RECESSION BENEFITS

They Bring Better Management

THE recession has taught many a U.S. company one important fact: the boom had larded corporate muscle with fat. Now, in working off the fat, businessmen are finding some of the benefits of adversity. These go far beyond merely trimming payrolls and such obvious economies as light, telephone and office-supply bills. Each day the recession continues, business must look harder at its policies, products, production, and--most of all--sales executive talent. "In a boom, it's hard to pick smart young executives," said one corporate boss. "Everyone looks good because the business comes in anyway. But in a recession, the good men stand out."

Industry's top executives are learning dozens of ways to improve operations. Sylvania Electric Products Inc. was poking along with one of its lighting products because several companies were all scrambling for the same market. Then President Don G. Mitchell decided to mechanize his operation; he cut costs and hiked production so successfully that he ran way out ahead of his competition. Says he: "What we did was spend a little more money in bad times, and we won 60% of the market where we had only 15% before." To stay competitive in its auto-supply business, Detroit's C. M. Hall Lamp Co. had to cut prices on a lamp bracket below what it considered a rock-bottom $17.76 per 1,000. Solution: it redesigned the bracket in reinforced nylon, sold it for $9 per 1,000.

Though no businessmen like layoffs, they have found that careful pruning in the right places need not damage overall efficiency. Dallas' Dresser Industries, for example, discovered that it could do just as good a job in its oil well supply business with 5% less clerical help. Los Angeles' Garrett Corp. shows no loss of efficiency even though it laid off 1,200 of its 11,000-man work force, has also lopped a full 10% to 20% from executive salaries and cut out many a frill. "A lot of the boys don't like riding air coach," says Executive Vice President K. B. Wolfe (a retired Air Force lieut. general and onetime deputy chief of staff for Air Materiel), "but when I ride air coach, by God, they ride it, too."

For every company that slims down its operation, another discovers new ways of doing things that should have been in effect for years but were overlooked during the boom. San Francisco paint manufacturer W. P. Fuller & Co. has its first full-scale marketing division, which means, says one executive wryly, that "we now have sales planning instead of just 'Hip, Hip, Hooray, let's get out and sell.' "

Many an executive has rediscovered an old truth: he should spend his time minding the store instead of wasting time on other affairs. Cambridge's National Research Corp. recently went through its long list of trade associations, discovered that it belonged to too many and promptly resigned from 80% of them. President Richard S. Morse decided too many valuable executive man-hours were lost at trade meetings. And as they spend more time on business, executives have reached some surprising conclusions about themselves. After a critical study of his company, President Hugh F. Colvin of Pasadena's Consolidated Electrodynamics knew just how to beef up his operation: he moved down to become an operating man again as senior vice president in charge of four fast-growing but troublesome divisions, while Board Chairman Philip S. Fogg took over the president's policymaking chair. Says Fogg: "This is what the recession does to your thinking. We are going to come out of this with talent applied in the right places."

On the other hand, Denver's subcontracting Stanley Aviation Corp., whose business is down 15%, decided that the problem was not too many executives but too few. It added new executives in production control, cost accounting and sales. "When do you add salesmen?" asks President Robert M. Stanley. "When you have more orders than you can fill, or when you don't have enough?" For similar reasons, cameramaker Bell & Howell this year tripled its ad and sales promotion budget to $600,000 for the second quarter as part of President Charles H. Percy's antirecession campaign, while Reynolds Metals is diversifying rapidly into new markets for aluminum swimming pools, auto parts, boats and tin cans. "We had all these programs before," says Vice President John Blomquist of Reynolds Aluminum Sales Co. "But now that business is tough, we're moving a lot faster in these development areas."

Says Denver & Rio Grande President Gayle B. Aydelott, who has used the recession to streamline everything from office procedures to main-line maintenance: "We found all sorts of revisions we could make to improve our operation. Now these revisions work so well we wouldn't go back to the old way of doing things even if the recession ended tomorrow."

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