By David Sahud, My Mentor, My friend, My Loving Father (1929-2012)
About the Author
David Sahud was a retired businessman with extensive background as CEO of several companies in the plastic films and insulation industries. He had a masters degree in chemistry and a second masters in management engineering. He spent his free time writing short stories, traveling and chasing the cold weather.
The call came from London. They needed me to turn around a disastrous acquisition in Newark. The three managers sent from the UK were incompetent and dishonest, the work force was demoralized, the quality of their standard products was unacceptable and the reason for the acquisition, a $2M order for new special film from IBM was in danger of default. Since it sounded better than a week in Poughkeepsie, I took the job.
I arrived at 7:30 AM at the three story office building across Ferry Street from the 130 acre factory and next door to the firehouse, where they generated their own electricity. Rummaging around the shabby looking office, I greeted Alice, the boss’s secretary, when she arrived an hour later. Her first question was, “Are you going to fire me?”
Taken aback, I said “I don’t think so. You have been very good for the 45 minutes that I have known you.” Then I asked Alice to line up appointments for the day with Ralph, my predecessor, the controller and the plant manager, so that I might learn the secrets of their success. She gave me a funny look with her one brown and one blue eye.
“They are all gone. Last Friday, the security guard walked them out of their offices for the last time. He also confiscated their company BMWs.”
“I understood that they would be here to meet me when I arrived,” I said, scratching my head. “Where do I go to find a warm body for continuity?”
Alice offered, “I think that the London Management felt the three of them were damaging the business. They fudged their expense reports, lied to IBM about the status of the $2M order and stole money.” When I called the Managing Director in London, he confirmed what Alice told me. He also volunteered that two operatives are arriving from London- one Plant Manager and one controller to work for me. That’s just great! I don’t get to pick my subordinates and they are both castoffs from some unrelated divisions. Well just sit around staring at each other waiting for something to say something intelligent (Sounds like a typical family dinner). They will know as much about the film casting business I am inheriting, as I know about how to build a fire hydrant. I haven’t had so much fun since my cat died.
It took a week or two for me to find out some of the things I needed to know (but would have preferred not to).
For example: (1) The IBM product was a ribbon for their new noiseless typewriter .The order was three months late and our management kept sending them phony status reports. The film they produced was full of holes. (not recommended for typewriter ribbon). (2) The manufacturing solvent was one of the most toxic available and the plant did not have adequate recycling or ventilation facilities, (3) The workforce was abused and hostile, (3) The plant was on a serious toxic waste site (including underground pipes smothered with asbestos) that the EPA wanted to shut down, (4) Their main product (besides IBM) was cellulose acetate film, which was dying in the marketplace. Besides that- they couldn’t make a good quality acetate. (5) The 15 Firehouse engineers were hostile and threatened to kill the management, (Hey! That’s now me!). So far, it sounds like Shangri-La.
Knowing that I could never list those items in my resume, I set about doing what I could. (First I flew down to IBM in Lexington Kentucky and told them that they were receiving a pack of lies for the past three months. Since they only had one supplier (Bayer in Germany, who held the patent) they wanted me to keep trying. Then I flew out to Germany and established a licensing agreement with technical support from Bayer. I convinced them that we would be their ideal second source, both in quality and pricing (I knew that was illegal- but we were in Germany).
Then I hired an Environmental Attorney to help us clean up the plant and keep EPA off our backs. Fortunately the two men sent from London were very talented and the Plant Manager learned how to use a 16 foot diameter casting wheel in two weeks.
Then it dawned on me that our plant with 350 employees used to be a Celanese plant with 4000 employees. Why do we need a 15 man generating station? We installed a package boiler on the plant side. (I needed police protection for several weeks after I said goodbye to the hostile firehouse engineers.) Then, I closed the three-story Executive building and moved the personnel into the plant. Not particularly neat, but large cost SAVINGS. My popularity was dropping at a logarithmic rate.
When we finally perfected the IBM product, they couldn’t sell their typewriters and shut down the project. I visited them and advised them that we still had 35 barrels of scrap black film laden with the highly toxic methyl ethyl ketone and couldn’t dispose of it in New Jersey. I suggested they make arrangements to get rid of it. They refused, claiming it was our scrap “ I said “OK. But please understand that there will be 35 drums all marked “IBM SCRAP MATERIAL CONTAINING TOXIC SOLVENT” trucks to Michigan, with the IBM in big bold letters.” (A little blackmail goes a long way). P.S. They assumed the responsibility.
After IBM’s cancellation, I knew we would never survive with just the acetate business. I had learned that you cannot close or sell a plant in New Jersey without cleaning it up to EPA standards. In studying the Courtauld’s purchase contract with The Georgia Pacific Paper Company, I found the needle in a haystack. The contract contained a clause that forbids the three year old sale unless the site was cleaned up to EPA standards. That means that the transaction was illegal, much to the surprise of both companies. So, with my trusty lawyer, I flew to Atlanta to have a chat with the president of Georgia Pacific. Begrudgingly, he acknowledged their obligation and called in his engineering team to make arrangements. When they outlined the need to start the clean up with the underground pipes, because of the asbestos, I stated that this cant be done without shutting down the plant (which was now profitable.) The same applied to starting the cleanup in the plant. After exploring the options, the President said, “You leave us no choice but to buy the facility back from you.” (Sounds like another blackmail to me).
I acknowledged his claim and added, (But you must remember that you sold us a rundown business for $2.5M losing $4M a year, while we are now selling back a going business earning over $5M per year.( Blackmail still in progress)). The clean-up will cost $20M. If they don’t close it, they face anywhere from 50 to 100K per day for keeping a hazardous facility on the site. I drew up a tentative offer to sell the business back for $ $5.5M plus a severance schedule for all of our employees. Georgia Pacific accepted the deal. It took three years to clean up and is now a shopping mall in the Iron-Bound-Section of Newark.
While we were still working with IBM Fuji Photo contacted me to find out how we could produce the film without holes (we couldn’t at that time) since they wanted to get into the business .At a dinner in Tokyo. I told them that they key was masticating the mixture very thoroughly and offered to sell that our SCRAP material, which had already been masticated and cast by us. In this way, they can be sure that the material was well mixed. I left with a 500 pound order @ 1.00 a pound.
I became something of a hero and expected a Rolls Royce parade down Oxford Street. Instead I got a midget driving a Morris Minor on the wrong side of Curzon Street.