Nota Bene

September 1 1989 by William O. Bourke

Never be satisfied. No matter how good it gets, want it to get better. You keep raising the bar of the hurdle, the high jump, all the time.”

William 0. Bourke, chairman and chief executive of the Richmond, Va. based Reynolds Metals, practices what he preaches: In his eight years with Reynolds, the market value of the stock of America‘s number two aluminum company has increased almost tenfold, from $380 million in 1981 to $3.3 billion in 1989. Last year was the best in Reynolds’s 70-year history, with a net profit of $482 million on revenues of $5.6 billion. Bourke congratulated and rewarded the company’s employees-and then raised the bar another inch.

Bill Bourke’s mind is now devoted to the metals business, but his heart may be elsewhere. At Ford, he had an impressive 23-year career and was a likely successor to Henry Ford II. When he was passed over, first for Philip Caldwell and then for Don Petersen, he quit.

“My whole training was the culture of Henry Ford and Lee Iacocca,” reminisces Bourke.

“They were two loquacious, colorful, hell-raising guys that lived hard, played hard, liked women, booze, all that kind of stuff, cussed a lot. Men’s men.”

Caldwell and Petersen were cut from a rather different cloth. Then why did Henry Ford promote them to CEO instead of Bourke? Says Bourke: “He probably thought, `He’s going to do his own thing and tell me to go bag it.’ Whereas that’s not the case with Caldwell and Petersen. And then he had his way till the day he died.”

David P. Reynolds, now chairman emeritus of Reynolds Metals, may have had a similar thought in 1981 when Bourke, his new CEO, decided to scrap 11 aging Reynolds plants. Aluminum was then in its worst slump in 50 years. Though Reynolds’ was reluctant, he did not stand in Bourke’s way. Then, from 1983 to 1985, following Bourke’s strategy, Reynolds Metals invested heavily in new plants and increased its premier strength in finished products, a condition which allows the company to sell its aluminum-in the form of cans and foil-for an average of 50 cents a pound more than its competition. The aluminum market has since recovered and the discovery of gold on Reynolds-leased land in Australia has helped. With the stock price tripled in the last three years, Reynolds is on a gold-plated aluminum roll.

Bill Bourke will continue to guide it until 1992, when he turns 65. Retirement will be at Bourke’s farm in Charlottesville, Va., where he and his wife Elizabeth now spend weekends.

Born in Chicago, Bourke earned his B.A. in commerce from De Paul and went to work for Studebaker. When Ford called five years later, Bourke was delighted: “My dream was to be a Ford dealer in San Francisco,” he says. Ford-and fate-had other plans for him, but it seems likely that given the chance, he would have moved a lot of Mustangs in the Bay Area.

-Peter Lacey

ALEXANDER F. GIACCO

Holding CEO titles on both sides of the Atlantic is the king of juggling act Alexander F. Giacco relishes. The chairman of the $1.8 billion Himont Inc. -a polypropylene producer with expanding interests in polymer-based composites and alloys-enjoys keeping balls aloft and tossing up new ones. Like the international joint ventures he’s put together this year-deals in Brazil, Mexico, Malaysia and a landmark agreement giving mainland China a stake in U.S. polypropylene plants and Himont the option to participate in film, fiber and molded products output in China. Despite the current state of flux in China, Giacco expects that joint venture to move ahead, although the full benefits may take longer to realize.

This is something of a second career. Giacco first joined Hercules, Inc., a $2.8 billion chemical, defense and aerospace concern, in 1942, in propulsion systems. “I spent the first 20 years of my work life in rocket development,” he recounts. Giacco went on to management positions in production, marketing and planning. In 1987, at age 67, he “retired” as chairman of Hercules to become full-time CEO of Himont. At that time, Himont was a joint venture of Hercules and the Italian chemical giant, Montedison S.p.A. Since then, about 20 percent of Himont went public, Montedison bought out Hercules’ stake, and in 1988, Al Giacco was named Montedison’s vice chairman and CEO.

“At Hercules, my job was to restructure and then pick areas in which we wanted to grow,” Giacco explains. This was before restructuring became de rigueur. “At Himont, I started out with the highest technology in the field and the opportunity for growth without restructuring.”

Born in Italy, Giacco was brought to the U.S. at 18 months, too early for the language to rub off. In recent years, he’s made up for lost time-mastering Italian and adjusting to cultural differences between American and European business. Last year, Giacco logged 144 days in Italy. He spent much of that time helping form a joint chemical venture between Montedison and Italy‘s ENI, called Enimont.

At Himont’s Wilmington, Del. headquarters, Giacco is determined his company is not seen as just another polypropylene pusher. Market tightness boosted earnings 64 percent to $373 million last year. Although high raw materials prices and new competing capacity should trim net this year, Giacco foresees growth prospects aplenty-using Himont technology to design advanced materials for high-value applications. For example, late this year, Himont expects to start up a plant in Ferrara, Italy, which will be the first to use the company’s new Catalloy catalyst system. It will chemically produce plastic alloys that until now have been possible only through physical mixing of materials.

Off hours, Giacco keeps balls aloft on the links. And the onetime clarinet player in swing bands fine tunes his penchant for simultaneous activities by recording himself playing various instruments, then blending results in a synthesizer.

Despite his position at the helm on two continents, Giacco doesn’t let his perspective on his role go overboard. “I believe that my job as chief executive is to create wealth for each of my constituencies-for the shareholder, for the employee, for the community,” he maintains:

-W. David Gibson

ROBERT HAUPTFUHRER

Floating over Kenya in a safari balloon, Bob Hauptfuhrer spotted an oryx. The speed and grace of the endangered antelope impressed the then president and COO of Sun Company. That was in 1987. When he left Sun last November to head a big, stockholder-approved spinoff operation, Hauptfuhrer had just the right name for it: Oryx Energy Company.

Dallas-based Oryx, formerly the upstream (drilling) division of Sun, is now the largest independent oil and gas producer in North America, with over $4 billion in assets, including a reserve of almost a billion barrels. “We’re going to be aggressive in trying to buy up and out-drill the other competitors,” maintains Hauptfuhrer.

Now, like that safari balloon, oil prices are rising, lifting Oryx’s profits: the first quarter of 1989 saw a profit of $17 million, compared to a loss of $5 million (as a Sun division) the year before. Since the split, the shareholders of Sun and Oryx (90 percent of them have kept both shares) have seen the value of their stocks grow faster than those of any other oil company. “We operate on the assumption that there will be an upward tilt from now until the end of the century,” says Hauptfuhrer, who sees a price of about $25 a barrel by the mid-1990s.

Worldwide exploration and production will continue to be Oryx’s business, even though new sources of oil and gas are get-ting harder to find: “I want to have a bigger piece of a shrinking pie,” explains Hauptfuhrer. He has no plans to add refining to Oryx’s capabilities and sees trouble coming to that now aging side of the business: “My own view is that the industry is, unfortunately, going to be increasingly accident-prone.” As for refining’s apparent profit stability, he observes, “If a 50 cent gasoline tax were imposed, you would see how quickly the downstream becomes cyclical. And we’d still sell our oil and gas.”

Bob Hauptfuhrer spent 31 years with Sun before leaving to start Oryx. A native of Philadelphia, he has a B.A. in public affairs from Princeton and an M.B.A. from Harvard. Married with three children, Hauptfuhrer likes to ski and travel for pleasure-you never know when you’re going to spot an oryx.

-Peter Lacey

THOMAS MONAGHAN

After transforming a $500 Ypsilanti, Mich. pizza stand into a $2.3 billion global concern, Tom Monaghan, the 52-year-old helmsman of Domino’s Pizza, is giving part of the wheel to his first mate. “We’ve got a lot of momentum going,” explains Monaghan. “I need someone to spend more time on the day-to-day matters.”

While Monaghan is still CEO, he has given the title of president to company veteran David Black. This comes

at a time when Pepsico subsidiary Pizza Hut, the market leader and Domino’s main competitor, is stepping up its own delivery service-the key to Domino’s 200 percent increase in revenues since 1980.

Domino’s has responded by introducing deep-dish pizza to its menu, an item that Pizza Hut has been serving since 1981. Today, it is the preferred pie of half the pizza-eating public, but its added 1.5 minutes baking time strains Monaghan’s streamlined operation, which has allowed for the famous Domino’s promise-home delivery in 30 minutes or less, or it’s free. “It’s pretty scary,” says Monaghan. “This is the first time we’ve added something new to our menu in 29 years.”

Still, with 5,000 franchises in all 50 states and 16 foreign countries, Monaghan can afford to delegate some of the daily concerns. “I still want to be active,” he asserts. “But I’ll be working on more long-range projects.” Monaghan, who owns the Detroit Tigers, is also a frustrated architect. His sprawling Ann Arbor, Mich. headquarters centers around a $120 million office complex that incorporates design concepts of the late Frank Lloyd Wright.

The CEO also hopes to spend more time with his four daughters and his wife, whose affections Monaghan first won by delivering to her a heart-shaped pizza.

Should Domino’s menu addition fail despite such expertise, Monaghan’s worries are limited. “If it doesn’t work, we’ll drop it,” he says. “That’s the nice thing about being a private company.”

-Jathon Sapsford