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By Allan Sloan
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CHAIN SAW AL'' DUNLAP MAY BE THE last chief executive left in the United States who publicly boasts about firing people. That's become an unfashionable habit, now that ""downsizing'' is a dirty word. But the recently installed chairman of Sunbeam Corp. is an old-fashioned slash-'em-and-trash-'em kind of guy who offered no apologies last week for chopping half of the struggling appliance company's 12,000 workers. Dunlap said he would close two thirds of Sunbeam's plants while doubling its sales by 1999. (That will be an interesting trick.) He also unveiled a fresh advertising slogan: ""There's a new Sunbeam shining.''
This high-risk strategy can succeed only if lots of things go right. It could all happen. But will Dunlap be around long enough to find out? Personally, I suspect that if his plan produces a few quarters of good profits, which are lots easier to come by than long-term success, Sunbeam will soon stop shining as an independent company. Reason: if Dunlap gets his numbers, you can bet that he and money manager Michael Price, whose Mutual Series funds own 21 percent of the company, will gin up a buyer and sell Sunbeam quicker than you can press the PUREE button on a blender.
To understand how this might play out, you have to look behind the headlines, examine Dunlap's history and figure out what makes him tick. You also have to understand what happened at Dunlap's previous employer, Scott Paper, where he made a fortune, attained the status of a minor Wall Street god and became a poster boy for corporate downsizing.
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If you can make it past Dunlap's forbidding exterior, you discover that despite his endless boasting he isn't really a beast or a blowhard. He just comes across that way. Offstage, he's very charming and very, very smart. He's been fixing troubled businesses for more than 20 years, but was all but unknown until he was anointed Scott chairman in 1994. He made his mark quickly, firing 11,000 of the company's 29,000 workers, closing plants and shutting down the headquarters building. Then he sold the remnants of Scott to Kimberly-Clark. Scott's stock tripled during Dunlap's 18-month tenure; he made about $100 million, and Scott's other shareholders made $6 billion. Yes, they owe much of that gain to Dunlap's performance. But a lot of it was luck, too. When Dunlap took over, the coated-paper business was on a roll, reaching a cyclical high. So when he sold Scott's coated-paper subsidiary, as the company planned to do before he got there, it fetched a superhigh price. And part of the stock run-up came from the takeover premium Dunlap realized by selling the company. Dunlap's brief stay at Scott was his seventh job in 17 years, by the way. That's an average of less than three years per job. So when I predict a short stay for him at Sunbeam, it's not cynicism. It's realism.
Before we proceed, you should know that my family and some of my NEWSWEEK colleagues own stock in Mike Price's mutual funds, so we have benefited from Sunbeam stock's more than doubling since Dunlap was hired in July. The stock rose about 50 percent the day of the announcement alone. Baseball players boast about a 30- 30 year: 30 home runs and 30 stolen bases. The 50 percent job cut combined with the 50 percent first-day stock rise gives Dunlap the first 50-50 year ever chalked up by a CEO.
Workaholic: Dunlap has come a long way since I first met him in 1984, when he was trying to fix ailing Lily-Tulip, the paper-cup maker. He was shacked up with his two dogs in a motel room near Lily headquarters in Augusta, Ga. Dunlap said his wife, who has put up with him for 29 years now, stayed home in Florida so he could work 24 hours a day with no distractions.
He isn't the kind of guy you call to fix small problems. You call him when you're in extremis. Unlike, say, Digital Equipment chief executive Robert Palmer, who recently announced huge firings to try and clean up a mess that he made himself, Dunlap cleans up messes made by other people. That distinction is often overlooked. ""People say, "You just fired 6,000 people at Sunbeam.' But I say, "No, I just saved 6,000 jobs at Sunbeam','' Dunlap told me in a 90-minute phone interview last week. ""I didn't create the problem at Sunbeam. I came in to clean it up. Don't blame the doctor; the doctor didn't make you sick.''
That sort of outspokenness is one reason Dunlap has gotten famous. Another is that, unlike your typical big-time chief executive, Dunlap doesn't hide behind his handlers or shy away from a fight. Last February, when we were putting together what became NEWSWEEK's ""Corporate Killers'' cover story, we offered a page to more than 50 chief executives to argue in favor of downsizing. Only Dunlap, whom we contacted on our deadline day, agreed to play. A few hours after we called him, his article arrived on our fax machine.
You have to love Dunlap's irreverence. Consider the way he unveiled his plans for Sunbeam last week. It's something of a Wall Street custom to provide an 800 number to let analysts, reporters and stockholders hear the proceedings at the company's expense. None of that for our boy. You had to dial the 312 area code on your own nickel. ""If people care enough to want to hear the conference,'' Dunlap said, ""let them pay for the call.''
Dunlap's strength is being able to look at troubled companies objectively. His weakness is that he can't seem to look at himself the same way. Take his book, ""Mean Business.'' It's got lots of interesting stuff, but it has more me, me, me in it than a diva tuning up for an opera. And over and over, Dunlap positively gloats about putting people on the street. Even when downsizing was in fashion, this book would have been over the top. The irony is that Dunlap doesn't like being considered an ax murderer. ""I don't enjoy firing people,'' Dunlap said, ""I know what it's like to have your father out of work. It's terrible.''
West Point: Dunlap, you see, grew up poor in Hoboken, N.J., the son of a shipyard worker who was frequently laid off. He escaped by clawing his way into West Point, serving in the army and then going into the business world. So, then, why does he brag about firing people? ""That's just my manner,'' he said. ""Just because I don't talk about feeling bad about having to fire people doesn't mean that I like having to do it. But if I don't fire some of the people, the whole company will go under, and no one will have a job.''
That sounds a bit too facile, so enough talking. It's put-up-or-shut-up time for Dunlap. Sunbeam is going to be a lot harder to fix than Scott was. Publicity and scrutiny attend Dunlap's every move at Sunbeam, whereas he was outside the limelight at Scott until results started to come in. Scott was bloated; Sunbeam isn't. Big customers like Wal-Mart aren't likely to cut Sunbeam any slack when they can buy similar appliances elsewhere. Last week, in one of his many interviews, Dunlap talked about wanting to be called Handsome Al rather than Chain Saw Al or Nuclear Al. Fat chance. Unless, of course, he surprises us skeptics by actually fixing up Sunbeam rather than merely gussying it up for sale--in which case he might just give chain saws a good name.
He's called Chain Saw Al, the Shredder, or Rambo in Pinstripes. Here's how Al Dunlap made his rep
Lily-Tulip: In his three years (1983-86) at the helm of the paper-cup maker, Dunlap moved headquarters from Ohio to a company plant in Georgia, slashing his staff..
Headquarters-Staff Cut: 50 percent
Crown-Zellerbach: From 1986 to 1989, Dunlap shed administrators, sold the San Fransico headquarters building for $57 million and closed 18 distribution centers.
Administrative-Staff Cut: 30 percent
Australian National Industries: For Australian tycoon Kerry Packer, Dunlap in 1989 fired virtually every one of the engineering firm's senior managers and closed or sold 15 of its facilities
Work-Force Cut: 47 percent
Scott Paper Co.: Dunlap laid off 11,200 employees at the paper giant in 1994, then sold the whole company
Work-Force Cut: 31 percent.
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