Texas Gal
by C. Sprite

 

Chapter Fifty         Feast or famine

On Sunday night I slept in the Holiday Inn near Brandon, and was in the office early Monday morning. As usual after an extended absence, my desk was covered with file folders. I plunged into the stacks of paperwork like an Olympic high dive competitor.

It took me two hours to look through all the employment forms and then file them in the small room off the outer office. I went through the mail quickly, discarding as much as possible and routing the rest to the appropriate individual. That left only the offers from people anxious to sell their businesses, and a ton of trade mags.

My coffee table already held months of trade mags so I decided that the time had come to reduce the piles quickly. I began skimming through them, dropping those that appeared to hold little or no interest into a pile on the floor. When I was through I still had more than I expected, but two-thirds were now stacked up next to the table. After lunch I would have someone remove it to the furnace in the plant where we burned our bark, unusable wood products, and paper trash to produce the heat we needed to cook our chips when making paper.

I now had a choice between reading trade mags or culling the offers for the Possibles folder. The Possibles won out, even though I was sure I wasn't going to buy anything this trip. Although I had always declined the overseas offers I continued to receive them. They were the first to be pulled for rejection letters. Then I separated out the businesses too small for me to consider, and the plants making paper products I'd long ago categorized as unsuitable. When I was done, I still had a folder full of offers from paper producers, sawmills, forest land owners, construction materials producers, and large printing companies. There were also a few offers left over from the Spring Break cull. I had moved so quickly to head for the Northwest that I hadn't notified them that I wasn't interested. I pulled out everything except the offers from the construction materials producers.

I needed a break, so I prepared a second cup of tea and went to sit on my deck. From there I could watch the activity in the yard between the headquarters building and the paper plants. Just as I settled into my chair, the phone rang. I scowled a little at the timing then stood up and walked back into my office.

"Sure," I said to Bob Warren's inquiry if I was free. "Come on over."

I had just settled comfortable on the deck again, this time with the phone sitting on the small table out there, when Bob arrived and joined me.

"Welcome back, Boss. Congratulations on your graduation. I saw it on the news."

"You saw my graduation on the news up here?"

"Yeah. You're sort of a celebrity up this way, you know. I guess the local station picked up the story from one of the news syndicates. They made a big deal about you being just seventeen and graduating with top honors from a four year college while running a major corporation."

"They should know that I haven't been running this company. You and the others have been doing all the hard work while I just pop in now and then for a visit."

"You're still the brains behind most everything we do," Bob said smiling. "The captain of a ship hardly ever goes down to the engine room, but the ship would never go anywhere without him, or her, on the bridge."

"To me it seems like all I do is stir up trouble and leave it to you guys to clean up my mess."

"I'd hardly call acquiring fifty-two paper plants, eighteen other assorted business operations, and hundreds of thousands of acres of forestland, making a mess. Any business executive in the country would love to have such a record of accomplishments."

"I just don't want you to think that I don't know who really keeps this place functioning. I could never have done it without you and the others, Bob."

"It's been an exciting four years, and we're thrilled to have been a part of it. So what's next? Anything in the Possibles?"

"You're a glutton for punishment," I said smiling.

"I just get almost as big a thrill out of the acquisitions as you do. I've had my share of dull jobs in my lifetime, where business consists of just one boring meeting after another. Life up here has never been dull."

"Have you gotten your rating for the G1?"

"Yep, Mike O'Neil checked me out and I took the test after spending as many hours practicing as I could. I can now share the flying duties with you. When I told Mike how you ferried all of us around the Northwest, and still managed to negotiate the deals, he couldn't believe it. He said that if you ever find yourself in a similar bind, that you should give him a call. He'd be happy to come along to pilot the plane so you can concentrate on other business."

"That's good to know. I'll remember. I should have thought of it before we left for Montana, but my mind was elsewhere. How are things going with the Northwest Region?"

"Our managers are running all the plants, and we've closed on all but three. It turns out that the plant in Butte can't be wrapped up until we get a signature from the owner's father, who still owns ten-percent. He's in a nursing home and he's being difficult about the sale. There's a minor question about property boundaries for the plant in Hood River, and we're waiting for the surveyor to finish his work. And the audit of the A/R for the plant in Grants Pass isn't complete yet. As soon as it is, we'll wrap up the paper work. You still have to make a decision regarding the Regional V.P. appointment."

"Have you felt out Jerry DeLuca about taking over responsibility for both the Portland and Hood River plants?"

"Yes. He's unsure if he wants to move from Concord. I told him that it would mean more responsibility and an increase in salary."

"But he didn't say no?"

"No, not yet anyway."

"Okay. Ask him to drive over here on Friday morning. I'll speak to him before the weekly meeting."

"Okay."

"Anything else going on," I asked.

"We're reaching capacity in Jamestown. I know that you wanted to wait until we had more experience with the product line before considering any purchases, but we're almost to the point of having to delay shipments. The Ameri-Moore sales people have done a terrific job of selling our products when they call on their Lumber Division customers. If we have an equipment problem, we'll be in a difficult situation."

"So we either need to expand the operation in Jamestown, acquire more manufacturing facilities elsewhere, or slow down the sales folks?"

"That's about the size of it. We have enough land at the plant to double the size of the operation, but we're talking three years of construction effort before we could begin production."

"There are a couple of plants for sale down South. I was considering a trip down there when the situation with the Northwest came up back in January. The offers are still in the Possibles folder on my desk because I never responded. In fact, all the offers in the folder are from companies manufacturing construction products."

"I remember the two you're talking about. They're part of one company with two plants; one in Louisiana and the other in Alabama. I remember thinking they might be worth a look."

"Okay. I'll contact the person who sent the letter and see if they're still being offered."

"Want me to look over the other offers?" Bob asked.

I could see the interest in his face and hear it in his voice. "Sure. Why not. We're not buying any paper plants though. I've already pulled them."

"I understand, Boss. We've got too much excess paper capacity right now. Roofing paper production, boxing, and bags are the only areas where we're tight. I got a lead on a company in Georgia that has box making equipment for sale, by the way. They acquired a small producer as part of a corporate takeover and want the factory space for the manufacture of circuit boards. They've shut down the operation, moved the equipment to a storage building, and are trying to liquidate it. They called last week because they heard we make boxes. I guess they're contacting everyone in the business. I told them we'd get back to them if we decided that we had any interest."

"Why don't we plan on taking a look this week, as long as we might be heading to Alabama anyway?"

"Sounds good. Wednesday?"

"Okay. The jet is being used by Susan for inspections, but we have the G1. It's just three hours to Georgia."

"If we leave early enough, we can do Alabama and Louisiana the same day."

"Sounds like a plan," I said.

"If we're going shopping, I'd better get my other work caught up," Bob said, standing up. "I'll take the Possibles and have a look."

After Bob left, I remained out on my deck for another half hour. I would have liked to stay longer, but I didn't want people to think that I never did any work, so I went inside and read trade mags for the rest of the day, except for a brief break for lunch.

   

The three-hour trip to Georgia was almost as much fun as my trip from the ranch at the beginning of Spring Break. We brought John, three engineers from Brandon, and the three engineers from Greenfield who were most involved with maintaining the box making equipment, to examine the equipment in Georgia. Bill Marshall and several of his finance people would wait at the plane until we were done since we were only looking to buy equipment. It was warm, but we had brought half a dozen collapsible aluminum lawn chairs with us. The guys could sit in the shade offered by the plane and relax until we returned. They would be invaluable at the two plants in Alabama and Louisiana that we would be heading for next.

Bob had arranged for a stretch limo to pick us up, and it was barely adequate for the nine of us. Fortunately the plant was only twenty minutes from the airport.

When we arrived at the manufacturing facility, the day was starting to heat up. The receptionist in the main building called the loading dock foreman, who came up to meet us and lead the way to the storage warehouse. As he unlocked the door, he said, "It's all yours. Let me know when you're through." He handed me an inventory of what was supposed to be in the building and left.

Not only wasn't the building air-conditioned, it was sealed up like a tomb and the air wasn't moving at all. I knew that it was going to be miserable in there within a couple of hours so I told our guys to make it as quick as possible. I was glad I didn't have to work in there. Bob and I waited outside in the shade offered by the building while our guys tried to identify the equipment and determine its condition.

John and his guys remained inside two hours, and when they were through, they were drenched with sweat. Expecting that to be the case, I had sent the limo driver out to get enough ice-cold non-alcoholic beverages for thirty people. He'd looked at me kind of funny, but took the fifty dollar bill I held out and disappeared. When he returned he had two large cartons in the truck, filled with containers of iced coffee, and bottles of ice tea and cold fruit drinks. The cartons were lined with large plastic bags and filled with ice cubes to keep the beverages cold. I think I've said it before, but I have an intense dislike for South Carolina and Georgia in the summer months. It's not bad along the coast, but inland is usually brutal with heat and humidity.

The guys wasted no time replenishing their lost fluids once they emerged from the storage warehouse. I think each man drank about a gallon of the cold liquids.

"It's a mess in there, DD," John said as he finished drinking a quart of OJ. "They just piled equipment every which way they could. They must have used forklifts to stack things up the way they did. Between the damage they did removing it from wherever it was being used, and the damage they did shoehorning it into this small storage warehouse, they've cut the value in half."

"Is it even worth making an offer?" I asked.

"If you can get it cheap enough, we can get it working again. A couple of the machines might have to be used just for parts to get the rest set up and working. At least it's all the same brand and model so everything is interchangeable."

"Any idea what it's worth?"

"It's all about ten to fifteen years old, but its good equipment. If they had sold it before it was removed from the plant, I'd say they could possibly have gotten about two hundred thou; maybe two-hundred fifty thou. Now, who knows? We can't be sure of the value until it's removed this building, spread out and each piece is evaluated. We could get lucky and find that the damage is cosmetic, or get unlucky and find that they've done even more damage than it appears. The truth is probably somewhere in between."

"Okay, John. Thanks. You guys relax. I'm going to see if there's anyone here to talk to."

Back at the main building, I told the receptionist that we had examined the equipment for sale and asked who I should talk to about it. She called purchasing and a young man came down to show me the way to the manager's office. His name, according to the name plate on the door was Terrance Stillworth.

"Come in, Miss Drake," he said as the young man knocked on the open door. "Please have a seat. Did you see the equipment we're offering?"

"My engineers did, Mr. Stillworth. It's too bad your people were so reckless when removing it and storing it. I'm told they did a lot of damage."

"Did they? I wouldn't know. I don't know the first thing about box making equipment. Are you interested?"

"Possibly. But my chief engineer says that we can't arrive at an accurate value unless everything is removed from the storage area so it can be examined more thoroughly. Can it be removed and spread out in the yard?" I knew he'd never agree to that, but I figured that a negative answer would help my position.

"We can't possibly do that. We don't have the space here for such an activity."

"I understand. As it stands right now, the most I can offer is five thousand dollars."

"Five thousand? For all of it? I was assured that it was worth at least a hundred thousand."

"Perhaps it was before your people smashed half of it while disassembling it and piling it up in the storage warehouse. Its current value is based on its current condition, not what it was worth when it was still set up. Do you know what happens when you stack tons of machinery on top of other machinery without taking proper precautions for the weight? Since you can't provide a means for us to inspect it more closely, I have to assume the worst."

"I couldn't possibly accept so little for it. I can possibly go as low as— seventy-five thousand."

I stood up. "I understand. I know you won't get the amount you're seeking, but I wish you luck in finding a buyer. It's pretty heavy equipment, so I'm sure a local scrap dealer will gladly give you a few hundred dollars for it and cart it away for free. Good day."

I made it to the door without his calling me back and proceeded through the office and into the hallway. I was almost to the receptionist when he caught up with me.

"Miss Drake, perhaps we can reach a compromise position."

"I doubt it, Mr. Stillworth. The equipment has been severely damaged by your movers. I couldn't even enter the neighborhood of the amount you're looking for while it's piled up in that storage building."

"How about fifty thousand dollars? I'm sure that it must be worth that much if it was worth a hundred thousand before it was moved."

"Mr. Stillworth, imagine this if you will. You purchase a used, but working refrigerator from an appliance dealer for a hundred dollars. As it's being moved to your home, it falls off the delivery truck and gets hit by a car following the truck. Now, it might have been worth a hundred dollars while it was on the appliance dealers loading dock, and the compressor might even still operate, but what is it really worth to you now?"

"The movers could not possibly have done that much damage to the boxing equipment."

"No? Have you seen it?"

"I've seen pictures of how it looked when it was set up."

"Take a walk out to the storage warehouse with your pictures and compare them to what's out there now. We're talking about machinery that weighs tons, and much of it's been piled on top of other equipment not capable of supporting such weight, after being not so gently removed from wherever it was originally set up. Perhaps I could go as high as seventy-five hundred, but that's nowhere near what you seem to be expecting. Whoever purchases it, if it's not purchased simply for the scrap value, is going to have to try to untangle that mess without doing further damage, ship it, and then try to reassemble the pieces and get them working again. You should have sold it before it was removed, and then allowed the purchaser to disassemble it and haul it away, rather than waiting until after it's been damaged to seek a buyer."

"We tried to sell it, but couldn't find any interested parties before we had to make room for the electronic fabrication equipment that was arriving shortly. We couldn't leave brand new equipment worth tens of millions of dollars sitting outside in the loading dock yard."

"The demand for single-color box making equipment has dropped precipitously in recent years now that four-color equipment prices have dropped as much as they have. It's unfortunate that your people eroded so much more of the value during the move. Now if you'll excuse me, I have a plane to catch."

Mr. Stillworth didn't chase after me again and I made it back to the limo in a few minutes. Everyone had cooled down and looked relaxed while sitting in the cool comfort of the a/c.

"Did you do a deal?" Bob asked, as the limo pulled away.

"No, he wants too much. I refused to budge from my high offer of seventy-five hundred dollars."

"Seventy-five hundred?" John said. "That's all you offered, DD?"

"You said that we had to get it cheap to be worth it. I bid cheap."

John shrugged. "I suppose you could have gone a little higher."

"Too late now. I established my price and then refused to budge. Perhaps it's better this way. We'll find equipment that won't take six months to set up, repair, and get working. Let's head for the airport."

Bob and I did a preflight of the plane and then we headed for Gadsden, Alabama. I had flown the plane down to Georgia, so Bob took the left seat for this part of the trip and took us to our destination in Alabama in just a half hour of flying time. Just one state over, the weather wasn't any better. It felt just as hot and humid as Georgia. The Whorton Manufacturing plant was thirty minutes from the airport, but we relaxed in the cool comfort of the limos as we rode. Since we were all going this time, we had made arrangements for two cars. The plant in Alabama was the headquarters for the small company, so Bill and his folks would work in the office, while John and his guys would poke and pry on the manufacturing floor. Bob and I would wander around and ask questions of whoever was sent to accompany us.

The two plants represented a small, wholly-owned subsidiary of a company that chiefly manufactured mobile homes. They had acquired the roofing products company incidentally, in a buyout of a company that manufactured aluminum siding. They wanted to expand the more profitable siding business now and were reportedly selling the roofing materials company to fund construction of a new plant in Arkansas to produce vinyl siding product. Unlike the paper plants in the Northwest, the plants were not going at fire sale prices. On the company's books the assets were valued at thirty-six million, but the asking price was only twenty-two million in consideration of an outstanding loan of just over ten million for improvements made when the company was purchased, and because they had been offering the company for over a year without receiving any real interest. According to the information we had so far received, they would be profitable from day one. Each plant could produce twice the product that Jamestown was capable of producing, and made a wider variety of roofing materials.

Like our plant in Jamestown, the noise was horrific and the odors abominable. It was too noisy to ask questions so we just walked through the plant on a silent tour with the plant manager for our guide. We all wore earplugs and it was necessary to shout to be heard on the few occasions when we wanted to know something, or say something. I think it must have been a hundred-ten degrees on the manufacturing floor. Enormous oscillating fans on floor stands just blew the hot air around, but I suppose it was better than nothing. It was a relief when we returned to the office area, both because of the low decibel level and the cooler temperature.

Bob and I talked with the plant manager and his assistant about the plant and the industry in general until John and his people had completed their evaluation, then we all headed to the airport, leaving Bill and the financial people to complete their work in Gadsden. The rest of us were headed to Louisiana to look at the other plant.

The plant in Monroe, just minutes from the airport, looked as efficient as the one in Gadsden. Both had good highway access and rail sidings. The plant buildings in Monroe were a little newer than the ones in Gadsden, but the structures at both plants appeared to be in good condition. Bob and I took another silent tour while John and his guys spread out to look at the equipment and the maintenance records. As much as I wanted to see the plant, I was glad when the tour was over and we could return to the office area to talk in a much cooler and quieter area.

Mr. Childress had a small refrigerator in his office and he offered us iced tea. It was cold and tasty, and helped cool us down.

"I could never live here," I said. "The humidity is oppressive."

"But don't you live in Texas?" he asked.

"Yes, but it's so much dryer than here. Gadsden was even worse, and Georgia was horrible."

"You get used to it I suppose, but it is a bit more humid than usual this week. Nine months a year it's wonderful here. I can't imagine living anywhere else. What do you think of our plant?"

"My experts will be the final authority, but to me it seems to be efficient, and the equipment appears to be in excellent condition."

"When Hollis Homes bought the company, they either upgraded or replaced most of our manufacturing equipment. The former CEO planned to make roofing materials an important new part of their operations. The new CEO has shifted their emphasis back to materials that would reduce the cost of manufacturing their mobile homes. The bean counters depreciated our new equipment quickly, to use the tax breaks, so the asset valuation appears lower than it should, but everything is top-notch and my equipment engineers keep it that way. Woodie, over in Gadsden, operates his plant the same way. We take care of the little problems quickly so they don't become big problems."

"That's a sound philosophy, Mr. Childress, and one which we heartily endorse. All our plants operate the same way. I'm always distressed when I see a plant where the equipment hasn't been maintained, but there are usually extenuating circumstances. Proper maintenance seems to be the first thing to suffer when money problems arise, when it fact it should be the last thing. Nothing drags the value down faster than inadequate maintenance."

"Too true, Miss Drake."

When John and his guys had completed their inspection I thanked Mr. Childress and we headed for the airport. We had cold drinks on the plane for the guys and we needed to get back to Gadsden. Bill called while we were on route and we agreed to meet at a steak house he'd been told served excellent meals.

The limo was waiting for us when we deplaned and whisked us off to the restaurant where Bill and his guys were waiting. The food was excellent, and while Bob and I abstained from drinking, Bob because we were flying, and me for both that and my age, the others enjoyed several mugs of cold beer.

The food was not too bad, although my steak, ordered extra rare, was overcooked despite my instructions to drop it on the char boiler, flip it over, and serve it up while it was still mooing. Some people seem to think extra rare means slightly pink at the very core. I like it purple at the core, if it's a good cut. If it's a cheap cut, then overcooking it is the only way to make it chewable and you might as well be eating pot roast.

I had flown us back from Monroe, so Bob took the controls and flew us to Vermont while I navigated. It had been a long day and the guys had worked hard, especially the engineers, so I told them that I didn't want to see any of them at work tomorrow. The financial guys hadn't had it nearly so bad, but they had worked a long day also and I couldn't exclude them. We dropped the engineers from the Greenfield plant off at the Turners Falls airport there, where we had picked them up in the morning. Bob helped me get the plane into the hanger at Rutland before we slipped into the limo with Earl. We had met at the hotel and Bob left his car there, while the other guys had driven directly to the airport.

Despite my pronouncement, Bob was at work in the morning, and John showed up around ten after having spent the morning at home preparing his report about everything we had looked at, including the box making equipment. What can you do with people who refuse to take time off?

The cafeteria was serving pizza again, it being one of the favorites of the plant personnel, so I had a pan sent up to my office and Bob, John, and I got together to discuss the two plants over lunch.

"They're conscientious about their maintenance down there," John said. "That's what impressed me most. That, and the fact that the equipment isn't very old. We wouldn't have to do very much at all to integrate them, at least as far as my end goes."

"If the numbers check out," Bob said, "it looks like a good investment. During their last fiscal year they earned a pre-tax profit of $2,491,000 on sales of $12,983,000. The profits will easily pay all the interest expense on the loans. The plant in Monroe is only running one shift, while Gadsden has one full shift and one limited second shift. We’d be increasing our capacity by four hundred percent over Jamestown's output. It would put an end to potential worries about a problem at Jamestown preventing us from meeting our delivery schedules. Although it comes with a customer base already, we should be able to increase sales with a bit of effort because of the expanded product line and our existing customer base."

"Yes," I said, "it does sound like a good investment, and it will ease the potential problems of capacity at Jamestown. I guess I should contact the corporate owner and open negotiations."

"Uh, what about the boxing equipment, DD," John asked.

"You mean the stuff you looked at yesterday?"

"Yes."

"They want too much money. You said we had to get it cheap for it to be worthwhile."

"I've been thinking about that. Maybe I could have chosen my words better. I didn't mean that we had to steal it. If it was worth $200,000 to $250,000 when it was set up, it should be worth $100,000 as it is now."

"$100,000? That's the figure that Mr. Stillworth quoted when we first started discussing it."

"Do you think we can still get it for that price?"

"I'm sure we could if it's still available. He lowered his price to $50,000 before I left the office."

"It would definitely be worth $50,000. I'm sure that it looks far worse than it is. Those machines are really rugged and piling them up as they did shouldn't really harm them that badly. Most of the covers and side panels have been bent to be sure, but they can be pounded out."

"John, do you remember when we were negotiating to buy the binding equipment from South-Core?"

"Yes."

"Do you recall the first rule of negotiating price?"

"Uh, never appear too anxious?"

"That's right. Now if I call Mr. Stillman and make another offer, that makes me appear anxious and gives him a lot more leverage. Let's sit on it for a while and see what happens. He said that they'd been trying to sell it since it was set up. If they couldn't do it then, it seems that the chances have dropped considerably with it being piled up in that warehouse."

"Uh, okay DD. I'd hate to lose it though."

I knew that John hadn't had a real challenge to his skills as an engineer since last summer when I'd run him ragged getting the binding equipment set up. Smiling, I said, "If we do lose it, I promise to find you something that will be just as big a challenge. Okay?"

John smiled back. "Okay. And I intend to hold you to that."

     

I met with Jerry DeLuca the following morning. Bob had asked him if he was interested in taking over as plant manager of both the Portland and Hood River plants that we had purchased a few months ago.

"So tell me what you think, Jerry," I said.

"I, uh, haven't been able to decide, DD. I know it will mean a little more money, but my family is settled in here. I've discussed it with my wife, and she's left it up to me, but I hate to interrupt their lives with a move across the country."

"I'd really like to have you out there, but I never move anyone against their will. That would be counter-productive. It has to be your decision to go."

"I know, and I'm tempted. I've loved being the plant manager at Concord, and I know that Portland and Hood River would be an even bigger challenge as we work to integrate them into our operations."

"I need an answer, Jerry; one way or the other. I would prefer to have you out there, but if you don't want the job I have to move down the list to our next candidate."

"I— uh— would like— to— ," Jerry stammered.

"You'd like to what?"

He looked at me and I could see the agony in his eyes. He was torn between his career and his family's happiness. Bob had recommended him for the job, and I had agreed that he was both capable and hard working.

"I'd like to have more time," he finally said.

"You've already had a month to think it over, Jerry. I'd like to give you all the time you want, but we need to get this settled and I'll have to give the next candidate time to think it over if you decline. It wouldn't be fair to the next person for me to give you more time if you decide against taking the position."

He sighed loudly. "I'm sorry to hold you up like this. It's just such a monumental decision. Okay, as much as I'll be interrupting the lives of my wife and kids, the extra money will give us all a better life. I can use a lot of it for the kid's college fund. Okay, DD. I'll take the position if you still want me for it."

"I do, Jerry, but not for the job you think."

"I don't understand."

"I want you for a slightly different job. Bob and I discussed it and I decided that the other job might put too much pressure on you to move your family. I figured that if you'd move for a plant manager position with greater responsibility than you have now, you'd certainly move to become the new Vice President of the Northwest Region."

"Vice President?"

"Yes. Still interested?"

His face lit up like the White House Christmas Tree during that annual event.

"Am I ever," he said enthusiastically. Then somewhat more subdued he asked, "If I had turned down the plant manager position, would you have offered me the V.P. spot anyway?"

"No. Almost anyone would move for a V.P. position, but I wanted someone who would be willing to move for a challenge and a little more money. Needless to say, the V.P. position pays quite a bit more than the plant manager position Bob offered."

"Will I still be the plant manager of both Portland and Hood River as well?"

"No. All our V.P.'s assume the plant manager position of one plant, in this case, Portland, and we'll find someone else to handle Hood River. You'll have more than enough on your plate overseeing your region. And you'll have good assistant managers at Portland to ease the load there."

"Thank you for this opportunity, DD."

"If you continue to do your usual thorough job, that'll be thanks enough."

I spent the remainder of the time before the weekly meeting discussing the job with Jerry and telling him about Portland. He'd seen the aerial pictures of the plants, but he'd never been out there. I even told him where he could get the most delicious French Toast he'd ever eat.

   

Although I'd usually announced promotions just before we broke for lunch, I decided to announce the appointment of Jerry immediately. I suspected that his presence at this meeting might keep the others from fully speaking their minds since they knew him to be a plant manager and not privy to boardroom matters. He gave a short acceptance speech and then everyone congratulated him before we continued.

"Okay, Bob," I said to Bob Warren, my Exec. V.P. and corporate right hand.

"Everything is moving along well," he said, "with the consolidation of the new plants into the company. We haven't closed on three yet, but I expect that we will very shortly. Two are paperwork related and one is a recalcitrant stockholder in a nursing home. Any of the problems can void the accord that DD reached with the owners, but we'll continue to pursue the purchase for as long as we can. Every plant was a great deal and we'd hate to lose any of them to Alliance.

"DD and a group of us went to look over a couple of plants yesterday, but this isn't the usual dash in and buy situation. The plants in question manufacture roofing materials, similar to what we make in Jamestown, so it won't affect our paper plant operations, other than to bring us new customers for the special papers we already produce for Jamestown.

"Last year at this time we were going crazy trying to meet the demand for school supplies and special novelty products. I'm happy to say that sales of those products, while not quite as high as last year when we introduced the MoPacs, have remained consistently good. We began producing the new notebooks several months ago so that we could even out the workload a bit. We won’t have any problem meeting the August delivery dates desired by most of the school stores.

"The Houston plant is up and running now, and doing well. It's taken the load off Danbury and Bloomington. Both Danbury and Houston are increasingly being called upon to produce data processing forms. It's too bad that Bloomington can't produce them, but we still have more than enough non-DP form work to keep them busy, and they're producing all of our MoPac covers. We've shipped the printing plant equipment that DD purchased last summer from its storage in Evansville and it's being set up in Houston, in the unused area of the main plant where we intend to set up the boxing and bagging operations. The area has been walled off to keep it separate and reduce the noise level. The intent is to have our own in-house printing and binding operation for all our corporate needs.

"At present, we're only operating at fifty-two percent of our paper making capacity. I'd like to see that raised to seventy-five percent or higher. Ninety-five percent of capacity would be wonderful, Matt.

"That's it for the general news. I didn't want to steal anyone else's thunder."

"Thanks, Bob," I said. "I'm sure everyone remembers our discussion back in January when we discussed setting up boxing and bagging operations in Houston. The Business Forms printing operation is only using half of our building there, leaving half a million square empty. The new print shop will utilize some of that empty space. Bagging and boxing certainly won't need it all. Bill?"

"Financially, we're rock solid," Bill Marshall, my V.P. of Finance said. "Our A/P's are current, and we take the discounts whenever offered. Our A/R's are within industry norms, and our lenders are all happy. The plants in the Northwest continue to toy with the red ink bottle, but there's little danger of them hurting the division as long as they don't dip too far into the negative range. Everyone else is cranking out product and making money."

"Thank you, Bill. Matt?"

"Our new product lines, Plymouth Paper fine stationary and Appalachian Paper supplies for children have been well received and are doing well," Matt Piermont my V.P. of Marketing said. "The new covers for the MoPacs are sensational and I think that they'll be as big a hit with the kids as the past covers. We're doing the best we can to get sales up, so we can reach Bob's desired ninety-five percent of capacity, but we can't seem to make much progress with our newsprint sales, and probably won't while Alliance is content to lose money there, or at least break even. I've been pressing the outside sales force that call on the big accounts to get new customers. We couldn't blame them when the buyers were being offered generous discounts and ludicrous invoice dating terms that we weren't offering, but now that we're matching Alliance's deals, I expect them to do better. The rest of our product lines are doing great."

"Thanks Matt. Ben?"

"We continue to field calls from former employees of the four Mo Paper plants that are still closed," Ben Phillips, my V.P. of Personnel and Employee Relations said, "but they've slowed considerably. The ones that are calling still want to know why we continue to buy paper plants while their plant remains closed after a year and half. They don't understand how market forces for different products just don't permit us to open their plants."

"There's a bit more to it than just that," I said. "A report we commissioned from an engineering firm showed those four plants to be the most susceptible to flood damage. The construction of a levee is required to reduce their exposure. Also, the age of the equipment is a major consideration. It's just not efficient. With the situation we're experiencing up in the Northwest, we can't afford to open plants that we know are going to only be, at best, marginally profitable. At worst, they could drag us down. Bob, any interest from buyers?"

"I've received a couple of inquires from overseas about purchasing the equipment. I sent out pictures and specs on the equipment in Ridgely to the parties, but haven't received any responses. The broker I listed the plant with hasn't found any interested parties yet. Roy Blu's credit has improved, but I doubt that he could get the funding necessary to buy the plant."

"Maybe something will turn up," I said to Ben. "Tom?"

"All is quiet," Tom Harris, my V.P. of Purchasing and Procurement, said. "Chemical prices have risen slightly this year, but I've made deals to buy larger quantities in spaced out shipments so we haven't seen an increase in our costs. If we acquire another fifty plants, I might be able to swing a slightly better deal by buying by the ship load."

"Thanks, Tom," I said smiling. "We'll work on it. John?"

"Nothing exciting happening," John Fahey, my V.P. of Engineering said. Smiling, he added, "It would be nice to get that boxing equipment. It would keep me busy for a couple of months."

"I know, John." To the rest of the executives, I said, "John's referring to the used, single-color box making equipment we looked at yesterday in Georgia. The owner has it piled up in a storage building. They've been unable to sell it for some time. I made an offer but the seller didn't bite, yet. Okay, let's continue. Gerard?"

"As Tom said, all is quiet," Gerard Deveraux, my V.P. for the Midwest Region said. "I too would like to do something for our furloughed workers from the four plants that remain closed, but there is nothing to be done. Many are working at the Jefferson City plant, so that's helped. When the other plants reopened, and their workforce was needed back at home, we were able to take even more of the furloughed workers from the four plants. It's not the ideal, but it's helped many families endure the closure of the plants."

"Thanks, Gerard. Ron?"

"The situation is the same in the Southern Region. All is quiet and all available positions at the operating plants are offered first to anyone furloughed from the closed plants. That's about all."

"Thanks, Ron. I'm certainly not going to call on Jerry at this meeting, but now he can see how we operate and be prepared for his next meeting with us. Since he'll be so far away, He probably won't be attending the meetings here more than every couple of months, but he'll receive copies of the minutes, just as the rest of us do, so he'll know what's going on. Okay, new business anyone?"

"Have you ever given any thought to holding our alternate weekly meetings in Jefferson City?" Gerard asked. "We have that magnificent new four-story headquarters building that Roy Blu built, and it's just minutes from the airport. Most of the building is empty now. It would be just a few miles closer for me, and about fifty miles closer for Ron, but it's much closer to Texas and Portland. With the new plane, Bob could bring Bill, Matt, Tom, and John down there in what, three and a half hours? He could even swing by and pick me up in Owosso."

"Three and a half hours each way for five of us means thirty-five lost man hours every two weeks," Bob said.

"How about every month instead?" Ron offered.

"Or perhaps just once every two months," Matt said. "Since Jerry will only be coming once every two months, this would save him half the journey, and minimize the lost hours to the majority of our weekly attendees."

"How does everyone feel about Matt's proposal?" I asked. "Or would you prefer Gerard's or Ron's idea?"

"I think Matt's idea would be best," Bill said. "It would save the optimum number of man hours over the course of the year, and reduce the travel time for Jerry. Since Jerry will be traveling by Jet, and most of the rest of us in the G1, we'll spend about the same time in the air. Ron would have the quickest trip, once he's airborne."

Smiling, I said, "We'll miss the delicious lunches served up by the B&B on those dates, but I suppose we'll find someplace in JC that will do. Those rib dinners we had when we went to propose the buyout to Roy Blu were delicious."

"I like Matt's idea as well," John said.

"Okay," I said, "let's take a vote. All in favor of Matt's idea?"

Everyone raised their hand, including Gerard and Ron.

"I guess that decides it, since it's unanimous," I said. "We'll set up a schedule of bimonthly meetings in Jefferson City. The rest will be here as always. Jerry will probably only attend the JC meetings. Gerard and Ron will continue coming every two weeks, but they always have the option of skipping every other meeting if they wish. Since JC is in Gerard's region, he'll be responsible to see that we have a place where we can meet in private and that there will be someone trustworthy there to record the minutes."

"The large conference room on the top floor where we met with Roy Blu will be perfect," Gerard said. "My secretary from Owosso can accompany us to record the minutes."

"Good. What other new business do we have for today?"

"The engineering company that did the flood analysis is supposed to be designing sediment pools," Ron said. "Have they completed their work yet?"

"Not yet," I said. "As soon as we have the reports we’ll have to make plans to begin construction. It'll be expensive, and I'm sure it will take several years to complete the effort."

We spent the next hour discussing the topic and other environmental concerns; quite a bit of time considering we didn't even have the reports yet, but it was an important issue. We broke for lunch when the B&B delivered the meals, then returned to our meeting afterward. We discussed possible responses to Alliance's tactics, an industry rumor that South-Core was looking to retaliate for my actions against them, and the competition from paper manufacturers abroad. Since Mr. Wells hadn't called me, I didn't believe there was any validity to the rumors about South-Core.

We ended the meeting about 3 p.m. and everyone returned to their offices, or began their trip home. Jerry only had to drive to Concord this time, but Gerard and Ron had plane trips ahead of them.

Everyone had somewhere to go except me. I retired to my sofa with trade mags to finish out my day.

   

Saturday was a beautiful late spring day in Vermont so I took to the air in the Cessna so that I could enjoy it more fully. I had no particular destination in mind, and I simply meandered around the area. I flew over to Lake George in New York, up to Lake Champlain, then eastward towards Maine before swinging south to overfly the Gorham and Concord plants. Turning northwest again I returned to the airport and the end of my ride. Rather than keeping Earl waiting around for me all afternoon, I'd told him that I'd return to the hotel by using the pool car we always kept at the airport for the use of the pilots when they were in town.

I spent Sunday lying near the swimming pool at the motel and wondering what my sisters were doing. They were probably out riding at that very moment. I would be spending another week in Vermont, but I was looking forward to having a few days at the ranch before we headed for France. It seemed that I was alone more and more. Part of that was probably the blues from having graduated and knowing I wouldn't be seeing my oldest friends in September. And part of it was because I wasn't fully integrated into the job of President of the division. Bob and the others were used to carrying the load in my absence, and I had little to do when I was here. That accounted for my spending so much of my time acquiring companies. I had to do something or go crazy. The non-business hours were the worst. While school was in session, I was totally absorbed in my texts, but when in Vermont, I found myself with nothing to do outside of the office. I'd thought about this situation many times before, but the situation seemed to be getting worse. Perhaps it was because I was facing the slow disintegration of my core family and the end of my school years.

Judy was now finished with school and would be seeking her place in the world outside of the ranch. I knew that she and Dex had talked about life after college, but hadn't made any plans. Susan and Mary had just one more year of college left, and neither had yet decided to continue with their studies. Once they joined the workforce full time, it would be the end of the life I had always known. We would see less and less of each other as the years progressed. At this point, all I could hope was that the ranch would remain a focal point for family gatherings. Just thinking about the situation depressed me tremendously so I tried to push the thoughts from my mind, but they wouldn't go peacefully and troubled me for the rest of the day. I was tempted to head for home in the morning— but I knew that I'd stay in Vermont as planned.

   

On Monday morning I placed a call to Martin Llewellyn, the CEO of Hollis Homes. According to his secretary he was in conference, but she promised to give him the message as soon as he was free. I drank tea and read trade magazines until he returned my call just before noon.

"Miss Drake, it's a pleasure to speak with you. I understand you toured our facilities in Monroe and Gadsden while your people checked out the equipment and our books with a microscope."

He'd said it in a jovial way so I knew he wasn't offended.

"My teams have had a lot of practice, Mr. Llewellyn. You can be assured that when my engineers are through they know the equipment as well as if they've worked with it for years. My financial people are top notch also. They know what to look for, and raise red flags when something doesn't add up."

"And what did they discover, DD? May I call you DD?"

"Of course."

"And you should call me Marty. What did your people find, DD?"

"They tell me that your people have kept the equipment in excellent working condition, and that the finances of the subsidiary appear solid."

"That agrees with the reports I've always received. The two plants have been solid performers. We're only divesting ourselves in order to build our new vinyl siding plant in Arkansas. Since you already own a plant producing roofing products, they fit right in with that portion of your company's activities."

"Yes. We've felt for a while that it might be time to expand our line-up of roofing products. The Monroe and Gadsden plants would accomplish that, if we can agree on their price."

"We've established what we feel is a very reasonable amount. Twenty-two million dollars will allow you to acquire the company and all its assets. Of course there's a ten million note outstanding for equipment upgrades. When my predecessor acquired the roofing company, he intended to take the company into modular home construction. The current board has announced that we'll continue to concentrate on mobile homes and travel trailers. Our roofing materials will be plastic, vinyl, and rubber in the future, so asphalt roofing paper and shingles have no place in our plans."

"I see. We were a bit curious as to why the principal on the debt was never paid down. It appears you only paid the interest on the note."

I believed that I already knew the reason, but wanted to hear Mr. Llewellyn's explanation. He never missed a beat, so he must have been prepared for the question.

"Yes. The note was signed at the then prime rate, which jumped up a quarter point just after we completed the transaction. Our accountants found it advantageous to pay just the interest, and use the money that would have paid down the original debt for other expenses. It was strictly a bookkeeping thing. Interest payments have always been timely and the lending institution has been satisfied with the arrangement."

"I see."

"So what do you think? Interested?"

"Interested? Yes. The only sticking point is the price. My financial people put the value closer to $28 million. With the outstanding note taken into consideration, that would mean $18 million."

"I'm sure that the Board would never accept that, as much as we'd like to wrap this up."

"Let me ask you straight up then. How low are you empowered to go?" I knew that he wouldn't give me a straight answer, but this was all part of the game.

"The Board has authorized me to go to $21.5 million, but no lower. We've been carrying the company on our books with an asset value of $36 million."

"Yes, but that includes Good Will. That's always one of those intangibles used to pump up financial statements."

"Good Will is always an important part of the asset when you have a strong customer base and trained company personnel. We're not just selling the equipment."

"Okay, I'll allow half a million for Good Will. That makes our offer $18.5 million."

"I'm afraid that we're still too far apart. The Board only authorized me to drop half a million."

"I understand. Perhaps they'll reconsider if they don't find a buyer during the next year. If we don't purchase the plants in Missouri and Louisiana that I'm going to look at now that I know you're expecting more than we feel the plants are worth, perhaps we'll still be interested. It's been very nice talking to you, Marty. I wish you all the best with your new plant in Arkansas and with Hollis Homes."

"I've enjoyed talking with you also, DD. I can see that everything I've heard about you is true. I loved the way you taught South-Core a lesson about releasing press statements with blatantly false allegations under the cover of innuendo. You've got a reputation for being an extremely strong negotiator and a tough competitor, but from everything I've heard, you've never engaged in any shady practices."

"Thank you, Marty. Goodbye."

"Goodbye, DD."

Marty's words echoed my mind after I hung up the receiver. He said I was a strong negotiator. So was he, apparently. Not selling the roofing manufacturing company wouldn't prevent them from clearing the land for their new plant, but the money would be needed before erection of the steelwork could begin. Bill had discovered that while the subsidiary company was in excellent financial shape, except for the justifiable $10 million note, Hollis Homes was mired in debt. The former CEO had apparently been on a shopping spree before being involuntarily separated from the company. That was why the accountants had found it 'advantageous' to pay just the interest on the loan. The parent corporation needed all the cash available. At this point I wasn't even sure that the story about a new plant was even true. They might just want to pay down some of their staggering debt without it appearing that that was the real reason for selling the subsidiary. Their bargaining position would be weakened if prospective buyers knew the real reason. I'd decided that the information gave me sufficient grounds to open negotiations $4 million less than they were asking. At $22 million, it was a decent deal. If I could get it for less, then it became an even better deal. If I didn't get it, there were other companies available. There really were two roofing products companies in Missouri and Louisiana for sale, and I was pretty sure that Marty was aware of that.

Oh, well. I'd just sit back and let the pot simmer for awhile. Sitting back and waiting was something I'd grown very good at, in spite of my deserved reputation for swooping in and buying multi-million companies after only a few minutes of negotiation. I picked up my tea cup and headed for the sofa and my pile of trade magazines.

 

(continued in part 51)

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

 

 

 

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