by Jim Wygand
The Wednesday afternoon Executive Committee bulletin on Phillip Shaw’s medical condition informed company employees that Shaw had been released from the hospital and would begin his recovery program at home. Charlie decided that he would use Phillip Shaw’s situation as justification for having to leave the bowling group before pizza and beer. He would say that Phillip’s absence had made it necessary to bring some work home and he had to get back to work on pending matters. Under the circumstances that would be plausible and, in fact, it was the truth. He did have a lot to do and it was in response to Shaw’s heart attack.
Charlie noticed that the guys in the bowling league all seemed to have been mollified by Wednesday’s bulletin. The group indicated that they believed the worst was over and that Phillip Shaw would soon be returning to work and things would get back to normal. He made it a point to tell a few of his friends that with Shaw on sick leave, he had inherited a lot of work from the Executive and Finance Committees and that he would not be able to stay for pizza and beer. He was careful to make sure that Bill Gallagher and Bob Simms had been among the informed. He wanted both of them to tell their wives that Charlie was very busy with additional work. That might discourage them from trying to poke into his life, at least until Phillip Shaw returned to work. Just to make sure that circumstances at his house matched what he had told the group, Charlie went to his house after leaving the bowling alley and changed the timer on his bedroom light to burn a little longer than usual to suggest that he might be reading reports. He would leave the timers this way until Saturday when he would return for softball practice. After re-setting the bedroom timer, he went to his car, checked the street for surveillance, and then drove to Philadelphia to meet Gina.
* * * * *
Gina was waiting for him with a bottle of wine ready to be opened and some dinner heating in the oven. “Hey big boy, how was your day?”
“Busy. We had a handful of meetings with the heads of the operating departments. Fred Perkins was almost charming. He caved in on everything and barely criticized any of the final budget proposals. Then I had to head off to Shoreville for league night. I begged off the pizza and beer saying that Phil Shaw’s absence had created a lot of additional work and I had to catch up. No one seemed to doubt my story. All those poor guys are sweating bullets because of their jobs. They all have families and Shaw is the most important employer in the area. I feel sorry for them.”
“Any flack from the crazies?”
“No, I think they are quiet now because they don’t want any problems while the situation at the company is so fluid. I didn’t see anyone watching me or the house, and no one was following me around. I don’t know how long that will last though.”
“Probably for as long as Phillip Shaw is out. Once things return to normal or a semblance of normal they will forget their panic about job loss and start concentrating on you again, my dear.”
“Wow, aren’t you the optimistic one? Thanks, I needed that!”
Gina laughed, “I told you they will not back off easily. Right now they are scared for their husbands’ jobs, the mortgages, and the kids’ schools. The minute they are not, they will find something to keep them occupied and you are their best option, sweets.”
“Well, I’ll face that when it comes back around. Want some wine?”
“Good idea, open the bottle while I set up dinner. I hope you like Italian food!” Gina laughed.
Charlie was uncorking the wine as he said, “Still can’t make Irish stew, huh?”
Gina set out their plates and silverware and then pulled a casserole out of the oven. As she put the food on the table she said, “I talked to Uncle Carlo today and he said to stop by his place for lunch on Sunday. Is that OK?”
“Perfect, Gina. I need his advice. It’s nice to have someone I can talk to about this stuff. Dad was good for the stuff about life but he did not have executive experience. Even if he were alive, I doubt that he would have been able to give much counsel in the job I now face.”
“Well, Uncle Carlo said he would be more than happy to talk to you. He likes you, I can tell. The fact that you make me happy means you can demand practically anything from him. I’m my ‘daddy’s girl’ and if my world is in order, he is just fine. That’s not a warning, by the way!” she laughed.
“Oh, I almost forgot “, Gina continued, “I picked up your binders today. I got navy blue to match your silk boxer shorts. I got three, is that OK?”
“At least for starters, I’m sure it’s enough. Thanks.”
“I also got you a three-hole punch so you can put your papers in the binders. You didn’t mention that, but women are usually smarter than men when it comes to details.”
“Oh my God”, said Charlie, “who told you that?
“Did you remember the punch or didn’t you?” Gina teased.
“Touché! Have some wine.”
“So, Charlie, are you going to softball practice on Saturday?”
“I don’t know yet, sweets, a lot will depend on my meeting with Bill Cummins on Friday. But I will try to make it simply to keep the rumor mill from buzzing. Why? Have you got something planned?”
“No, just wanted to know. Like I said before, I don’t want some horny housewife in Shoreville to throw a net over you while you are there. I wouldn’t mind stopping in at the trattoria for a glass of wine.”
“If you are asking me for a date, you’re on”, Charlie laughed. “By the way, baby, how was your day?”
“Well, after going on my office supply run I stopped by the school for my tutoring sessions. You remember that architect I introduced you to?”
“Bob, right? The guy married to the artist.”
“Yeah, well I talked to him today and his designs were approved by the city. They’re going to use them in the next low-cost housing project.”
“That should give his reputation a boost, no?”
“You betcha and it will improve his finances a lot so Emily will be able to relax a bit and paint some more. She needs to build up her collection for a show.”
“It’s nice to know that friends move ahead, no?”
Gina and Charlie talked for another half-hour about their now-mutual friends until Charlie said, “I’ve got to get to those financial statements, Gina.”
“OK, I’ll put the dishes in the dishwasher and watch some TV.”
Charlie sat at the dining room table with his papers in front of him and began to file them away in one of the binders Gina had purchased. His first job was to identify the personal assets of the Shaw family that had been purchased by the company. He took copious notes and outlined a strategy for divesting the company properties without having to change the financial statements. No one could know that Phillip Shaw was even thinking about taking the company public. He decided that the best strategy would be to sell the properties to the family members who were using them with a “desk drawer contract” drawn up by Warren Carpenter. The cash payment and subsequent mortgage payments would be made to Warren who would put the money into an offshore account. The entries of the transactions would be officially booked when Phillip Shaw announced that the company would sell its shares on the market.
The next issue was to evaluate how much cash the company would need to invest to avoid being attractive for its cash value. That might mean reduced dividends to the family members. Charlie wondered if any of them would object to a short-term reduction in their quarterly dividend payments. They would have to ride out a short “dry spell” and he would have to check with Warren Carpenter to see if any of them would have cash flow problems if the dividends were cut back. The idea that any of the Shaw siblings would have cash flow problems amused Charlie but he knew that rich people tend to spend what they have, especially when they are the heirs to a veritable fortune and don’t work for a living. He made a list of questions to be raised with Warren Carpenter and then put all of the papers in the binder.
“I hear somebody using a three-hole punch over there!” Gina laughed.
“Yeah, you were smart to buy it. What would I do without you?”
“Absolutely nothing, Mullins! Without me you would be lost!”
Charlie closed the binder and looked at Gina. “Chaaaarrlie, are you wearing those silk boxer shorts?” Gina asked teasingly.
“Yep.”
“Well, I’m gonna yank ‘em off. What say we head for the bedroom, or would you rather I pull them off here and now.”
Charlie walked slowly to the sofa where Gina had been watching TV and she pulled him down on her. They made love right there, in front of a TV that neither bothered to watch. Exhausted, they both laughed and trodded off stark naked to the bedroom, threw themselves into bed and slept.
* * * * *
The next morning Charlie brought Gina a cup of coffee while she lay in bed. “I will never again look at that sofa the same way”, said Charlie.
“Comfortable, no?”
“That’s one way of looking at it!” he replied.
Charlie dressed for work while Gina put the breakfast dishes in the dishwasher. He kissed her fondly and left for Wilmington. “Give ‘em hell, Mullins!” Gina said as he left the apartment.
Charlie sat through two morning meetings with the heads of the operating departments and watched, amused, as Perkins continued his lapdog routine. He kept copies of the budget figures for his pre-acquisition analysis of the requirements of each department.
The Thursday bulletin from the Executive Committee stated that Phillip Shaw had begun his recovery program and that if all went as expected, he would be back as CEO within a month. The bulletin also announced that daily bulletins would no longer be necessary and that the Executive Committee would resort to weekly reports on Phillip Shaw’s health. Shaw’s release from the hospital and the one month recovery time indicated that his heart attack was mild to moderate. The employees of the company were relieved at the news. Charlie presumed that he would not have to answer a lot of questions about the company at Saturday’s softball practice.
For the rest of the afternoon, Charlie reviewed the approved budget figures in preparation for his white paper on the status of each division.
The Shaw Corporation had 5 operating divisions. It had an industrial chemicals division that was further subdivided into 3 units. One unit manufactured flavors and food additives. Another produced industrial cleaning solvents. The third subdivision manufactured cellulose capsules for the drug industry.
The company had a steel shot/abrasives division that manufactured inputs for blast cleaning of industrial machinery. The division also had a subsidiary unit that provided blast cleaning services for customers.
A third division, the oldest in the company, was a cutting tools manufacturing operation.
The remaining two divisions were, respectively, one to produce machinery for the paper industry and the other to produce food processing machinery.
Old man Shaw and his son had seen to it that the divisions were inter-related in terms of products and services to the market. The chemicals division sold flavors and additives to the food industry that purchased its machinery. Industrial cleaning solvents were sold to the machinery customers and sold internally to the blast cleaning division. The cutting tools, paper industry machinery, and food processing machinery divisions were “stand alone” operations serving three distinct industry segments while promoting the products of the chemicals and blast cleaning operations. The company emphasized customer relations in its marketing strategy. Sales personnel were expected to promote the products and services of the chemical and blast cleaning divisions. Customer feedback was vital to informing division heads of market needs across the full range of company products and services. The marketing “model” was based on that of the old Ethyl Gas Corporation whose sales personnel made it a point to know everyone in customer companies from the janitor who used cleaning solvents on the factory floor to the president and to the chief financial officer whose concern was for costs. A visit from a Shaw salesman to a client company could take up to half a day as the salesman moved up the customer company’s hierarchy getting feedback on Shaw’s products. By the time he reached the president’s office for a brief visit, the salesman knew as much or more than the president himself knew about how Shaw Corporation’s products were perceived. He might tell the president that he had spoken to the janitor and learned that a more powerful cleaning solvent was necessary or that he heard from operating personnel that there was a quality problem with the cellulose capsules. He would promise to look into the reported situation and get back to the customer and send a report to the president. This “in-depth” sales approach virtually assured that Shaw retained customer loyalty. Customer service reports were often detailed descriptions of the customer’s observations and these were discussed up the chain of command at Shaw. Changes in products in response to customer observations were fed back to the sales personnel for follow-up with customers.
Each operating division reviewed the customer service reports to prepare its quarterly budget and capital requests to address customer issues. It was up to Fred Perkins to impose discipline on the budgeting process and make sure that the capital requests of each department were reasonable. If it was agreed that a capital allocation was necessary, Fred would so indicate and his department would then work with the operating divisions to finance the capital requests. Fred Perkins saw it as his almost-sacred duty to protect the company from what he considered the tendency toward profligate spending by the operating departments. It was his view that the people heading up operations always wanted the latest “technological toys” regardless of the effect such purchases might have on the company’s finances. Since Shaw was flush with cash that meant maintaining close control over the transfer of cash to the operating division and following up on its use but first and foremost thoroughly questioning every request for additional funding. Over the ensuing quarters, the finance area would monitor the return on investment and provide feedback to the operating departments. It was a very tight system designed to provide the best possible service to customers while holding the line on unnecessary cost increases. The growth of the Shaw Corporation in its early years testified to the soundness of the system.
Charlie put the copies of the budgets, past and present, into his briefcase in preparation for the white paper. At five-o-clock Charlie left the office for Gina’s place in Philly.
* * * * *
When he arrived, Gina was waiting with the fixings for a dry martini and a dry manhattan. Charlie was non-plussed. “Gina, how do you do it? Do you know when I will be home? Am I that predictable?”
“Au contraire, Mullins, I just know that you can’t wait to see me and you can’t keep your hands off me. Or am I wrong?”
“No, Ms. Ferrelli, you are not wrong. But don’t get cocky.”
After they had dinner, Charlie sat down to his papers. He was beginning to see a pattern that would enable him to write a well-documented briefing paper. The operating departments had all fallen behind the market in small increments, due largely to the badgering by Fred Perkins. Reluctant to make daring proposals, the operating department heads were very conservative in their demands. They were simply keeping up with the market and in some cases, falling gradually behind. The result was that the company had gradually lost competitiveness in a number of areas. The loss was incremental and in no period was it felt with any great impact. It was just a gradual and almost imperceptible loss of clients to competitors.
In the context of his present assignment this situation was, in Charlie’s view, an opportunity. Phillip Shaw could cite the gradual losses of competitive position as justification for a more aggressive approach to the growth possibilities of the company. Moreover, he could do so with impunity because the company is still in the hands of the family. There would be no shareholder complaints. A more aggressive growth strategy would also build employee morale while indicating that Phillip was back and in good form. Charlie could now see the general direction of his white paper
.
Now comfortable with his planned approach, Charlie placed his papers in the binder and shut down his work for the evening. Gina who had been watching TV turned off the set, put a smooth jazz CD in the CD player and went to the kitchen to prepare two drinks. She came back with the drinks in her hand and said, “Let’s listen to some music while we have a drink. You can come down from your work and we can both relax.”
“Thanks, baby, here’s to the patient fiancée.” They clinked their glasses and sat on the sofa to relax.
XXX
Charlie was in a light mood as he drove to Wilmington Friday morning. He now had a rough outline of his white paper in mind. The pattern was clear but subtle. Charlie knew that in large companies bad news rarely came all at once. Usually there was a period of small imperceptible losses justified by what wound up being called “market conditions” and then frantic efforts to catch up once the changes were perceived on the bottom line. It was a rule of thumb that every dollar of lost market share usually costs five dollars to get back. But loss of market share did not occur overnight. He saw from the reports he had taken from the files that the operating department heads had been hedging their positions for more ambitious, and costly proposals to expand, largely in response to the opposition they expected to face from Perkins. No single report would have been sufficient to raise a red flag, but the pattern was clear.
When he arrived to his building he walked past Fred Perkins’ office on his way to his own. Fred was sitting at his desk, a bottle of antacid pills in front of him, and staring off into space. He said, “Good morning Fred.”
Perkins grudgingly acknowledged Charlie’s greeting with a curt “Morning, Mullins”. As he walked past Laura Metzer’s desk he saw that she was smiling. “How ya’ doin’ Laura?”
She answered Charlie in an almost whisper, “I’ve never seen him so quiet, Charlie. He’s almost human!”