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On corporate Darwinism.

On corporate Darwinism

Have you ever heard the story about the two bush pilots flying across the Canadian Rockies? It seems Chuck and Bob developed engine trouble in their four-seat Cessna 182, forcing an immediate landing. Fortunately, there was a small clearing in an otherwise densely forested area.

It was rough going, but both men survived the final approach. Their puddle jumper, though, was demolished and a ruptured fuel tank required abandoning the wreckage.

As they walked away, Chuck noticed a huge grizzly bear running towards them, obviously happy about two guests dropping in for dinner.

Chuck shouted at Bob to start running. Bob, a bit overweight, tired after only a few minutes. He panted, "What's the use, we'll never outrun it.' In reply, a leaner Chuck yelled over his shoulder, "I don't have to outrun the bear, I only have to outrun you!'

The recession and fierce foreign competition have been the bears plaguing most US industrial companies, especially machine-tool builders. One such firm, which refused to stop running, is the Acme-Cleveland Corp, Cleveland, OH. Under a pervasive (some say drastic) weight-reduction plan spearheaded by Chairman of the Board and CEO B Charles Ames, Acme-Cleveland has weathered the economic slump, while regaining the financial and technological fitness necessary to fend off hungry competitors.

In a recent interview, Ames frankly detailed their prescription for survival. "Like many other old-line capital-goods manufacturers, Acme-Cleveland was saddled with excessive and obsolete inventory, outmoded plants and heavy retiree-benefit costs incurred when the company was more than twice its present size. These problems had to be eliminated because it doesn't make sense to burden current and future operations with annual charges for assets and employees that are no longer part of the business.

"Accordingly,' he continues, "over the past three years, we have dismantled an infrastructure in our company that had been developed for a level of business that no longer exists. The program was costly and wrenching to carry out, but essential for our survival.'

Since January 1981, the firm has reduced its work force from 6300 employees to the current 2600, including permanently trimming more than 1000 salaried positions. Morecover, 15 manufacturing facilities were closed, written off or consolidated, which eliminated approximately 1.4-million sq ft of manufacturing floor space from a 1981 base of 2.5-million sq ft.

"While these actions were painful,' Ames admits, "a less aggressive course would have risked allowing the entire business to sink deeper into a hole that might have made recovery impossible.'

He emphasizes, "The net effect has enabled Acme-Cleveland to survive a severe receission and to emerge from a difficult period in relatively strong condition. Our annualized break-even sales volume, for example, has been reduced from close to $370 million in early 1981 to an estimated $185 million for the fiscal year '84. Our restructuring job is now basically completed and we are currently in the process of rebuilding to be a more diversified and balanced company.'
COPYRIGHT 1984 Nelson Publishing
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Copyright 1984 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Acme-Cleveland Corp. bucks recession
Publication:Tooling & Production
Date:Feb 1, 1984
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