Al Dunlap Interview, Part II
SMITH: What’s on your mind as you walk in and take over? “I’ve got to
show these people it’s going to change immediately.” What’s the message?
DUNLAP: I’m thinking, you guys mucked it up -- now let me get a winning team in here and let’s see if we
can save it. You know, it’s amazing, every company I’ve been, people have said, “Well, we were doing everything right.” But these were companies that were basket cases. If, in fact, they were doing it right, the company
would have been doing well. But that’s a defense mechanism, and I’ve heard it so many times, it doesn’t upset me anymore.
SMITH: But, Al, with all due respect, how do you call a
company a basket case which shows five years in the black? I mean a basket case has got to be losing money. It’s got to be hemorrhaging. I mean Sunbeam had five profitable years from 1991 to 1995.
DUNLAP: When I came to this company last year, believe me, it was hemorrhaging. It had precipitously lost market share. It was headed for a total debacle, which was proven out. This company lost about two
hundred and thirty million dollars last year. The write-offs we took were things that should have been done many years before that to properly reflect the value and operations of the company. Now the previous
executives, if they had got it right, why did they not have the performance that we’re having? Whether it’s Scott, whether it’s Lily, whether it’s Sunbeam, if they had gotten it right, why did someone ask me to come in
and save them?
SMITH: You said the company lost two hundred thirty million dollars in 1996, but the write-off was three hundred thirty-seven million. If they lost two hundred
thirty million, that means, without the write-off, they would have made a hundred million dollars. So it was a profitable year in 1996 except for the write-offs.
DUNLAP: No, it
wouldn’t have been. The losses would have been substantially more than that. Remember, I arrived in July. We instantly made enormous changes to the company. This company was headed downhill. Now the people who were here
can say forever, and if that soothes their ego to say they were really doing well, so be it. The record speaks more eloquently on this than I can. I was called in here by the board to rescue this corporation. That’s why
I was called in. They were almost panicking. And, of the nine restructurings I’ve done, this was clearly the worst.
SMITH: But to a layman, you have to admit, five profitable
years in the black before that does not look like a company that’s going to go bust.
DUNLAP: But five years of a company going downhill.
SMITH: How do you know downhill?
DUNLAP: I know.
SMITH: Fifty- to a hundred-million-dollar profit each year.
DUNLAP: Here, here: people are looking from fifty thousand feet. I was at ground zero.
SMITH: Yesterday, when we were talking at your house, -- um -- we got -- we
were talking about West Point and the value system there. -- um -- you were talking about your marriage, and you were talking about family, and you were talking about the importance of loyalty. And you said, “Loyalty is
a very important thing to me.” Now we’ve met workers at your McMinnville plant who’ve been there ten, twelve, eighteen, thirty, thirty-four years. We met a woman who’s been there since she’s been out of high school.
She’s never done anything else. To her knowledge, she’s not qualified for another job, and she’s got a death -- death sentence over her. She’s got a termination notice. Where does loyalty fit in to restructuring a
corporation like Sunbeam?
DUNLAP: When you rescue a corporation like Sunbeam -- Sunbeam in my view -- we could debate this all day -- but in my view, in the view of the people I
trust, was going out of business. Therefore, that meant every single employee in Sunbeam had a death sentence. It would not have been in operation. I believe that. The people that I trust believe that. We saved the
corporation. And, in that case, it’s like a commander in the field. You don’t wanna lose a single soldier, but, when you go into battle, you’re gonna lose some, and it’s tragic, and I feel very sorry for anyone who lost
their job. But my job at the end of the day is to save the corporation and save as many jobs as I possibly can. And I’ve saved over six thousand jobs. There would have been, in my view, zero jobs.
SMITH: As a military leader, as a guy who went to West Point, how do you feel about a system that says, “The majors and the captains and the colonels screwed up, so the privates and the corporals get shot on
DUNLAP: In the first place, every place I’ve ever been, the biggest cuts were taken at the headquarters -- seventy-one percent of the headquarters at Scott, about
fifty percent of the headquarters here and, compared to that, a small percentage of the people in the field. So I get rid of the majors and captains who...
SMITH: Your first --
your first quarterly report in 1997 said Sunbeam’s employment was cut in half -- six thousand people. I mean, if you -- you can eliminate several hundred at -- at headquarters, and that won’t account for six thousand
DUNLAP: First place, you have to understand, of that, about three thousand people went with the businesses we sold. And we sold businesses to people who legitimately
wanted to be in those businesses. And they’ll invest in it. That will be their reason for existing. And hopefully, they’ll do much better. So about three thousand people of the six thousand went with those businesses.
But, again, you have to come back to the hard facts of life. You had a company in serious, serious trouble. I came in, and I have saved -- the real story is I have saved six thousand jobs, and I’m very proud of that.
SMITH: -- um -- let me go back to McMinnville. By everybody’s account, at ground zero in McMinnville -- not in Delray, in McMinnville -- by everybody’s account that we talked
to, inside the plant today and outside the plant what was inside the plant before, by everybody’s account, that was a profitable company and a factory. When I said to people Al Dunlap says this is a basket case, they
said, “Nonsense, this was a cash cow for Sunbeam.”
DUNLAP: It was a component of a seriously failing company. What we had to do was look at every component of that company and
try to make every component as successful as we could. So what did we do? We kept -- in McMinnville, we kept the highest end of the products, the most technologically advanced, and we’re adding new and better equipment
to enhance that. And we moved the lower end of the business, which we ultimately would have lost, to Mexico where that can be better served.
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