in a one day trip though."
"How much are they asking?"
"One is listed at 11 million and the other is asking 14."
"I assume that they have timberland as well?"
"The lower priced plant says 18,000 acres, and the other lists 31,000 acres."
"Well— we can't expect too many Gorhams to fall into our lap."
"No, that's true. We may have had our share already. Do you want to look into them?"
Bob smiled. "I thought that you'd never ask."
I smiled back. "I knew that I didn't have to."
After Bob left I went over to the sofa and relaxed as I caught up on the trade news. The most recent issue of The Paper Press had an article about our acquiring Hockler Paper in Maine and Gorham paper. I read, 'DD has been shopping again. Her latest purchases include the two Hockler Paper plants in Maine, along with 100,000 acres of timberland, and Gorham Paper in New Hampshire who brought 68,000 acres to the table. Mr. Kurt Hockler has confirmed that he sold his company for only ten million dollars, but in an even more astounding revelation, Mr. Nedermyer, former owner of Gorham, has reported that DD paid only four million for his company. Gorham had been having problems since the plant was destroyed by fire several years ago. After rebuilding the plant and installing two new paper-forming machines, they were never able to get reestablished. They were just days away from a bank foreclosure when DD stepped in to bail them out. Mr. Nedermyer expressed his gratitude to DD for a generous settlement compared to a prior offer from South-Core, whom Nedermyer described as "pirates practically trying to steal the plant". Once again DD has taught South-Core a lesson in how it's done. With these acquisitions, Piermont has entered the ranks of the companies producing newsprint paper. If they employ their normal marketing tactics of providing a high quality product at very competitive rates, then newsprint buyers have a new, reliable source to fill their product needs.'
I smiled to myself. It was a wonderful endorsement for Piermont, and better publicity than the ads that we placed in many of the trade publications. I continued reading the trade magazines until it was time to return to the hotel at 6 p.m.
On Tuesday I worked on the Master Plan. I reworded some sentences that looked ambiguous after seeing them on the typed pages and added a paragraph or two in several places. After reading the final draft several times, I gave it to Nancy for typing. Before returning to the pile of trade magazines in my office I went for a walk through the plant. As usual, things were humming. Paper was being formed at a fantastic rate as workers supervised the process. I watched as a roll was finished and a new roll started before continuing on. I finished up at the loading dock where several railway cars were being loaded at the same time that seven tractor-trailers were being filled. I returned to my office after watching for a few minutes.
As I passed Nancy's desk she told me that Bob was looking for me. I called him from my desk and he came right over.
"Hi, boss. I have the preliminary information on those five offers. Bill is still looking into the financial data on the plant in Wenatchee, Washington.
"That plant in Pennsylvania has been closed for more than four years. The building was put up in 1956 so it was only used for eleven years before being closed down. The company that originally owned the plant, Allegheny Paper Box, had financial problems from the beginning. The owner kept pumping money into it, but finally sold out in 1961 after he was almost bankrupt. The new owner, a sawmill operator, bought it to get the timberlands that went with it. They tried to operate it but it continued to lose money. They sold it to the windows manufacturer in 1964, along with a trucking company that they had acquired. The windows manufacturer tried to run it and then gave up in 1966. They laid off the employees and closed the place down. That's how it sits. No trees, no experienced employees, and no customers."
Bob looked up at me.
"Doesn't sound very good, does it?" I said.
"Sounds like a Jonah. Three companies couldn't make it pay."
"Maybe they just weren't doing it right."
"Sounds like you want to take a look at it."
"Might be worth a trip. It can't be much more than an hour's flying time."
"In the jet, yes. In my small plane it would be about three and a half hours."
"Are you telling me that you have your license already?"
"No, I wish. I've soloed though, and I'm getting ready to do my first cross-country trip. I love it. I can't wait to go flying each weekend. I was referring to the plane that I rent from the school for my practice."
"At this rate you should have your license in a couple of months. We'll have to start looking around for a plane for you."
"There's a used Cessna 172 for sale down at Rutland. The price isn't too bad."
"I think that a 206 might be a little better. It has greater speed, greater range, and more capacity if you want to transport a small group."
"That's fine by me. I was thinking of the initial cost, and higher operating costs."
"The time that we saved would justify the extra expense."
"Okay, boss. I'll keep my eyes open for a used 206."
I picked up the phone and asked Nancy to get me the person who had sent the letter from the wood products distribution company. Bob and I talked about flying while we waited. In about five minutes, Nancy called to say that she had a Mr. Rojas on the line. That wasn't the name on the letter but I picked up the phone.
"Hello, Mr. Rojas. This is Darla Anne Drake."
"Good Morning, Miss Drake. I'm sorry but Mr. Billings is not available today. May I help you?"
"I don't know. I'm calling about the proposal that Mr. Billings sent to me about the property in Pennsylvania. The former paper plant?"
"Yes, I can help you with that. What would you like to know?"
"My first question is about the price. There wasn't any quoted in the proposal."
"We're open to offers on that property."
"Before I set aside an entire day to go look at the property I'll need the range that you're looking at. If you say more than two million then I won't even bother going to see the property."
"You don't feel that it's worth more than two million?"
"A defunct paper plant that's been closed down for more than four years? No experienced labor available and no customer base for the products. After sitting for four years the equipment is probably going to require a complete overhaul. Without even seeing it I would estimate a minimum of a million dollars just to get it operating. I just bought a fully operational plant in Gorham, New Hampshire, with almost new equipment, a complete staff, customer base, and 68,000 acres of land for four million."
"Yes, I read about that purchase in The Paper Press. Mr. Billings had heard about it before the article even appeared. Congratulations."
"Thank you. So do you have an idea for the price range that Mr. Billings has established?"
"I'm sure that he would consider all offers."
"That doesn't really answer my question."
"Well— let me say that he's aware of how much you paid for Gorham and he knows that Gorham was in peak operating condition and came with a lot of timberland. I'm sure that he doesn't have excessive expectations."
"Okay, Mr. Rojas. I hope that I'm not wasting my time. When can I tour the plant?"
"Whenever it's convenient for you. We placed it with a broker after we acquired it last year. He's local and can meet you there to let you in. His name is Homer Cousins."
Mr. Rojas gave me Mr. Cousin's telephone number and I contacted him next and made an appointment for the following day at ten a.m.
"Okay, Bob, we're on for tomorrow. We won't need Bill on this trip but let's get John to bring a few of his top guys."
"Okay, DD. Anything else you want to look at?"
"What did you find out about the others?"
Looking at his notes, Bob said, "The proposal that accompanied the custom forms printer looks pretty accurate. I tend to agree with you that they're looking for top dollar. Hardly our normal acquisition target. Makes me wonder why they want to sell out. The owner isn't anywhere near retirement age.
"The roofing material manufacturer is part of an estate liquidation. The heirs are looking to sell out and settle. It's been on the market for almost a year and the price has been reduced twice already.
"The paper plant in Orofino, Idaho that makes Kraft paper is moderately profitable. They've been hanging on for years serving a small customer base. They're in the middle of Alliance Paper International territory and that might be part of what's prevented them from growing very much. At a price of 11 million, the revenues would be just barely enough to cover the note payments.
"The paper plant in Wenatchee, Washington is another single plant in Alliance territory. Bill's still looking into their financial situation but it doesn't appear that they're under pressure to sell, and it doesn't look like a bargain.
"That's it on what I've been able to learn since yesterday."
"That's great, Bob. Why don't we take a trip to look at the printing plant in Illinois and then stop to see the roofing paper company on the way back?"
"Okay, when?"
"Thursday?"
"Okay. I have a couple of appointments but I can cancel them."
"Would Monday be better?"
"It would be a little easier on me. I can't speak for Bill. I'm sure that you'd want him along."
"Let me give him call."
I dialed Bill's extension and he picked up. "Hi, Bill, DD. Are you available to take a trip on Monday?"
"Sure, DD. I have a couple of appointments with our own people but I can reschedule them. Where to?"
"Bloomington, Illinois. The printing company."
"I'll be ready."
"Okay, Bill. I still have to call for the appointment. I'll let you know."
After I got off the phone with Bill I called Nancy and asked her to call the forms company. She called back a couple of minutes later to say that she had a Mr. Tassett on the line. She connected us and I said, "Good morning, Mr. Tassett, This is Darla Anne Drake of Piermont Paper."
"Yes, Miss Drake. How are you today?"
"Fine, Mr. Tassett. Yourself?"
"Fine, fine. I assume that you're calling about the proposal that I sent."
"Yes, that's correct."
"Do you have any questions, or would you like to visit us?"
"Both, but the questions can wait until we meet. Would Monday morning be convenient?"
"Yes. What time?"
"We'll arrive at your local airport about nine a.m. local time."
"Okay. I'll arrange to have a car there to meet you."
"We'll need two cars. I always bring a small team with me with we visit companies that are offered for sale. I'll be bringing five others."
"Very well. Two cars it is. I'll see you on Monday then?"
"Yes, see you then."
After I hung up I called Nancy and asked her to contact the roofing paper company in Jamestown, New York. She called back a few minutes later with a Mr. Merwin on the line. She connected us.
"Good morning, Mr. Merwin. This is Darla Anne Drake."
"Good morning, Miss Drake. It's an honor to speak with you."
"Thank you. I'm calling in response to the proposal that was sent to us regarding the sale of your company."
"It's not my company, Miss Drake. I'm only the plant manager."
I was a little surprised by his statement. Usually employees, especially management staff, identify with the company. It seemed that Mr. Merwin was trying to detach himself from the company. "But it was you who sent me the proposal letter wasn't it?"
"Yes, that came from me. I've read about how you buy companies that are in distress and make them healthy again."
"And are you in distress?"
He was quiet for a few seconds. "Yes, the company is going downhill. Mr. Basstrolli, the owner, passed away almost two years ago. His kids formed a committee to run the company and it worked okay for a while but they each have their own lives and they spend less and less time worrying about the company. For the past year things have gotten worse each month. They put the business up for sale a year ago and that seemed to end their interest in it. I think that they just want to be done and rid of it. I have to fight to get them to allow me to replace people who leave. Since they haven't had any luck selling the place I asked if I could give it a try when we had our monthly meeting a few weeks ago."
"And are you authorized to negotiate on their behalf?"
"They've reserved the final decision for themselves, but I can show you the facility."
"Okay, Mr. Merwin. How's Monday afternoon for you?"
"Fine, Miss Drake. What time?"
"I don't have an exact time because we'll be on our way back from a meeting in Illinois. Let's say about 3 o'clock, plus or minus a half hour?"
"Fine, I'll be looking for you from 2:30 on."
"Okay, Mr. Merwin. We'll see you on Monday."
"I'm looking forward to it."
After I hung up the receiver I said to Bob, "All set. Pennsylvania tomorrow, and Illinois and New York on Monday."
"Okay, boss. We'll meet at the hotel at eight?"
"Better make it 7:30 for the Monday trip. That'll give us two hours to travel the seven hundred and fifty miles. The company jet should get us there by nine o'clock Central time."
"Okay. I'll pass the word to John and Bill."
After Bob left I sat and read through all the proposals again. Even though Grandma had told me to continue buying, I wasn't just looking for an excuse to spend money.
It was lunchtime so I checked to see what I had in my kitchen and decided to make a tuna fish sandwich. There was some fresh fruit in the refrigerator, so for dessert I selected a nice ripe pear. I took my food to my desk and reread the proposals one more time. I was trying to decide if I should waste any time going to the Northwest to look at the two offered paper plants. Neither seemed to offer a great deal, and I didn't want to add plants just to make the company larger. There was always the possibly that I could talk the price down, but it was just as possible that they wouldn't budge. In the end I decided to send rejection letters with the note that the asking price was more than we were willing to spend for plants so far from our principal area of operation. It wasn't a refusal as much as it was a bargaining ploy. I felt that if they were anxious to sell, they would reply with a proposal containing a reduced price as Kurt Hockler had done.
After lunch I went in search of a book that would explain the process of manufacturing asphalt-paper. We had stored the books that had once belonged to Matt Piermont's son in the file room off my outer office. I found several books there that made reference to asphalt-paper so I took them back to my office to read. I read until 6 o'clock and then called to tell Earl that I was ready to leave.
Bob and John were at the hotel at eight when I entered the lobby. There were also three of John's engineers. I recognized all three and greeted everyone. To one, Mike O'Connell, I said, "Hi Mike. I thought that you were working down at Greenfield?"
"I am, DD. John called and asked me to come along. He said that the equipment that we're going to be looking at hasn't been operated in more than four years. I got a lot of experience refurbishing Greenfield's out-of-service equipment."
"Since Mike and his people did such a great job down at Greenfield," John said, "I thought that he would be a good man to have along."
"Great. Shall we leave? We can talk in the car."
On the way to the plane, and then aboard the jet, we discussed the hurdles that would have to be tackled if we were to start up a plant that hadn't been run in more than four years. Virtually every piece of equipment would have to be disassembled, cleaned, lubricated, and re-assembled. As with Greenfield it could take many months to restore the equipment. With no revenue for months, this wasn't the sort of project that a small company could undertake if they were required to make payments on a loan. Also, the cost of refurbishing a paper-forming machine could be enormous.
As the plane taxied to the ramp after landing, I could see the limo that Nancy had arranged, waiting to take us to the plant site. We exited the plane and walked straight to the limo. The driver jumped out and opened the rear door for us. The driver knew where we wanted to go and took us directly there. We found a car parked at the locked gate. A sign announced 'No trespassing - Allegheny Paper Box'. A small, pudgy man got out of the car and walked over to the limo. Bob opened the window.
"Good morning. I'm Homer Cousins. Are you folks here to tour the plant?"
"Yes," Bob said, "We're from Piermont."
"Fine. Just give me a minute to unlock the gate and we can drive down to the plant. It's just beyond the curve in the driveway."
A few minutes later we were able to drive through the gate as Mr. Cousins swung it wide open. I was surprised by the sight that greeted me as we rounded the curve. There were four enormous interconnected buildings, with a river in the background. As we got closer I estimated that the total plant size was at least double that of Greenfield, currently the largest plant in Piermont.
Mr. Cousins led us to a building that looked like the plant's office building. The limo driver parked and we got out, following Mr. Cousins to the front door. Before opening the door he turned to greet us. Bob took care of the introductions.
We got a quick tour of the office building first. The furniture was still there, coated with bird droppings, and almost all of the windows had been broken out. I was surprised that vandals hadn't yet broken in and wrecked the building. Mr. Cousins told us that the site was completely fenced and patrolled twice each day at random times, and that was enough to stop vandals from moving in, but not to stop local kids with small caliber rifles from shooting out windows for fun.
From the office building we moved to the first of the plant buildings. John, Mike, and the other engineers went right to work examining the pulping equipment. It was bright in the plant and with the flashlights that they had brought along, they had all the light that they needed.
"We already had a scrap dealer come in and quote us a price," Mr. Cousins said. "He said that he'd cut-up and remove everything for only twenty thousand. Then you'd have a wide open space to bring in your new equipment."
"Thank you, Mr. Cousins, that's interesting."
"My pleasure," was his reply.
As the engineers worked, Bob and I, along with Mr. Cousins, continued the tour. I tried not to register any emotion as we passed three paper-forming machines.
The building behind the main plant was a gigantic warehouse, and being empty made it look doubly large. At the back of the warehouse there was railroad spur line that was fully enclosed from the weather, with a motorized door that sealed off the entrance after as many as five cars were brought in. An enclosed tractor-trailer loading bay could handle twenty trailers at a time. Whoever designed this plant had great expectations.
The fourth and last building was a complete box making operation, substantially larger than our operation in Greenfield. Like everything else, the equipment was filthy with dirt and bird droppings, and the floor was littered with glass from broken windows.
I wondered how a plant as complete as this one could have failed to make money. Poor management was the only thing that I could think of.
"Mr. Cousins, are you a local?"
"Yes, ma'am, Miss Drake. Born and raised not more than fifteen miles from here."
"Do you know the history behind this plant? Why couldn't three owners make it go?"
"That I can't help you with, I'm sorry to say. I only know that it suffered financially for years, and was finally closed down. Too bad. It was the largest employer in this area during the late fifties and early sixties. First as a construction project, and then as an operating plant."
"There wasn't any asking price in the proposal that we received. Do you know what the owners are looking for?"
"They only told me to pass any offers on to the headquarters in Texas. I'm working on a straight salary basis for showing the property to prospective buyers."
I smiled. "I hope that you're getting paid by the week rather than the visitor."
Mr. Cousins laughed. "Definitely. I couldn't survive with only one showing a year. I'd prefer to get a commission though. Six percent of a million dollars would make my entire year."
"You think that it's worth a million."
"That was my appraised valuation for the buildings and land when I was hired. I told them that it's going to cost them twenty thousand to cut-up that old equipment and haul it away. You weren't thinking of trying to use it, are you?"
"How much land is included in the sale?"
"The plant sits on a hundred and fifty-two acres. That's the only land that's included in this sale. I understand that originally the plant owned about 80,000 acres of timberland, but that was sold off years ago by one of the previous owners."
"I see."
"Uh, do you think that your people will be much longer?"
"I'd estimate about four to six hours. We'd be happy to lock up for you when we leave. There's not much reason for you to hang around."
"Would you? Thanks. I do have some things to do if I'm not needed here. This is my busy season. Uh, do you think that you'll need me to submit your offer?"
"No, I can speak directly to Mr. Rojas or Billings since you're not working on commission."
"Yeah, every time that I think of that sixty thousand I wonder if I should have held out for a percentage. Oh, well. Too late now. It's been a pleasure meeting you, Miss Drake. I'll stop back this afternoon to make sure that you didn't have any trouble locking up. Goodbye."
"Goodbye, Mr. Cousins. Thank you for showing us around."
After he left, I turned to Bob. "At least we know what the appraised value is. I wonder if any of the people from Texas ever came up here to look at the property?"
"No way of knowing. We would have made the trip to see what we got, but they may have just ignored it because it wasn't what they wanted in the buyout. They may have just relied on Mr. Cousins for information. If they had paid him a commission, instead of a straight salary, he would have been bending over backwards showing this place to anybody that he could talk into coming out here. As it is, the longer that it stays available, the longer he gets paid."
"I'm beginning to hope that the equipment is salvageable. Three paper forming machines and an entire boxing operation could make this a better deal than Greenfield."
"I guess that we'll know in a few hours. I'm going to go check on the guys."
"Okay. I'm going to take a walk around the grounds."
After Bob left I walked down to the bank that overlooked the river. I must have stood there for twenty minutes, watching the water flow past. Then I returned to the office building and walked through all the offices trying to figure out their original purpose. All the paperwork was gone, but I thought that I could identify each area based on its furniture and layout. There was no mistaking the executive offices. The president's office was even larger than my enormous office in Brandon. Our original house in New Jersey didn't have as much square footage as this one office. Around noon I went to ask if anyone was hungry and I got a resounding yes, so I had the limo driver take me back to town and I got a steak house to prepare a take-out lunch that would feed a dozen hungry people. I estimated that it should be enough for me and five, large men with healthy appetites.
When I returned, we spread out the food on the console desk of a process monitoring station near the paper-forming machine where everyone was working. As they finished what they were doing, each man would come over and fill a thick paper plate with pieces of steak, potatoes, and baked beans.
We didn't finish the inspections until almost six p.m. We spent the last two hours in the boxing operation. The machines were similar to the older equipment that we had in Greenfield so Mike had no trouble evaluating their serviceability.
One of the engineers locked the gate when we left the grounds and we arrived back at the plane by six-thirty. I signed the invoice for the driver and we boarded the plane. We talked about the equipment during the ride back to Vermont.
"What's the bottom line, John," I asked after they had talked about individual equipment problems for almost an hour.
"Bottom line, I estimate about a million dollars to get all the equipment restored to like new working condition. That's parts and labor, complete, using our people for everything. When done we'll have equipment and a plant worth as much as twenty million. The paper forming machines aren't like the new high-speed units that we have in Concord and Gorham, but they're as good as Greenfield, Brandon, and most of the other plants. They're only about fifteen years old and had to be new when installed there around 1956. One didn't even see that much service. The box making machines aren't the new four-color types but they'll work three full shifts a day and be ready for more the next work day."
"Thank you, John. The building looked sound to me. It would probably be clean and dry if the windows hadn't been shot out. Anyone notice any problems?"
"I concur," Bob said. "I walked around all four buildings looking for signs of roof leaks and foundation problems but didn't find any."
"I'd feel a lot better if I knew why three owners couldn't make a go of it here, but it looks like I should tender an offer. Any disagreement?"
Everyone shook his head when I looked around.
"Okay, thanks for coming along and working so hard today. Anyone who doesn't have plans is welcome to join me for dinner in the hotel; my treat."
Earl was waiting when we arrived at the airport, and when we reached the hotel, John and his assistant, Jerry, joined me in the dining room. Everyone else had to get home.
I sat at my desk in the morning and, over a couple of cups of tea, plotted the strategy that I would use in contacting the seller of the plant. I waited until a little after ten before calling Texas because of the differences in time zones. When I did have Nancy place the call, Mr. Rojas answered again. I wondered if that was part of their strategy.
"Good morning, Mr. Rojas."
"Good morning, Miss Drake. How did the tour go?"
"It was— interesting. I was amazed at the amount of damage by vandals considering the remoteness of the location."
"Damage?"
"Yes. I doubt if there's an intact window in the entire plant. Haven't you been there since you bought it?"
"Er— no. We have an aerial picture from when it was operating. We pay a security company to look after the place. I'll have to check into it."
"I'm sure that the picture only faintly resembles the plant in its current condition. No one has broken in yet, as far as I could determine, but with all the windows shot out, the birds, rodents, and small animals have moved in. Bird-droppings coat every square foot of the plant and office building, and mice, rats, and squirrels have taken up residence throughout. I guess that the only way to stop that is to replace all the windows and hire an exterminator."
"Other than the damage and the pests, how did you find things?"
"About as expected. The machinery hasn't been used in so long that it all needs a complete disassembly and overhaul. My engineers estimate about a year of work before the plant could resume paper-making operations."
"I'm sorry that it doesn't look like a viable opportunity for you."
I recognized the ploy immediately, having used it myself. Gain the upper hand by having the other person defend the object of negotiation. I tried to subtly reverse the positions. "Yes, it's too bad. We don't have anything in Pennsylvania and I had hoped that it would work out, but I'm afraid that I couldn't offer you very much given the condition of the property. Well, I don't blame you for the trip. Since you haven't been there, you couldn't know how bad things are." I had now expressed my desire to reach a compromise, without appearing anxious. I was essentially telling him that I hadn't ruled out the purchase, only that I wouldn't be willing to pay an exorbitant amount to acquire it.
"As I said when we last spoke, I'm sure that Mr. Billings will be happy to consider any offer that you care to make."
I believed that I had the unknown advantage of knowing the appraised valuation that Mr. Cousins had presented, and I had now learned that no one from the Texas distributor's office had apparently visited the site since acquiring the property. "Well— considering the amount of time and money required to restore the plant, I don't think that I could offer more than $875,000 for the land, buildings, and contents."
"Land? There aren't any timberlands included with this offering."
"I realize that. I was referring to the fenced-in land that the plant is situated on."
"Okay, I just wanted to make sure that that point was clear. So you're tendering an offer of $875,000?"
"Yes. At that price point I think that it might prove advantageous to restore the plant and equipment."
"Very well, Miss Drake. I'll present your offer to Mr. Billings."
"Thank you, Mr. Rojas. Have a nice day."
"You also, Miss Drake."
I thought about the call after replacing the receiver. Mr. Rojas' only mistake had been in admitting that he hadn't seen the property. I would have moved on without answering. I wondered if they would respond by proposing a different amount or just dismiss the offer out of hand. If they rejected the offer, I would make a second offer of a million, and failing that, I decided to make an offer on the equipment alone. The scrap dealer wanted to be paid to haul it away. We'd haul it away for nothing.
I spent the rest of the day reading trade magazines, or about asphalt-paper making.
Friday was our day for our weekly, executive meeting. Every other week Ron and Gerard flew in to attend, and they were in attendance today. We went through status reports first, with everyone reporting that the company was flourishing, a fact that I already knew from the financial reports, and then we discussed problems and new business. We spent a bit of time discussing the regional division of sales territories again, and fine-tuned them a little bit, and then we discussed unused capacity at each plant. Each regional VP presented a report showing plant equipment usage and production versus plant capacity.
As part of new business we discussed the plant in Pennsylvania that we had gone to look at. Both Ron and Gerard had already heard about it. Gerard asked what territory the plant would fall under if we managed to acquire it. I said that the geographical location fell within the Northeast region, even though the plant was actually closer to Owosso than Brandon. I added that they shouldn't hold out too much hope because the distributor wasn't under the gun to sell so they might want to negotiate for a while, or might reject us altogether.
"If we get it, it could be a nice addition to the company, but it will be a year before it could start producing paper. All the equipment will have to be disassembled and rebuilt. I have a funny feeling about this deal so don't get your hopes up. We'll be looking at a couple of other plants next week. One is a forms printing operation like Danbury, and the other is an asphalt-paper maker in New York. Any other new business?"
Since there didn't appear to be any other new business, I handed out draft copies of the new master plan. We went through the pages, item by item, until we were done. It was after five by the time that we were finished and Ron and Gerard had to catch planes so we ended the meeting.
I spent the weekend by the pool at the hotel, reading. By Monday I had completed reading the books about asphalt paper that I had found in the office. We left for the airport at 7:30. Our group consisted of Bob, Bill, Larry, who was the new accounting manager replacing Ron, John Fahey, Jerry, his chief assistant, and me.
Two employees from the printing company met us at the airport in Bloomington, Illinois and we piled into the two cars for the ride to the plant. Mr. Tassett welcomed us when we arrived and led the way to a conference room where three other executives were waiting. We sat and listened as Mr. Tassett gave a presentation about the company and tried to convince us that it was a good investment. When his presentation was over, I asked if John and Jerry could be shown to the shop floor while Bill and Larry were taken to accounting. Then I asked if Bob and I could have a tour of the entire plant.
We spent a couple of hours walking through the plant, occasionally stopping to watch the employees at work as they set up jobs on the equipment and operated the machinery. Mr. Tassett would explain the process as we watched and we let him without letting on that we knew what was required almost as well as he did. We saw John and Jerry at work, looking at machines that were 'down' as new jobs were being set up, or watching and listening to equipment that was operating. Another person, who I decided must be one of the shop's equipment repairmen, was with them the whole time, but he never tried to stop them from looking at anything.
When our tour was over, we returned to the conference room and talked about the business.
"Mr. Tassett, you seem to have a nice business going here; you're making money and growing slowly. Why are you looking to sell?"
Mr. Tassett paused before answering, and then sighed. "I guess that it's because I'm tired. I've been doing this for almost twenty years and I want to do something different with my life. Call it mid-life crisis for lack of a better term. I've found myself being less and less interested in coming to work each day. It was just luck that you caught me in last week on the first try. I know that if things continue like this, the business may start to suffer. I want to sell out before that happens. The business is profitable and the buyer can just step in and run it as a turn key operation."
"I see. Early retirement, eh?"
"Something like that. I want to move to California. I've already bought a small vineyard out there. I'm going to make wine under my own label. The money that I receive from the sale of the plant will enable me to pay off the mortgage, get started properly, and sustain me for a long time if I initially fail to make money with the new venture."
"I wish you luck. Let me know when you have your first wine ready for market and I'll buy a few cases."
"I'd be happy to, but you have to be twenty-one."
"Doesn't wine have to age for a few years?"
"It should age, but it can be sold after just a year."
"I can have it sent to my mother or aunt if it reaches maturity before I reach twenty-one."
"Okay, deal. So what do you think of my company? I realize that you'll have to speak to your team before making any buying decisions."
"I think that you have a nice little operation here. It reminds me a lot of our plant in Danbury. Your plant is priced quite a bit higher than that one was though, and your equipment isn't as new."
"How much did that plant cost?"
"Twelve million. When we assumed control, the plant had a net profit of 1.86 million on sales of 4.62 million."
"That's very similar to us. Our sales at the end of our last fiscal year were 5.26 million with a net profit of 1.68 million."
"Very close. You're only running one shift?"
"Basically. When our shipping schedule starts to slip we do some overtime by extending the hours of operation on the shop floor by an hour or two until we get caught up."
"That works."
We spent about another hour talking. By noon, local time, John and Jerry had completed their job, and Bill and Larry had seen enough to determine that the company was efficiently run. Mr. Tassett gave us ten minutes of privacy to discuss things.
"The accounts look good," Bill said. "Average amounts of A/P and A/R. Good accounting practices. Everything is up to date. No red flags."
"The equipment is in pretty good condition," John said. "Only one machine is out of operation. It's waiting for a part that should be in tomorrow. The equipment is older than our stuff in Danbury, though, so it's a bit more labor intensive and can't do some of the stuff that we can do now. The operators seem well trained and experienced."
"It appears that the plant would be worth our buying it if the price was lower," I said. "I was hoping that there was something that would justify the purchase such as state of the art equipment or something. Thanks for your work today. I'll speak to Mr. Tassett and then we can head for New York."
I went to Mr. Tassett's office and told him that we were impressed with his operation but after completing our investigation I had decided that the price was more than I could justify. I thanked him for his time and extended my hand to say good-bye.
"You'd be interested at a lower price?"
"For the right price, yes, but as I said earlier, your equipment is older than what we acquired with the Danbury deal, and upgrading it to what's needed to produce data processing forms is going to be quite expensive."
"I couldn't sell out for only twelve million."
"I didn't expect to find another deal like Danbury. I could go as high as fifteen million, but that's it all. Sorry."
Mr. Tassett looked away for a minute, then said, "Please sit down for a minute." When I had, he said, "I've been looking to sell for over a year now. You're the first prospect that's even made an offer. I guess that tells me that my price was a little too high, but I chose to leave it so that I'd have some room for negotiation. I just hadn't expected to receive such as low offer. How about if I dropped to eighteen million."
I sighed. "That's still three million over my appraisal of your business. I'm afraid not, but you'll probably get more interest from other parties if you drop your asking price to that."
"Seventeen million?"
I shook my head slowly. "I'm sorry. Fifteen is as high as I can go."
"I can't drop that much. I have twenty years invested in this business."
"I understand. That's why I didn't want to insult you and make an offer so far below your asking price." I stood up again. "You have a nice little business here, Mr. Tassett. I'm sure that you'll eventually find someone that will meet the price that you've established. And I'll still look forward to buying that wine."
Mr. Tassett appeared troubled but we shook hands and he had his employees drive us back to the plane. We arrived in Jamestown, New York about 2:15 local time. The limo that Nancy had arranged for was waiting. We didn't have enough time to go to a restaurant so we settled for a diner that looked clean. The food portions were generous and the service was fast. We were on our way to the plant before 3 o'clock.
We pulled into the parking lot of the plant about 3:10. As we entered the building a gentleman stepped forward, identifying himself as Mr. Merwin. I handled the introductions for my party and we followed Mr. Merwin to his office to talk. He offered us beverages but everyone declined. I explained that we had just eaten lunch ten minutes earlier.
We spent about thirty minutes talking in the office. We discussed the products that they produced and Mr. Merwin showed us samples of each. Then we took a tour of the plant as Bill and Larry went to work in the accounting office. The plant had a small lab with a scientist and two assistants that, in addition to regularly checking product quality, experimented with new product ideas.
Basically, shingles started with a special reinforced paper that was first heavily coated with an asphalt substance, then some kind of granulated material was applied to one side. As the paper reached the end of the line, it was cut into four strips and then chopped off at the proper length. The shingles were automatically stacked and wrapped into bundles containing a third of a 'square'. A 'square' refers to one hundred square feet of coverage when put down on the roof. Roll-roofing came in three-foot wide rolls of paper that had been treated like shingles, except it wasn't quite as thick, and tarpaper was three foot wide rolls of asphalt-imprenated felt used for underlayment. The smell of the asphalt in the plant was offensive. I couldn't see me working in here on a permanent basis, and I was glad that I didn't have to.
John and Jerry were keenly interested in the process and examined each machine as thoroughly as they could, being extra careful not to get injured by either the dangerously hot tar or the fast moving rollers, gears, and coated paper. Bob and I returned to Mr. Merwin's office when our tour concluded at the warehouse loading dock, while John and Jerry remained on the plant floor. We continued to talk about products, markets, future products, and new equipment developments. Mr. Merwin appeared very anxious that we should purchase the plant, despite the fact that we weren't currently involved in that part of the industry.
"I understand that the asking price has been reduced twice already, Mr. Merwin. How much flexibility still exists in the price negotiations?"
"As I told you on the phone, the current owners are anxious to sell. I'm sure that they'll consider all offers."
"You're currently asking seven million?"
"Yes, that's correct."
"Based on the financial data that you've provided, and after seeing the plant and equipment, I have a figure in mind. Assuming that everything checks out, do you think that the owners would be willing to accept five million?"
"I can't speak for them but they haven't had any other offers so far, so I'm sure that they'll discuss it among themselves. Is that a firm offer?"
"If everything checks out in accounting and on the shop floor, yes. That's why I bring experts with me when I visit a potential acquisition."
"I know that it will, so I'm going to consider it a firm offer. My maintenance guys do a great job of keeping the machines in top condition. We can't afford to have the lines down, so we keep an extensive parts inventory on hand."
We continued to talk until John and Bill had completed their work. A quick conference confirmed that everything checked out and before we left, I told Mr. Merwin that the offer was firm.
An hour and a half later we were landing in Vermont. I again invited everyone to join me for dinner to thank them for their efforts. Bill, John, and Jerry took me up on my offer, but Bob and Larry had to get home.
Over dinner we talked about the three plants that we had looked at. Bill hadn't been to Pennsylvania so he just listened as we discussed the merits of that property. In the past I usually knew by the end of our tour if we had a deal. Now I had made several offers without knowing which one we would get, if any. I didn't have any expectations about the plant in Illinois. We were too far apart on price. I also didn't really expect the owners of the roofing materials plant to drop their price to meet me. The original asking price had been ten million and I had only offered half that. If we got it for five million, it would pay to buy it, otherwise I would forego the privilege of having to occasionally visit the smelly plant. I was pinning my hopes on the plant in Pennsylvania, but each day that we didn't hear back made it more likely that we wouldn't. I wondered if Mr. Billings had invited other paper producers such as South-Core or Alliance International to bid. Still, there wasn't anything that I could do until I heard back from Texas.
I spent the next several days at the plant, reading or talking with my executives. I also met Stan, the new Data Processing Supervisor, and discussed plans for the future, including my goal to eventually put mini-computers in each region and link them via telephone lines.
On Friday we held our weekly executive staff meeting. As part of 'new business' we discussed the three visits to potential acquisitions. It had begun to look as though the effort had been wasted since we hadn't heard back from any of the sellers. We discussed whether I should approach the sellers again and we generally agreed not to. Only the Pennsylvania plant would justify another call, but I didn't want to appear too anxious. I decided not to place any follow-up calls just yet. After the meeting ended I left for the airport and returned to Texas. I would be back again in two weeks for the annual party at Greenfield.
Mother and Susan came out to greet me when I got back to the ranch. Ricardo had come running to help with my bags as soon as the plane touched down. It was still early so Auntie, Mary and Judy weren't home yet. We hugged and then carried my bags up to the house.
We hadn't even reached the house before Susan asked, "How many companies did you buy this trip?"
"Not even one."
"None?" she said in a shocked voice, "You're losing your touch."
"Maybe. Things just didn't work out this time."
"You mean that you tried to buy something?"
"Yes, I made offers on three companies, but no one accepted."
"What happened, honey?" Mother asked.
"I offered less than they were asking and no one accepted my bid. It's as simple as that."
"Should you have offered more?"
"That's always the question when you're negotiating to buy something, isn't it? On two of the companies, my offers were, basically, as high as I was willing to go. If they had accepted, then we would have had a good deal; otherwise I didn't feel that the benefits of acquiring the property would justify the expense. On the third property I offered a very low price because I believed that that was the best bargaining position to start from. I may have bid too low and made the seller think that I wasn't serious about the offer. I haven't heard back from them yet. I suspect that they might have approached our competitors. My main advantage over my competitors has always been the speed with which I can operate. I handle the negotiations directly so it's not necessary to wait while information is passed back to a corporate office and new instructions received, and there's no board involved that has to 'consider' a purchase for two months. On this deal I haven't even been able to speak to the principal."
"Can you still submit a higher bid?"
"Not until they respond to the first one. If they reject it, then I can offer more, but if they don't reject it, then it makes me look too anxious and I lose any advantage in the negotiations. I keep expecting to hear that South-Core or someone else has purchased the property. I'm going to just put it out of mind."
"That's best. You can't win them all."
Over dinner I was once again quizzed about the offers that I had made as we all related what we had been doing for the past week. I was glad when my turn was over and Mary began to tell what she'd been doing at the Cattle Ranching division's headquarters.
Saturday and Sunday were days of relaxation. We rode in the early mornings and then relaxed as the heat of the day built up. As frequently happened during the summer while we were all working for Ameri-Moore, we had long discussions about the company and each of the divisions. We each presented what we felt were the shortcomings and strengths of a division and offered our ideas on what we would do to resolve them if we were in charge. In my case I was in charge of Piermont, so I was mainly on the defensive when we talked about my division, but I always try to keep an open mind. Of course, Susan felt that I was moving too fast. She criticized my expansion of the division's focus now that I had told everyone that I had tried to purchase a roofing materials manufacturer. We currently operated paper plants, cardboard manufacturing plants, a custom forms printing company, and three sawmills offering a variety of wood products from board lumber to plywood. Of course I argued that the roofing materials could be sold to the same distributors who bought our wood products, and also that the roofing materials were just coated paper.
Things were fairly static at the Cattle Ranching division and in the Lumber & Wood Products division, but Judy told us that the shakeup in the Textile division was still continuing. Mr. Wickerham's second in command had been promoted into his position and had taken the action that Mr. Wickerham couldn't. A number of gin people had been dismissed and others promoted into their positions with the understanding that they were expected to return their operations to good order. The mills had also suffered a loss of some supervisory people. The executives were now committed to terminating problem managers before their own positions were terminated.
"I hate to tell you this, sis," Judy said to me, "but some people are blaming you for all the firings."
"Me?" I said incredulously. "I had nothing to do with it."
"They think that you were behind it because you did the inspections on the entire division last year. And because you were present when Mr. Wickerham was fired. You also attended some of the executive sessions. People think that you're running the division now, from behind the scenes."
"That's just plain silly. As if I didn't have my hands full with Piermont."
"I'm just telling you what they're saying."
"I guess that I can't stop them from thinking it. Grandma once told me to let people believe what they wanted to believe about my role in the company. Their beliefs have enabled me to function as an equal in the business world. Without my reputation, they would look at me and see a child instead of a businesswoman. People just wouldn't pay any attention to me."
"Doesn't it bother you that they think that you could be behind all these people losing their jobs?"
"Grandma made it very clear that the people released weren't doing their jobs. We don't capriciously dismiss good workers. I'm sorry that they're unemployed, but I don't feel bad that they were discharged for taking advantage of their position to goof off. I would have dismissed them myself had it been my job to do so. No, I don't mind that people think that I could be behind it. I'll have a lot less trouble if people don't think that I'm a soft touch. I don't want people to fear me, but I do want them to respect my position."
(continued in part 36)
Author's note : I want to express my grateful appreciation to Teddie Sue for her proofreading help and story suggestions on this series.
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