A year after Icahn’s run at Anchor, William Baxter, the man leading the antitrust division inside the Reagan administration’s Department of Justice, threw the government’s support behind tactics like Icahn’s. There was no need for more regulation, he told a panel convened by the Securities and Exchange Commission. In the new Friedman universe, takeovers were “a very socially beneficial mechanism” for assuring that corporate assets would serve the highest value. Employment, community cohesion, and the general welfare of the country did not seem to figure into Baxter’s calculation. Carl Icahn addressed the panel on the same day as Baxter. He agreed that no regulation was good regulation.
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At the time of Icahn’s raid on Anchor, Vincent Naimoli ran the container division. Naimoli was a Topper hire. He wasn’t a glassman, either; he’d come from a Tampa, Florida, building products company just two years before. Naimoli didn’t particularly like Anchor Hocking, and he didn’t seem to particularly like Lancaster: It was too small-town, too insular, too old-fashioned. The loathing was mutual. Naimoli struck the few in Lancaster who encountered him during his short time there as a self-important blowhard, in a place where even the richest people didn’t put on airs. More important, Naimoli wanted to be a wheeler-dealer like Icahn.
Icahn had focused his critique of the company on the low-margin container division, so Naimoli offered to spin it off from Anchor Hocking. Topper—who never liked the container division and perhaps reckoned that disposing of it would satisfy any other Icahns in the wings—agreed. There was just one problem: Naimoli didn’t have any money. He was a well-paid salaryman, not a multimillionaire. But this was the 1980s, the era of junk bonds, and as Icahn was proving, you didn’t have to have money to make money.
In early 1983, a Kidder, Peabody banker introduced Naimoli to Bill Simon, who had been treasury secretary under both Richard Nixon and Gerald Ford. Simon had formed Wesray Capital Corporation, an early leveraged-buyout shop—what is now called private equity. Simon agreed to back Naimoli to the tune of $76 million, only about $1 million of which was Wesray’s. In March, Topper took the deal. With the stroke of a pen, Ray Topper halved the size of Anchor Hocking at a Filene’s Basement price.
When Dale Lamb, then a full-time official with the American Flint Glass Workers’ Union, received the phone call from a Lancaster “Flint,” he couldn’t believe what he heard. “‘I just got the word,’” the man said to Lamb. “‘That sonofabitch Topper just sold all the container plants for $76 million. The goddamned ground costs more than that!’ I said, ‘If you think the ground costs more than that, the machines in Plant 1 alone are worth $40 million.’ He said, ‘That sonofabitch. It’s gonna be havoc.’”
Naimoli ordered all the container division’s plant and sales managers from Lancaster, as well as nationwide, to gather at the country club on Easter Sunday. He told them the container division was splitting off. The new company, to be called Anchor Glass Container Corporation, was moving to Tampa. He invited them to move, too. “I had the opinion people in Lancaster were set in their ways,” Naimoli told me. “I told them they would work a lot harder in Tampa.” He also said he was giving them a raise by moving them to Florida—not because he was actually giving them a raise, but because the state had no income tax.
The deal turned out to be an early example of modern financial engineering. The $75 million Simon borrowed wasn’t Wesray’s debt, nor Naimoli’s. It was loaded onto the back of Anchor Glass Container. Anchor Glass then loaned part of this money to Wesray. Wesray used it to buy some of the company’s real estate and equipment, even furnaces. Anchor Glass then leased these assets back from Wesray. Whether the company succeeded or failed, Simon and Naimoli couldn’t help but win.
Anchor Glass went public in 1986, and Simon cashed out. Three years later, a Mexican container company, Vitro, mounted a successful hostile takeover—the first hostile takeover of a U.S. company by a Mexican one. Vitro paid $900 million, nearly twelve times what Topper had sold it for just six years earlier. Naimoli took his windfall and bought a Major League Baseball franchise, the expansion Tampa Bay Devil Rays. He became a Tampa grandee, and self-published a hagiographic autobiography, Business, Baseball & Beyond.
The Anchor Glass Container story looked like an unqualified success. But the old container division, which was never able to breathe under all of its debts, spent years falling in and out of bankruptcy.
Selling the container division was just one of Topper’s leaps into 1980s finance. Supposedly as part of a poison-pill plan to fend off any future Icahns, the board instituted a golden-parachute scheme for the executive officers of the company. If anybody else tried to swallow Anchor, they’d have to pay off Anchor’s leaders.
For generations, through both periods of harmony and episodes of friction, workers and management understood that their interests were aligned. Now they weren’t. Cartoons soon appeared on bulletin boards: a man under a gold parachute descending onto Plant 1, his penis out, pissing into the rooftop vents.
Anchor Hocking’s fortunes continued to decline. Sales fell domestically and overseas, hobbled by macroeconomics. After Reagan’s 1981 tax cuts, the federal budget deficit soared, boosting the value of the dollar and making Anchor Hocking’s ware more expensive overseas while making ware from foreign companies like Durand cheaper for American buyers. By 1984, glass was stacking up in warehouses.
As it happened, Anchor owned a plant in Clarksburg, West Virginia: the former Brockway plant. The Clarksburg plant first opened in 1885, but in March 1979, Brockway shut it down. Local and state economic development officials provided $8.5 million in low-interest public-money loans to Anchor so it could play savior. And because the Flints in Clarksburg wanted work at almost any price, they agreed to a number of concessions. Topper, then president under Barber, cackled over the terms, bragging that he’d bested a Rockefeller—West Virginia governor Jay Rockefeller.
Now, with sales slowing, Topper pitted Plant 2, over on Ewing Street, against Clarksburg. Plant 2 made Fire-King baking dishes, blender jars for small-appliance makers like Sunbeam, Crock-Pot covers, mixing bowls. The Ohio Environmental Protection Agency was pressuring Anchor to install new exhaust scrubber equipment on the Plant 2 stacks. West Virginia, on the other hand, had looser environmental laws.
In late November 1984, Lamb and another union official were in Clarksburg negotiating a new contract for the Flints there when he received a call from the Anchor Hocking general counsel.
“He said, ‘We’re comin’ down tomorrow, and, out of due respect for you, we’re gonna give you a proposal. There’ll be no counterproposal.’” The proposal was in fact a demand: Clarksburg workers had to walk back even more on wages, benefits, and work rules. If they refused, Anchor would shutter the plant it had purchased just five years before with public money. If they accepted, Anchor would close Plant 2 in Lancaster and move its machines to Clarksburg.
“‘Plant 2 is a goner. It’s a goner!’” Lamb exclaimed to another union official, Roy. “I hung up the phone, and I said, ‘Oh, shit, Roy.’ I told Roy. He says, ‘You’re shittin’ me.’”
Lamb phoned friends in Plant 2. They spoke to the plant manager. Nobody knew anything about a closure.
A management team arrived in Clarksburg and made the proposal. Lamb had hoped to negotiate, at least a little, but the local workers wouldn’t hear of it. “They said, ‘You get the hell back to Lancaster, ’cause you got all those friends in Lancaster. You’re a Lancaster boy. You don’t want those jobs comin’ down here. You get the hell out of here.’” Lamb was angry at the locals in Clarksburg, but he understood. “They didn’t want to lose their jobs.”
The Clarksburg Flints’ capitulation wasn’t unusual. Unions were in full retreat all over the country. Ronald Reagan demolished PATCO, the air traffic controllers union, in 1981. Other industrial unions, like the United Steelworkers and United Auto Workers, had been weakened by plant closings and cutbacks. Strong anti-union sentiment was fed by instances of
union corruption and by the conservative winds blowing through American politics.
On December 5, 1984, twenty days before Christmas, Topper announced that Anchor Hocking would shut down Plant 2—for good.
The shock in Lancaster was numbing. “Plant 2’s closing is devastating.… It will set us back years,” an Eagle-Gazette editorial grieved. The paper, and most people in Lancaster, accepted the story that the closing was a simple response to overcapacity. It couldn’t be helped.
Even after the news broke, the Plant 2 workers, led by the plant manager, produced for five more months, right up to the moment they shut off the fuel to the furnaces. The plant manager told his bosses at headquarters, “You missed out. You misjudged these people. These guys are professionals.”
Some Plant 2 production employees, like skilled machine operators, were offered jobs in Plant 1 on Pierce Avenue or in Clarksburg, but most were fired. Plant 2’s equipment was trucked to West Virginia.
The year had already been a lousy one for Lancaster. In February, Hickle’s department store, a mainstay since 1900, announced its closing—done in partly by the Reagan Recession and partly by local fear. Forty people worked there. It was the fourth downtown business to close in a year, including Kresge’s. The worst, though, was still to come.
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Not long after Anchor settled up with Carl Icahn, another CEO decided to get into the leveraged-buyout business. Daniel Ferguson, CEO of Newell Corporation, made a deal with an Arizona bank called Western Savings and Loan. Western loaned Newell $42 million for fifteen years and purchased 800,000 shares of Newell stock for $18.4 million. Western’s chief, Gary Driggs, took a seat on Newell’s board.
A relatively small Arizona savings and loan—as opposed to a New York investment bank, for example—would seem to have been an odd choice for such a package. But Driggs was a maverick gambler, a perfect match for Ferguson.
Ferguson’s father, Leonard, had been CEO and chairman of Newell, a maker of drapery hardware, window shades, home hardware, and sewing notions. Ferguson took over in 1965. The company plodded along, making a healthy profit in an unglamorous industry. But by the 1980s Ferguson had caught the takeover bug. He used Western’s money as dry powder for a spree. In 1983, Newell acquired the Mirro Aluminum Company, which made cookware, for about $42 million. Most of that purchase price was debt. In 1984, Newell bought another Wisconsin company, Foley-ASC, which made cooking tools, for $8 million by issuing preferred stock. In 1985, it bought 40 percent of American Tool Companies, makers of Vise-Grip pliers—again, mostly with debt—and gained control of William E. Wright & Sons, a Massachusetts textile firm that had been family-owned since 1897. In every case, Ferguson subjected the targeted firms to “Newellization,” his own brand of what business schools called “operating efficiencies.” He fired people, cut product lines, sold off bits of the companies. Thanks to Icahn, Anchor Hocking was now in play, too.
In May of 1986, Ferguson met with Ray Topper. To this day, nobody seems to know exactly what the two men discussed, but on June 11, Newell began buying Anchor Hocking’s stock.
On July 3, Topper demanded that the unions at Plant 1 enter into early negotiations for a new contract. He wanted more cost cuts, more wage concessions. The unions were under no obligation to begin negotiations early. But if they refused, Topper said, he would gut Lancaster by closing both Plant 1 and the distribution center, moving production and distribution elsewhere.
On July 31, Anchor’s board adopted a stockholder-rights plan, a second poison pill designed to sicken any potential acquirer by giving Anchor’s leadership the right to buy shares at a deeply discounted rate. That would require the issuance of more shares, devaluing each share, and making it more difficult to execute a hostile takeover.
By late August, Newell owned 5 percent of Anchor Hocking, at which point it had to reveal its Anchor holdings to the Securities and Exchange Commission. In its SEC filing, it announced it might seek control.
Topper now demanded major concessions from the union: a minimum 15 percent pay cut, new work classifications that would allow the company to pay lower wages for certain jobs, retirement cuts, and—fifty years after the Wagner Act—the hiring of non-union contract workers. The Flints offered a 5 percent pay cut and other concessions. Both sides took out competing newspaper ads to explain their arguments to the town.
Talks between the Flints and Anchor Hocking broke down on the night of September 30. At midnight on October 1, the Flint leadership called a strike.
In the past, Dale Lamb had tried to be a conciliator who understood the company’s side and that of his union brothers. He took heat for that approach.
“A lot of union guys didn’t like me, but tough shit,” Lamb recalled. “I’d tell ’em, ‘Remember, you went to them and asked for a job. You’re working for them; they’re not working for you.’” He negotiated hard, and he wasn’t afraid of strikes, but he knew that neither side could win when there was one. Likening the company to a woman, he told his men, “If she says no and crosses her legs, that’s frickin’ no. You don’t wanna get rid of her, ’cause she’s the one that doesn’t have bad breath.”
This time, though, things were different. Lamb and every other union member, along with a good number of Lancaster’s residents, hated Topper.
The strike lasted three weeks. Topper placed armed guards around some Lancaster facilities and hired scabs to ship ware. Police were stationed at Topper’s home. Union men attacked people they thought were scab workers coming in and out of the distribution center. They smashed windshields and placed nails in the roadway. They convinced some union truckers not to load or deliver product. Six picketers were arrested and jailed.
None of it did any good. The strike ended on October 22. (The mold makers held out a few days longer.) The unions gave up 15 percent on wages, bringing Plant 1 into near parity with Clarksburg. They agreed to cuts in vacation pay, bonuses, and incentives. Lancaster still had about two thousand people employed, but Anchor Hocking had a bitter workforce.
To Newell, though, Anchor Hocking was an even sweeter morsel, because Topper had fought a battle Newell wouldn’t have to fight. Two weeks after the strike ended, Newell wrote a letter to the Anchor board of directors offering $34 per share to buy the company outright. Topper dismissed it as “a nonoffer.”
Over the succeeding weeks, Newell and Anchor traded barbs, but the end was never in much doubt. On February 23, 1987, the board of directors of Anchor Hocking voted to approve Newell’s offer. The deal, valued at $32 per share—about $338 million—represented a premium over the 1985 high for Anchor’s stock, 27 5/8. The $338 million was mostly debt, as with other Newell acquisitions. A story went around that Topper cried. But some Anchor executives said Topper wanted to sell.
The five years since Carl Icahn made his run at Anchor Hocking had been dizzying ones for Lancaster, but the denouement of the Newell takeover was catastrophic. Six days after the July 1987 shareholder vote ratifying the board’s decision, Newell fired 110 people from the downtown headquarters. Anchor Hocking treasurer Sam Hurley was one. And because he was one, he was assigned the job of breaking the news. He asked the office workers to walk across the alley into the hotel I. J. Collins and the town had built. Everyone assembled in a back room. “You could see they were thinking, ‘My God!’” Hurley recalled.
By the end of the year, the rest of the office employees were fired, too—about three hundred in all—and the headquarters closed up. A core group of Lancaster’s leadership class, and their all-important spouses, were swept away, ripping a huge hole in the social fabric of the town. None of the executives Newell brought in to run Anchor Hocking moved to Lancaster. To this day, locals insist that Newell ordered executives to live elsewhere—most moved into the Columbus area—so they wouldn’t be troubled by requests for civic involvement or charitable contributions.
The headquarters building sat empty. Eventually a local law firm bought it. Gerry Stebelton was a partner in the firm. His mot
her spent thirty-five years working in the cold end, selecting and packing ware in the sluer. He grew up on Harrison Avenue—on the west side—eventually making it to law school, and then worked in New York, but he came back home, where he served on the city council. He was elected state representative. When he and his partners reopened the headquarters building, they held an open house. About three thousand people streamed through. Many of them wept.
There were tears in Clarksburg, too. A month after the takeover was ratified, Newell shut down the Clarksburg plant. Clarksburg workers, local politicians, and West Virginia governor Arch Moore were outraged by what they saw as obvious betrayal. Moore, citing the money the government had supplied to lure Anchor, called out state troopers to prevent Newell from moving equipment back to Lancaster. Newell and Moore tossed competing court injunctions back and forth. Moore impounded the plant’s machines and molds and filed a $614 million lawsuit. Newell accused the governor of holding it “hostage.”
Then it secretly sent Anchor employees, crane rigs, and flatbed trucks to West Virginia. The people and the gear holed up at highway rest areas around Clarksburg. As soon as a court granted Newell permission to remove certain equipment, and before the state could reply, the small army dashed to the Clarksburg plant. They switched tags on some still-impounded machines and molds, replacing them with tags reflecting permitted items, to fool the troopers—who didn’t know a mold from a press—guarding the plant’s gates. Trucks used back roads to get across the Ohio state line before a new injunction, and West Virginia state police, could stop them.
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