Document jBDL3QL0XpbXaY62nQ5OwKq8O

MANAGEMENT Glidden goes for less width but more depth During the regime of the late Adrian Joyce, its diversification was often unprofitably indiscriminate. New team-management is now consolidating Chmn.-Pres. Dwight P. Joyce took company over from his father, Adrian (portrait on wall). Running contrary to management trends has become a habit for Cleve land's big Glidden Co. In the 1920s, while most of U. S, industry was busily seeking deeper penetration of existing markets, Glidden was diver sifying broadly. Now, in a period when diversification has been very much the fashion, Glidden is going the opposite direction--consolidat ing its position in industries where it already is established. However, there's no question that it's still a diversified company. Long thought of as a paint manufacturer, Glidden now gets only 40% of its $237.8-million income from paint. The foods group--chiefly edible oils, plus spices and condiments--is the largest in sales, with $98.5-million in fiscal 1962. Coatings and re sins, the present name for the paint group, provided $95.2-million in sales. The chemical group was the most profitable; its $40-million pro duced 36% of Glidden's $6.7-million net income last year. New approach. Under Chmn.Pres. Dwight P. Joyce (cover and pictures), Glidden has been trans formed from a highly centralized company with interests in many in dustries into a well-ordered complex of operations in varied but comple mentary businesses. For Glidden, growth now comes from within these fields rather than from wholly new ventures. Joyce has eliminated a host of op erations, some of which were unre lated to the main business and others which had become unprofit able. He also has delegated a great deal of authority to a management team, instead of concentrating it in his own office. Changed pattern. With all these moves, Dwight Joyce has led Glid den away from the patterns set by his father, Adrian D. Joyce--a prod uct of the 19th Century who built and ran the company for the most part by himself. To Adrian Joyce, who died in 1954, the company was his life and, in return, was his to do with as he chose. A tall, straight-backed man, Joyce had a starchy dignity. He established a policy of not "ming ling with the help," and to Adrian Joyce, the "help" extended through directors, all of whom called him "Mr. Joyce." For many years under his direction, Glidden's general of fice had no coffee breaks, and smok ing was prohibited. Dwight Joyce is a more modern type or executive. He is the boss, but he accepts decisions from lower levels of management. And while he doesn't mingle with the "help" either, many of his associates call him by his first name. Dwight Joyce also believes in separating business from pleasure; he devotes his afterhours life to family, social, and civic activities and to his favorite hobby --flying his own plane. At 62, he still gets in 200 to 250 hours' flying time annually. Thus, the transition from Adrian to Dwight Joyce was not only from father to son but---as one executive puts it---"from the corporate entre preneur management of Adrian Joyce to the corporate manager approach of Dwight P. Joyce." And along with this change came a decentralization in decision mak ing. As Robert D. Horner, vice-pres ident for the international group, explains it: "Fifteen years ago, the second and third level of management looked at a problem and thought, `How would Adrian Joyce do this?' Today, the man looks at a problem from his own standpoint and thinks, `What should I do?' " I. House that Joyce built Given Adrian Joyce's one-man ap proach to management, it is no sur prise that Glidden once was known as "the house that Joyce built"-- Reprinted from Business Week -- .entire issue copyrighted by McGraw-Hill Publishing Co.. Inc. GLD 041074 meaning, of course, the elder Joyce. idly acquired paint plants in various And it was quite a house. parts of the country, giving him a Under one roof, empire-builder complex that today is second only Adrian Joyce had accumulated to Sherwin-Williams in trade sales, paints, naval stores, chemicals, food the biggest part of the paint indus products, mining operations, a vege try (excluding such industrial uses table oil and animal feed business, as auto finishes). Then, in an attempt a fishery, and some metal refining to become more self-sufficient in plants. other aspects of paint manufacture, On his own. All this began in Joyce also acquired linseed crushing 1917, when Adrian Joyce, who had plants and can-making operations. helped build Sherwin-Williams Co. From there, Joyce spread his to No. 1 company in the paint indus growing empire--almost explosively try, decided he wanted his own busi --into foods, oils, and chemicals. ness. Resigning as general sales Chain reaction. Sometimes one ac manager and as a director of Sher quisition led simply to another. For win-Williams, he formed a syndicate example, Glidden entered the food that took over the little ($2-million business indirectly because Joyce annual sales) Glidden Co. felt he wasn't getting full use from Joyce, then 45, didn't have the the company's modem linseed oil funds for the $2.5-million purchase, crashing plant in St. Louis. so he mortgaged his personal pos Since the flax season lasted only sessions and put the stock in escrow. six months, Joyce cast about for an It was redeemed from the banks over other product that could be crushed the years by payments from earn on the same equipment. The answer ings. (Since stock was freely dis was copra, which yields coconut oil. persed for acquisitions, the Joyce However, in order to sell coconut family now owns less than than 2% oil, used as the base for shortening of the Glidden stock.) and margarine, Glidden would have Glidden was profitable almost to butt heads with full-line food from the start. Earnings generally processors such as General Foods exceeded 20% on invested capital. Corp. So Adrian Joyce, playing his Using the original paint and varnish entrepreneur role to the fullest, de works as a jumping-off point, Adrian cided to start his own food business Joyce early began to indulge his be through acquisitions. lief that it is better to be a factor From 1920, when copra-crushing in many industries than dominant in^ operations began, Glidden acquired one. Capital created by paint profits seven food companies, giving it en- was used to diversify the company try to the margarine business and greatly in a relatively short time. other foods. The topper came in Stages of growth. At first, growth 1929, when E. R. Durkee & Co. was was within the paint industry, purchased. This provided Glidden Through the early 1920s, Joyce rap- with a full line of products in spices, seasonings, salad dress ings, and--most important--an es tablished name. Matter of whim. Not all the acqui sitions were so logical. Dwight Joyce claims his father liked to make deals almost as much as he enjoyed run ning the existing parts of this com pany. And there is some evidence that Adrian Joyce sometimes wheeled and dealed just for the sheer joy of it. A popular story has it that once while riding on a train from Cleve land to Chicago, Joyce met a man who had a type-metal business in Hammond, Ind. By the time he got off in Chicago, Joyce had bought the business, though it was unprofit able at the time and had no logical place in Glidden. The board of directors approved this purchase, but there was one time, in a similar case, when they reared back and said no to "Mr. Joyce." Undaunted, Joyce kept the purchased company as a personal venture, made it profitable, and later, when the board found it more attractive, sold it to Glidden at a profit. A taut ship. Such recalcitrance on the part of Adrian Joyce's board was exceptional, however. Generally, Joyce told the board what he wanted done and it acquiesced. Under him, board meetings often adjourned after only a half hour; under son Dwight, they frequently last all day. The members of Adrian Joyce's board were picked by Joyce himself. And, at least once, when a member was at odds with Joyce, he was asked to--and did--step off. Tight control continued through the management ranks. There was nothing that could be called in to day's sense a management team. Di visional executives reported directly to Adrian Joyce. Team management is personified by staff meeting of (left to right) Dr. William A Bittenbender, research director; Alexander D. Duncan, senior vice-president; Joyce; B. W. Maxey, vice-chairman and vice-president (finance); William C. Phillips, administrative vice-president and treasurer, and Paul W. Neidhardt, vice-president for the coatings and resins group. II. Change of command However, in the 1940s, the aging Joyce began to let go of the reins, and a slow transition began. In 1947, when his father was 75, Dwight Joyce, then 47, moved up from vicepresident of the paint division to president of Glidden. Nevertheless, the elder Joyce remained as chair man of the board and chief executive officer until his death in 1954. Spread thin. The company was profitable when Dwight Joyce be came president, but the "house that Joyce built" was not really in good order. Capital was thinly spread over many different operations, some in conflict with each other. - GLD 041075 `Any company must be willing to shift its investments to make money'... "Father never wanted to pull down the flag on anything," Dwight Joyce says. Besides, the original management group was dying off, after a 15-year period when no new men had been trained for executive responsibility. False economy. One problem, as Dwight Joyce sees it, was, "We were penny-wise and pound-foolish in the 1930s." Mindful of stock prices, Adrian Joyce had jealously guarded the divi dend. By stringent cost-cutting and occasional reductions of personnel, the company had been kept profit able. But, says Dwight Joyce, "We cut from the payrolls a number of promising young men who were not immediately valuable." Then, too, there was little oppor tunity during World War II to in vest either in plant and equipment or in manpower. Says B. W. Maxey, vice-chairman of the board and vicepresident (finance): "At the end of the war, physical plant was bad, and there was no new blood coming into the organization." New broom. Under Dwight Joyce, the company entered a period, of personnel development and of re assessment of properties. Young men were moved into key spots, and Dwight also began to exercise his belief in team management and dele gation of responsibility. One of the men given authority was Paul W. Neidhardt, vice-presi dent, coatings and resins group, who explains: "In the old days, Adrian Joyce decided whether we did or did not have too much inventory in the paint division. Now this is done one level below me." III. Contracting and expanding At the same time, the company began the process of consolidation--just when many other companies were beginning to diversify. Too many Glidden divisions were pro ducing sales but little profit. Such incongruous interests as fish solu bles, sex hormones, animal and poul try feeds, and safflower seed were reexamined and disposed of. Maxey says: "The disposition work was a job to be done--so we did it. Any company must lie will ing to shift its investments to make money." Out of margarine. The first big product line to go was die marga rine business. Not only was mar garine a highly competitive, lowprofit product but, in selling table margarine, Glidden actually was competing with the companies that bought its edible oils. Many poten tial oil customers hesitated to buy from Glidden while the company was also making the end product. When margarine was sold, edible oils became a bigger operation. To day, the edible oil business is more profitable than the combined marga rine and oil business used to be, Maxey says. Out of other fields. The biggest disposal was the soybean business. Glidden originally had entered it to obtain a source of oil for paints. But by this time, soybeans had be come a standard commodity, and the operation was alien to Glidden's main products, requiring more cap ital and time than Glidden was pre pared to invest. The division was first leased, then sold to Central Soya Co., Inc., for $8-million. Glidden also disposed of animal feed, type metal, lead and zinc pig ments, naval stores, salad products, copra crushing, linseed oil crushing, mining, and turpentine operations. In all, the company eliminated operations involving investment of $44-million, but which generated pre-tax profit of only $1.3-million on $70-million of sales. What appeared to be a shrinkage of business thus turned out to be a planned shift of investment. IV. Rebuilding by plan During this period, from 1948 to 1960, sales and profits remained static. Management explained its moves to stockholders, arguing that it was necessary to forgo present profits to insure greater earnings in the future. Capital made available by sale of operations was used partly for re construction and modernization. The big rebuilding period ended in 1960 with several updated paint plants in operation, plus a new grocery prod ucts plant and a new plant for the processing of titanium dioxide, a chemical used in whitening agents. Planned growth. Glidden today is trying to follow a plan for growth. Dwight Joyce explains: "Father op erated by expediency, with no clearlv delineated plan. He was a believer in serendipity--start after one goal, find another." Dwight Joyce feels the past has proved that the company needs a formal, long-range plan. In 1959, such a plan was established, coordi nating divisional plans and capabili ties and charting the company's de sired growth path. It leaves no room for random acquisition. "Acquisition is one growth method," Maxey says. "But we do not want to make a bad acquisition. Any proposed acquisition must fit with our present company opera tions from a marketing, technical, operating, production, and profit standpoint." Latest additions. The acquisitions Glidden has made since the estab lishment of the long-range plan clearly go along with its goals. In late 1961, Glidden purchased-- through the exchange of $10-million worth of convertible preferred stock --Pemco Corp., a leading producer of porcelain enamel frits, a material for making glazes and enamel coat ings. This move not only broadened the company's coatings and chem icals business but also gave Glidden research capabilities that both par alleled and augmented its own. Another acquisition was OIney & Carpenter, Inc., which gave the gro cery products division a line of canned processed onions and po tatoes, which can be sold conveni ently through Glidden's existing grocery marketing organization. The company is thinking of pushing these products into the institutional field, using the marketing setup of the edible oils division. And overseas. Glidden also has begun making investments in Eu rope, broadening its markets in ex change for the exporting of technical and capital resources. Until 1960, the only business Glidden did in Europe was through licensees. Since then, it has acquired a one-third interest in a West German paint manufac turer and a majority interest in an Italian paint producer. Now it is building a Pemco division plant in Belgium. Maxey says Glidden hopes to add to its overseas operations at least once a year. "We are convinced that the company will be stronger if a portion of its income is from off shore operations," he explains. Teamwork. Joyce is continuing his concept of team management. "I delegate more to the people who report to me," he says. "Men have to do the job themselves. My father made decisions. I try to persuade, but don't overrule them if they don't see it my way." Joyce had 17 men reporting di rectly to him when he took over the company but has cut this down to six or seven. Fie says: "Now my job consists of two important functions --making basic policy decisions and future planning. When I do those. IVe clone my job." GLD 041076