RECESSION BENFITS: 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 Matériel), "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.' "