Texas Gal
by C. Sprite

 

Chapter Forty-Eight         Dare I take on Alliance?

I hired a plane taxi service to bring the Gulfstream I from Vegas, and the necessary work was completed by the mechanic. It was ready to go as soon as we had someone to fly it, and I intended that someone to be me. Two days after Christmas I took my first lesson, and in three more days I soloed. Since I already knew how to fly, learning to handle the extra engine wasn't all that difficult. I was still limited to Visual Flight Rules, but that was okay for now. Once I soloed, I spent every minute possible in the plane until it was time to return to school. Most of an afternoon was spent shooting touch and goes at the ranch. I didn't have to worry about anyone else being in the pattern and I could really concentrate on making flawless landings.

On New Years Eve we all watched the ball drop and celebrated with a glass of champagne each as we blew noisemakers and tossed streamers around the living room. Another year had passed and I was halfway through my fourth year of college. I'd submitted an application to the Graduate Studies Program the day after we returned to Austin, but I hadn't heard back yet. Of all the reasons they might use for refusing me, poor grades couldn't be one of them. I was still maintaining a perfect 4.0 average.

My decision to apply to the program had been a difficult one. While I wanted some time off to see what I could do with what I'd already learned, it would be great to spend one final year at school with Susan. Judy had decided not to continue beyond the four year degree program.

A few days later we returned to complete the work for the Fall semester. Over the next couple of weeks, we were holed up in bedrooms reviewing our textbooks and notes when we weren't in class or taking final exams. And then we were done with our seventh semester of eight!

  

I had a full day of rest and fun at the ranch before heading northeast for Brandon. Although I felt qualified to take the new plane, currently shoehorned into the hanger with Auntie's Cessna at the ranch, I hadn't yet taken my test for the rating upgrade.

Earl met me at the airport and it was wonderful to slip into a warm car as the icy fingers of an arctic blast of wind reached up under my skirt. Earl slammed the trunk after placing my suitcases there and hurried to get inside himself.

"Thank you, Earl," I said. "It's nice to see you again."

"You're most welcome, Miss Darla. And it's nice to see you again."

"Did you have a nice holiday season?"

"Yes, ma'am. The entire family got together and we had a great time."

"That's the best part about holidays. It seems to be the only time of the year when families get together these days."

"Yes, ma'am. That's so. We kinda lose touch as we get older."

I thought about what he said. My own family was nearing that point. Before too long we would be spreading out and losing touch as we pursued our various goals in life. I suppose I had already been doing that for several years. While my sisters had remained at the ranch, I had flown off to different parts of the country conducting inspections and performing other acts of business.

I was still ruminating my lost time with my family when we arrived at the Holiday Inn. My usual suite was ready and after checking in I headed to the restaurant to let good food assuage my conscience.

    

Despite my feelings I didn't hop on the plane and head back to the ranch the next morning. I still had a job to do. As I entered the building and was greeted warmly by the people I encountered I realized how much we gain in our friendships with business associates, even as we experience the loss of family closeness. I guess that Piermont could be thought of as an extended family.

Nancy had prepared a pot of tea for me and I felt its warmth spreading through my body as I sat down at my desk; a desk covered in paperwork. Well, I had been gone for more than four months.

The new employee forms always seemed the best place to begin, because I could clear the biggest part of my paperwork in the shortest amount of time. I grabbed a stack and began reading. I knew I'd never remember the names, and probably not even the faces, but it had become a standard part of my routine. I did try to at least remember the names and faces of all management personnel. My eyes were crossing by the time I finished the last form and took them to the file room off my outer office. At least my desk was mostly clear now. There was still the mail to go through, and an enormous pile of letters with business offers, but I was making progress. I prepared another cup of tea and went over to my sofa. It was a wonder that my coffee table wasn't bowed from the weight of the trade magazines piled on it.

From the beginning of my involvement in the lumber business, I had started receiving free trade magazines. As my involvement increased so did the number of publications I received. I had never signed up for any of them, but they continued to flood in. I'd always received renewal notices, and had only returned those for the more desirable publications, but all the magazines continued to come. I'd received lumber, paper, ranching, and textile publications for the longest time, but now I also received business, investing, aircraft, construction, data processing, petroleum, geology, and about every other area that had been associated with my name over the years.

After taking an appropriate break from work I returned to my desk and sorted through my mail. As always, a pile would be forwarded to Bob, a pile went into the wastebasket, and a pile was filed in my desk for possible later reference. That left the offers as the only thing on my desk.

I read through them quickly, sorting them into the usual three piles: overseas, too small, and Possibles. I couldn't believe that the Possibles folder still contained over ninety letters when the others were removed. Of course, a lot of Possibles wouldn't really be considered. This was just the first cull. There were businesses that didn't interest me but couldn't receive the standard response letters that the offers removed so far would receive. Just for a slight break I carried the rejected offers out to Nancy, and wound up conversing with her for ten minutes before returning to my office.

The next cull removed producers of soft goods such as toilet tissue, facial tissue, napkins, and paper towels. I also removed formed paper product producers and mat board producers. That left only producers of our current products.

I was surprised to find a letter from High Plains Paper in the folder. I'd stopped to read that twice when I first uncovered it. The owner, a Mr. Perkins, said that he'd understood when we'd previously responded that his plant was too far removed from our main operating sphere, but wondered if we might be interested now that we'd greatly expanded the territory in which we operated. His letter meant that I wouldn't have to look for an excuse to contact him after so long.

As I read through the offers I realized that there were eight from single plant paper manufacturers in the Northwest. I'd never encountered anything like that before and I wondered at the reason. In total, there were twenty-two letters still in the Possibles folder after the final cut for suitability of product.

Just before noon I wandered down to the cafeteria and selected my lunch. I was faced with a choice between lasagna or eggplant parmesan, so I selected the eggplant, then added a cup of Jell-O and an orange to my tray. As always, I preferred to eat in my office.

I was back working with the Possibles as soon as I finished my lunch. All but one seemed to be single plant operations. The one exception was a company manufacturing roofing materials like those made in our Jamestown plant. They had two plants; one in Monroe, Louisiana and the other in Gadsden, Alabama.

I'd avoided expanding our construction products operations until now because I felt that we needed more experience with manufacturing and marketing the products, but the Jamestown plant had been successful since the beginning. We'd inherited a good product line, a solid customer base, and an excellent employee roster. Michael Merwin had been an excellent plant manger for us. I decided that if we could find another solid performer like Jamestown, I'd be very interested.

  

Just before 2 o'clock Bob called and I invited him over.

"Hi Bob," I said, as he entered my office. "Happy holidays."

"Hi, boss. Welcome to the Arctic Circle."

"It is cold," I said.

"Yeah, and there's two more months of this stuff before we see any appreciable warming. It almost makes you wish you were a bear and could go into hibernation until spring."

"I don't think I'd enjoy sleeping in a cave," I said.

"You've got a point there." Seeing the folder I was working with he said, "Anything good in the Possibles?"

"I've cut the pile way down and still have twenty-two left. Eight of them are from companies in the Northwest. Makes me wonder what's going on. Has Alliance stepped up its pressure on the small guys?"

"Not that I've heard. Maybe it's just the publicity that you've received, along with the fact that we've grown so big. People know that we more often buy companies that are having problems, than those with profitable operations, and that we always seem to be expanding."

"I suppose. Speaking of problems, how are things going with the former South-Core plants?"

"Good. Very good in fact. I think that we're over the hurdles now. We have the employee and manager situations pretty well settled, the dead wood and trouble makers have been dismissed, and product is flowing. But we're still keeping a close eye on things, looking for any signs of sabotage. The equipment was all in excellent condition when we took over. The engineers in the plant are good men. They know their business. John's been delighted with their performance."

"Good. What about Buckhannon?"

"It's quiet. We've maintained double the security staff that we have at other plants. The equipment has been repaired and overhauled so it's ready when we need it. Our guys from Franklin did all the work, so no one in town there knows that the work has been completed. Our Franklin engineers left enough things apart so that it would look to the security guards that we're still not ready, but everything can be buttoned up in a matter of hours. I sure wouldn't want to be one of those jerks that tried to take over the plant, with the whole town believing that the plant is still closed solely because of them."

"I don't feel any pity after what they did. It was just plain stupid. And actually the plant is closed only because of them. We didn't need all the capacity we acquired, so their action made the decision of how to cut back. If they hadn't pulled that stunt, we would have tried to keep all the plants operating, at least marginally, while we worked to increase sales."

"Yeah. The dock supervisor is still in jail. He received three years for ramming that police barricade with a truck and almost killing a cop. If he keeps his nose clean in prison, he could get out in eight more months."

I hope he doesn't expect to ever work at Piermont. I appreciate loyalty, but not outright stupidity. How are things in Houston?"

"Moving along well. I was down there last month. The machinery has all been cleaned up and repaired. It looks like a completely different plant than the one we first saw. As you know, as soon as we informed the owners of the recreational vehicles of a new fee schedule they couldn't get their stuff out quick enough. It seems that Porter was practically letting them stay there for free. He had no costs, so he took anything he could get. The news isn't all bad though. We have another company interested in leasing a building. They're currently leasing two buildings in the area, and have outgrown both. They'd like to consolidate under one roof."

"What do they do?"

"They make golf carts. You know, those little electric carts that golfers use on the courses."

"Yes, I know what you mean. That's great, Bob."

"And we've signed the lease papers with the company that's taking the north half of Building 6."

"That's the outfit that makes aluminum step ladders?"

"Yes. Their references are good. Their former landlord is sorry to lose them, but they only had 120,000 square feet available there and they needed more operating space. They'll have 268,000 sq. ft. in Building 6. Lots of room to manufacture and grow."

"Excellent, Bob."

"The engineering company hired to determine the flood susceptibility of our plants and design sediment pools has completed Phase One, in which we asked them to determine the susceptibility to the maximum flood stage of both one-hundred-year and five-hundred-year flood levels. The news is pretty good. All of the plants are high enough to avoid flooding from the worst flood levels expected in one-hundred-years. Only four of our plants would suffer damage in a five-hundred-year flood level."

"That's wonderful news," I said.

"Yes. As you thought, the four plants most susceptible to that flooding are the ones still shuttered after the Mo Paper buyout. They're the oldest plants, and apparently insufficient attention was paid to their locations and height above maximum flood stage when they were constructed."

"I suppose that most planners back then only considered the one-hundred-year levels important," I said. "That's another strike against the four plants. I've wondered if they'd ever be profitable unless we replaced the paper forming machines. The cost of building sediment pools further increases the cost of bringing them forward to profitability. If we have to build levees as well, they're less and less attractive."

"Then you want to dispose of them?"

"Yes, I think that might be best."

"They may be impossible to sell. Everyone knows that we continue to buy plants. They'll be suspicious of our motives."

"Anyone looking at the plants will see how old the equipment is. That's the primary reason for disposing of them after all. Big companies dispose of assets all the time where they don't want to upgrade facilities. The higher risk or older equipment provides opportunities for people with limited financing to enter the market."

"True."

"So let's establish a price and list the most undesirable plant as being for sale."

"Ridgely, Tennessee is the plant most important to the local economy, of the four," Bob said. "It would be great if someone bought it and reopened it, but it has the poorest rail and road access."

"Yes, reopening it would be a boon to the locals. Transportation wise," I said, "the others all have a spur line alongside the plant and major highways nearby. Plus, Henderson is very near Evansville, so each can support the other if there's a problem, and Paducah has both good access and more than enough room for sediment pools. Memphis has excellent access and so might even be more valuable as an empty plant because of the location."

"We may have trouble finding a buyer for Ridgely with that ancient paper manufacturing equipment it has."

"There are lots of older plants around the world, with lots older equipment. Hey, you never know. Perhaps we might find an overseas buyer who can't afford to ante up seven million dollars for a new, high-speed paper forming machine, but might be able to come up with two million for an old unit."

"Two million might be too much. I wouldn't turn down a million, if they'll do the work of dismantling it and hauling it away. With a much newer machine, the plant would be considerably more attractive to a buyer. I wonder if Roy Blu would be interested. He was last summer when we were looking for binding equipment."

"He wants terms, which means he has no money. These plants are only capable of being marginally profitable. His interest expense would eat up any profit he'd make, and we'd have to take the plant back."

"You're probably right," he said, "but maybe he's turned things around. I'll check his credit and see where he stands. It's been almost a year."

"Okay."

"Do you want me to do anything with the Possibles?"

"There're a lot of them."

"I know. But things are a little slow today."

I grinned. "Okay, Bob. Have at it."

He was smiling as he headed for the door. I wondered if he enjoyed the wheeling and dealing as much as I did, or possibly even more.

I spent the rest of the day reading trade magazines.

   

On Tuesday, Earl drove me to the airport. Originally we had used tie-downs for the Cessna, but when hanger space had opened up, we grabbed it. It was large enough to store both the 206 and the Gulfstream II with room to spare. Later on we would store the Gulfstream I there. When the Gulfstream II was also at the airport, both large planes could be accommodated if the Cessna was tied-down outside.

Rolling the Cessna out, I preflighted the plane, then started it to let it warm up. When the engine was warm and running steady, I took to the air. Flying over snow-covered hills and mountains is a completely different experience than flying over verdant landscapes in summer and I enjoyed my time aloft. I practiced radio-navigation using the abundant omni-directional beacons in the area, and then played with the ADF/DME instruments to find several locations. Every hour that I logged as the pilot in command, counted towards the time I need to accumulate before I could go for an instrumentation rating.

The sun was settling on the horizon as I pushed the plane back into the hanger.

   

Bob had worked up all the Possibles by Wednesday and was anxious to talk about them. I recognized that excited look on his face as we sipped our beverages and discussed each.

"Yes," he said, "it does appear like Alliance has been squeezing the little guys. There are too many for sale in their primary sphere of influence to mean anything else. It may or may not be totally intentional. They can manufacture and sell product far below the cost of the small outfits. Whether they're using that to drive them out, or simply responding to overseas competition by lowering their prices, I don’t know."

"We haven't felt any serious competition from overseas producers yet, have we?"

"We don't sell a tremendous amount of newsprint to businesses on the west coast, so we don’t have a real accurate barometer of that."

"Perhaps competition from South America and the Pacific Rim is more prevalent than we think and we're just not getting an accurate picture from our sales reps. It might be worth a trip to some of these offered properties just to get a look at their books. I wonder what kind of prices they're getting, or not getting?"

"Or it might be their cost of chips, chemicals, and supplies."

"Again, a quick look at their books would tell the tale."

"Yes," Bob agreed. "That would tell us everything."

"So it sounds like a trip is in order."

Bob's face lit up with a smile. "Bill's ready. He says that you owe him an old company with lots of old, moldy records."

I couldn't help from chuckling. "Yes, I did promise him that after he did such a great job for us with the South-Core deal."

   

As my time was so limited, we left just before sunrise on Thursday. I had canceled the regular Friday meeting since I had most on my managers with me. Bob, Bill, Tom and John were an important part of this trip. Tom Harris, my VP of Purchasing and Procurement was on his first trip to evaluate a business. His knowledge of supply costs would be invaluable as he and Bill reviewed the books of any company we visited. John brought three of his guys, and Bill brought two, making us ten in all. Roy Blu had thought we were invading his offices when just six of us walked in. I wondered how we would appear to the plant owners we intended to visit on this trip.

Our first stop was High Plains Paper, the company that Grandma had mentioned, and which the owner had twice written to me about. They knew I was bringing a large team, and we were met at the airport by two cars.

"Good morning, Miss Drake," a chubby little man with pale dry skin said to us as we entered the offices of High Plains. His short white hair looked like it had a mind of its own. "I'm Theo Warwick. Welcome to Idaho."

"Good morning, Mr. Warwick," I said. "Thank you. We're happy to be here."

"Come into our conference room please. I've arranged for beverages and snacks."

We followed him into the conference room where we removed our coats, then took seats around the table.

Once I had introduced everyone, and we had prepared our tea or coffee, we were ready to talk business.

"Mr. Warwick, you've written to me twice about selling your business, but you didn't mention what was prompting the sale."

"Miss Drake, I didn't believe it to be necessary. May I call you DD by the way?"

"Of course."

"Thank you. Please call me Theo. As I was saying, I'm sure you know our situation exactly. I've read dozens of articles about you over the past few years. Every reporter seems to make one fact abundantly clear: you always do your homework and never enter a situation blind. I've also spoken to several plant owners that have dealt with you. Larry Lemmon of Plymouth Paper has been a close personal friend of mine for many years. He told me that if my in-house reports disagreed with what you said were my production numbers for any given month, that I should immediately fire my bookkeeper."

I smiled. "How is Mr. Lemmon? I haven't seen him since we purchased his plant."

"He's very well. I saw him last month when I was in Palm Springs. He's enjoying his retirement completely. He still watches what's happening in the industry and when I mentioned that I envied him, he said I should write you again because your operation has expanded significantly. He also said that if I saw you I should congratulate you for your magnificent coup over South-Core. He loved reading about that. He's still resentful over what they did to him."

"That's understandable. Since you spoke to Mr. Lemmon then he probably told you that I like to hear the situation in the owner's own words, even when I know it as well as he does."

Over the next half hour, Mr. Warwick spelled out his situation with such clarity that I could envision it as if I had been there. Alliance was indeed squeezing the small guys, but not so overtly as South-Core. They didn't hire away the sales people or buy up a plant's debt. Instead they simply undercut their prices on a consistent basis. Whenever High Plains found a new customer, they lost him after just a few orders. When Theo ran sales and cut prices to the bone, Alliance undercut them. When he was forced to restore prices, Alliance raised their prices back up, but still undercut his. What they did was both perfectly legal and perfectly acceptable in a competitive market system. Unfortunately, Mr. Warwick was now standing with his back firmly against the wall. He could back up no further.

When he was finished relating his tale of woe, I asked, "Could we take a look at your plant and books, please?"

"Of course, DD. Do you feel there's chance you might be interested?"

"I prefer to reserve judgment until we’ve seen everything, Theo."

While Bill, Tom, and Bill's two assistants were escorted to the office, the rest of us followed Theo to the plant. We started at the pulping operation and progressed slowly. Despite my suggestions that Theo should leave us to it so we didn't waste his time, he stayed with us. Whenever it was quiet enough, he and I conversed about the industry and about Piermont.

With the amount of help he had brought, John was able to finish his evaluation in record time. An hour after we'd begun, we were back in the conference room. I asked Theo to excuse us for ten minutes of private discussion and told him that we'd share everything we'd learned once we'd discussed it among ourselves. He graciously left the room.

"John?" I said.

"The equipment certainly isn't new, but it's been well maintained. I would say both paper forming machines are equal in capacity to what we have in Brandon. It's obvious Mr. Warwick takes pride in his plant. With continued preventative maintenance, the equipment will continue to produce well for many years."

"Good. Bill?"

"The situation is as Mr. Warwick stated it. His A/P's and A/R's are normal. His bookkeeping is all manual, but the ledgers and reconciliations are current. No red flags."

"Thank you, Bill. Tom?"

"About as we expected, DD. He paying higher prices for his chemicals, chips, and other supplies than we do, but they're within industry norms for a single plant operation. He's not being gouged because of poor credit or anything. He's cut his prices for product to the bone, though. No plant is ever going to be healthy based on the price schedule he's established."

"Thank you, Tom. So as we thought, it appears that Alliance is simply playing the part of the 800 pound gorilla. They're swinging their weight around trying to gather all the bananas for themselves. But there's nothing illegal about that. The free enterprise system espouses such proactive behavior. We do it ourselves. We haven't targeted our competitors, except for retaliatory action against South-Core, but we maintain a highly competitive pricing structure which allows us to sell our products."

Everyone around the table nodded. Alliance was simply being an effective competitor. It made me sad to think that small competitors in the East probably looked at Piermont as being the 800 pound gorilla there. Roy Blu had actually accused us of being responsible for his financial problems, and he'd had 19 plants. But the system forced you to be that way. Your operation had to be lean and mean to offer better prices that your direct competition, or you had to have another edge, such as niche markets where your competitors didn't have such sharp pencils.

"Okay, Edward," I said to one of Bill's assistants, "would you tell Mr. Warwick that we're ready to proceed, please."

He jumped up and hurried out the door, returning a minute later with Theo.

"Theo, I'm afraid that I have to tell you the same thing I told Mr. Lemmon after we examined his plant. We came hoping that we could find something that our information and suspicions didn't tell us. Unfortunately, that's not the case here. Your plant is running well, your equipment is well maintained, your product is of excellent quality, and we can't put our finger on anything that could be improved. The problem here is simply that Alliance isn't leaving you enough crumbs to prosper. I'm sure that they believe they will ultimately absorb you."

"Yet you bought Lemmon's plant."

"We happened to be in an excellent cash position at that time so we were able to take on Plymouth despite the situation that existed. And the situation there was vastly different. South-Core was squeezing him out with dirty tricks, not effective pricing competition."

"But only another giant can stand up to Alliance."

"Piermont isn't a giant."

"You beat Alliance out of two acquisitions: Owosso Paper and Appalachian Paper."

"Only because I was willing to pay more in each case. I felt the value was there, and it was."

"With 37 paper plants, plus 8 sawmills, 6 cardboard plants, 3 forms printing plants, and about a million acres of forestland, you're a giant compared to High Plains Paper."

"833,000 acres of forestland," I said, "not a million."

"Not yet anyway."

"Alliance has many hundreds of plants, located all over the world. They make us look like the 90 pound weakling on muscle beach."

"A third of their plants produce soft goods exclusively," Theo said.

"In a price war, only the purchasers benefit, and only initially. The competitors slug it out until one or the other is driven out of business or swallowed up. Then the survivor reestablishes its coffers by charging much more than the competition would have allowed previously. We could not possibly outlast Alliance. Although they have a diversified line, the company itself is financially rock solid."

"Then you're saying that you're not willing to take them on?"

"I'm saying that I can't see a solution to your problem. Have you offered your plant to them?"

"No, but they sent me an offer. They said that they'd assume control and give me two million dollars so that I could retire in style."

"Only two million?"

"It's their standard offer where the plant is free and clear of liens. Where the plant's structured debt exceeds that, they just wait until the bank takes over and then buy it from them. Over the past ten years, the banks have learned to avoid making loans to small paper producers in the Northwest. Alliance has gobbled up a dozen plants in the past decade after driving them against the wall and then pulling the wall down on top of them."

"That's where you are now?"

"Yes, my back is against the wall, and I expect Alliance to pull it down on top of me soon. I could maybe hang on for another year or even two, as I exhaust all my reserves, but no longer than that if they keep undercutting my prices. The handwriting is there for all to see. They know that I'll have to sell out soon. I was hoping that you might make me a better offer than Alliance."

Anywhere else, the plant would be worth eight to nine million. With the 18,000 acres of forestland property, it would be worth ten to eleven. In his original offer, Mr. Warwick had placed a price of $11 million on the deal, and I realized now that he wasn't just positioning himself for the negotiations. But in Alliance territory, buying a plant meant that you were buying into Warwick's troubles. They seemed determined to make the Northwest their exclusive paper domain. The machinery alone could be disassembled and sold for two million, and Mr. Warwick would still have the forestland.

"Mr. Warwick," I said, "I can offer you $3.5 million for your plant and forestlands."

My offer caught him by surprise. In fact it caught my entire team by surprise. I could see that by the look on their faces.

"DD, you have a deal," Mr. Warwick said immediately.

It only took ten minutes to wrap up the paperwork. "People will arrive next week to assume control of the plant, Theo."

"Thank you, DD. I look forward to seeing how you pin Alliance's ears back. I'm going to move to Palm Springs and join my friend in the sun. As I've gotten older the cold has seeped into my bones more each year."

"I wish you the very best in your retirement years. Give my regards to Mr. Lemmon when you see him."

"I will."

Fifteen minutes later we were back at the plane and ready to leave for our next destination.

"Boss," Bob asked, "do you have a plan?"

"Just the usual one. Buy low and sell lots of product."

"Are you planning on going head to head with Alliance?"

"I don't think that everyone should simply roll over and let Alliance have the entire Northwest. We're much better positioned to compete with them than Mr. Warwick and the other single plant operators. Our size lets us compete with Alliance on paper production costs, and our marketing clout is a hundred times better than any single plant can have. Since establishing our outside sales force a couple of years ago, they've done a terrific job of bringing in large newsprint accounts, but perhaps it's time to sharpen our pencils and step up that marketing effort."

    

Of the eight offers that I had received in the last group, we visited six by Friday night. And of the six, I purchased four. I knew that two of the eight were still too strong to sell out at the price I would have to offer if we're to engage in a protracted price war with Alliance, so we didn't even go there. In a couple of years, if the situation didn't change, they would be more receptive to a price that allowed us to continue head-to-head competition with Alliance. If I paid too much for any plant, the interest expense of the money we'd have to borrow would definitely keep us in the red at the product prices we might have to charge.

One of the six we visited was as bad off as the worst of the others, and Alliance had made him an offer of a million dollars, but he refused my offer of two million. He had no forestlands to boost the price. I figured that in another year he'd either have to sell or shutter the plant. The other one had let his plant and equipment deteriorate to the point that it wasn't worth even a million to me. Alliance could have it, if they even wanted it.

"We have another tough nut to crack," I said to my team as the jet flew east. "We have to fight Alliance on their terms, and on their home ground. We know that they've been specifically targeting any new customers that the small operators have found, and undercutting the prices to entice those customers away, with the ultimate goal of driving the small plants out of business. What's yet to be determined is if they're willing to offer those prices across the board. If they have to offer lowball prices to every customer they provide with product, it's seriously going to cut into their bottom line."

Bob smiled for the first time since I bought High Plains Paper. "You intend to target Alliance's customers?"

"It's only fair. It's what they've been doing. We have to determine who's buying their product, and then undercut their price until Alliance cries 'uncle.'"

"We can't get involved in price fixing," Bill said.

"I'm not talking price fixing. I'm talking price warring, which is perfectly legal. If they target our customers like they've targeted others, we'll turn the tables on them and inform every one of their customers exactly how little Alliance is charging certain other customers."

"That's not going to bring customers to us," John said. "It's simply going to make them confront Alliance and demand equally low prices."

"Yes," I said. "But since we know those special prices will prevent Alliance from making a profit, how long can they continue to offer them to all their customers?"

  

On Monday, Bob, Bill, and John left for the Northwest with two plane loads of people. I had chartered the Gulfstream I that we had used to go to Houston last summer from the Rutland operation. The nineteen that the turboprop held, combined with the fourteen that the jet held, would give us a sizable force in the Northwest. The jet would make the trip in six hours, while it would take the turboprop about ten hours of flight time, and they would probably have to stop once to refuel.

For now, the assistant plant managers of Brandon, Greenfield, Concord, and Gorham would manage the four plants. By the time the formal transfer was done, we would have found permanent managers to send. There was nothing to say that any of the four going out as temporary managers might not decide to apply for the job on a permanent basis. They were all good people or they wouldn't have the permanent position they already held.

I had been tempted to go along also, and then go home to the ranch from there sometime this week, but I would only be in the way out there. I had done my job. I had stirred up the hornets. Now the people who did the real work in the company would take over, settle things down, and integrate the plants into our network of operations. The turboprop would return to Rutland as soon as it dropped off its passengers, but the jet would remain there until Thursday night so that Bob or the others could travel between plants. Bob would return Thursday night so he could be at Brandon for the Friday meeting, and so I'd have the jet for my Friday night return to Texas.

I spent my week reading trade magazines and staring out at the snow. I removed the eight offers from the Possibles folder, responding to the two plants that we didn't visit by informing them that economic conditions, coupled with the price they were seeking, made our purchase of their operation unfeasible. News that we had purchased four plants in their part of the country, and the price I'd paid, was no doubt already spreading through the grapevine.

   

On Thursday I was reclining on my sofa when my phone rang. I put down the magazine and had to stretch to reach the receiver without getting up, but I made it. Nancy informed me that a Mr. Robert De Forest from Alliance Paper International was calling. I knew that was the name of Alliance's U.S. Division President. I told her to connect the call and then heard a women tell Mr. De Forest that I was on the line.

"Good morning, Miss Drake," he said. "How are you this fine day?"

"Very well, Mr. De Forest. And yourself?"

"Wonderful. Thank you."

"Are you calling from nearby, Mr. De Forest?"

"No, I'm at our Northwest Regional headquarters in Spokane."

"Too bad. I would have invited you over for some coffee or tea."

"Thank you, Miss Drake. Perhaps another time. And the next time you're in Spokane, I hope you'll stop in for a visit if I'm here."

"Thank you, Mr. De Forest. If I have the time, I will."

"Excellent, Miss Drake. I wonder if I might call you DD, as everyone in the industry seems to do."

"That would be fine, Mr. De Forest. As you've said, it's become almost standard in the industry."

"Thank you. And would you call me Bobby? It's how I'm known to my friends."

"Of course, Bobby. I hope we can be friends."

"Thank you. DD, I understand that you've been doing a little shopping up in our neck of the woods? This is your first foray across the Mississippi, isn't it?"

"Not at all. I have seven paper plants in Missouri and Arkansas. And I picked up a Forms business and a few million square feet of buildings in Houston this past summer. But the paper plants I just purchased are the first that Piermont has acquired in the Northwest."

"That's what I thought. Do you intend to purchase other plants up here?"

"Are you offering to sell me some of your plants, Bobby?"

"Not at the moment. In fact we're currently looking to acquire a few more ourselves. We had sort of set our sights on the ones that you just acquired."

"I'm sorry, Bobby, but we're not looking to sell them at this time."

I heard him chuckle. "I didn't expect you would."

"I've received so many offers of available plants located in the Northwest lately that I'm sure you'll find something suitable, Bobby."

"I'm sure. Should I take it that you intend to buy additional plants up our way?"

"I'm always looking for a good deal, Bobby. When I find one, I buy. It doesn't matter what part of the country it's in. My division already has plants in twenty states, and we sell in all fifty."

"Alliance has always considered the territory west of the Mississippi to be our backyard."

I intentionally chuckled loud enough for him to hear it. "Oh, come on, Bobby. That encompasses about two-thirds of the continental United States. Surely it's big enough to share just a little. Besides, neither Owosso Paper nor Appalachian Paper was west of the Mississippi. You didn't let a little thing like a river boundary stop you from doing a little shopping yourself."

"That's water over the spillway," he said. "I hope we aren’t going to get in each other's way up here."

"I promise that Piermont will not get in Alliance's way if Alliance doesn't get in Piermont's way. We find actions such as targeting our competitor's customer base with unrealistically low prices to be very counterproductive, unless that competitor has first done it to us. Piermont's policy is to live and let live. We feel that everyone should profit from a hard day's work."

"A wise policy, DD. No one wins when the big boys, and girls, go to war."

"Exactly, Bobby, exactly."

"DD, I've enjoyed our little talk today. And I do hope that you stop in to see me the next time you find yourself in Spokane."

"I will, Bobby, although I have no plans to travel up that way again any time soon. If you ever find yourself in our neck of the woods, I hope you'll drop in and say howdy."

"I will, DD. Goodbye."

"So long, Bobby."

It had been a short conversation, but an interesting one. I doubt if he'd ever before called any of the owners of plants in 'his' area. His call was a tacit acknowledgment that although his company was many times our size, he recognized that we wouldn't be easily pushed around like the others, and that we had the potential to impact his bottom line if the situation warranted it. My closing comments alluded to the fact that I wasn't actively seeking to acquire additional plants up there. I was sure he was smart enough to understand my meaning without my saying so directly. Although I wouldn't run from competing with Alliance, I didn't feel we had much to gain by increasing our exposure there.

    

I recounted the conversation at the Friday meeting.

"It appears that Mr. De Forest is attempting to call a truce before hostilities can begin," I added when I had finished.

"Smart man," Bob said. "He knows that we're not one of the powerless paper producers he's been dealing with until now. Everyone in the industry, and outside it, knows what you did to South-Core simply for maligning your name in the press."

"That's what I've been counting on. If he leaves us alone, we'll leave him alone. But if he declares war, then we'll both suffer, but we won't be the only casualty. I think we sort of established a policy of détente yesterday."

"That eases my mind," Bill said.

"But we have to remain as vigilant as always. I suspect that we haven't seen the last of South-Core, and that we have to watch our back all the time for signs of their treachery, but we have to watch everyone else as well. By getting as big as we have, the big guys are starting to worry when they see us coming, and the small guys would love to carve a piece of our pie for themselves."

The rest of the meeting was spent discussing the situation at the new plants and the plans for integration. Bob and I had already gotten together before the meeting started to prepare a list of acceptable plant manager candidates for the new plants. He would contact them one by one until he had four that wished to transfer to the Northwest.

As I prepared to board the plane a few hours later, I pulled my coat closer around me. I was really looking forward to the warmer weather at home, and certainly wouldn't miss the frigid winds of Vermont.

   

I had just one full day at home before we had to leave for Austin, but I made the most of it. With Susan trailing close behind, I snuck into Auntie's room as soon as I woke up. As Susan started filling the bath, I flung open Auntie's drapes. She groaned and pulled her pillow over her face to block the sun as I glided silently to her bed and attacked the soft bottom of her feet with my fingers. In seconds Auntie was awake and screaming. She grabbed me and pulled me onto the bed so she could attack my sensitive sides, but Susan attacked her from behind and she found herself wiggling too much from Susan's effort to tickle me effectively.

Our screaming must have awakened the whole family because when we finally stopped to catch our breath, we found Judy, Mary, and Mother looking on with amused smiles. As we recovered, we went into the bathroom and climbed into the enormous tub, which was quickly filling with water and soapy bubbles.

After we had relaxed in the warm, soapy water, we climbed out and dressed for a ride. While it was nowhere near the low temperatures that I had experienced in Vermont and Idaho, it was chilly outside, so we dressed warmly before going down to breakfast.

Emily seemed as anxious to take me for a ride as I was to go. During the past two weeks she had watched as the other horses left the corral, but hadn't been allowed to join them. She glanced back at me as I tightened the cinch on her saddle, then continued munching her apple. When she was finished, I slid the bridle over her head and led her out of the corral. She and I stood there waiting until everyone had left the corral and mounted up, then I closed the gate and we left for our ride.

We returned after only a couple of hours. It was colder outside than I thought so we didn't stop at our watering hole. We rubbed the horses down and turned them out into the corral before going up to the house.

After lunch my sisters helped me get the Gulfstream I out of the hanger and I shot a number of touch and goes, then went for a ride over to Comanche, down to Temple, and back up to the ranch. The combined distance of the three legs was just under two hundred fifty miles so the trip only took about fifty minutes. After I landed, Judy, Mary, and Susan came back out to help me put the plane away again. I would have loved to take them for the ride but I wasn't rated for the plane yet so I could only fly it solo until then. I had already forgotten all about my business trip and that was fine by me. I would have to get my head back into my college work anyway.

 

(continued in part 49)

Many thanks to Bob M. for his excellent proofreading efforts on this chapter.

 

 

 

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