FORT LAUDERDALE, Fla. - Too many products. Too many employees. Too many offices and idle assembly lines.
To Al Dunlap, Sunbeam was almost ready for a gurney ride to the morgue. He took the job as chairman and chief executive officer of the household products maker July 19, knowing surgery would be a bloody mess. But when it was over, Mr. Dunlap sought to have his patient doing cartwheels.
"By the time I get to a company, the preponderance of the damage is done," Mr. Dunlap said in his 60-employee headquarters atop the Fort Lauderdale skyline. "I come in looking for a pulse."
What happened Nov. 12 returned Mr. Dunlap to his peculiar perch of prestige and notoriety.
As CEO of Scott Paper in 1994, he had inherited a bloated payroll, a stagnant product line and a mountain of debt. Mr. Dunlap was vilified on Main Street for lopping off 11,200 employees and pocketing $80 million in stock option cash-outs, but he was hailed on Wall Street for boosting the value of Scott's shares by $6.5 billion and safeguarding the future of Scott's 20,000 remaining employees.
Mr. Dunlap was no less dramatic in finding a cure for Sunbeam, which turns 100 years old in 1997. In his November announcement, the 59-year-old West Point graduate dumped 87 percent of Sunbeam's 11,500 product varieties, closed eight factories, put 10 others up for sale and, in the process, cut its 12,000-employee work force in half.
The Sunbeam plant in Waynesboro, which employs 500, was one of the victims. The plant, which makes patio furniture, is among those to be sold. Waynesboro officials hope that the plant, one of the largest employers in Burke County, will remain open.
Once again, critics howled at Mr. Dunlap's cold-blooded tactics. But Sunbeam's share price soared, hitting an all-time high of $29.50 Nov. 27 before settling at $28.37« on Nov. 29. Mr. Dunlap again found himself single-handedly defending his shareholder mandate to resuscitate corporations.
"Why are companies allowed to be this bloated, and why do companies put people in jobs that don't exist," he bellowed. "You have to look at previous management and ask why it allowed it to get to this point. Corporations are allowed to get so bad, then they call me at the 11th hour. The only way to fix it then is to take dramatic action."
The jury will be out on Mr. Dunlap's rescue plan until sometime next year. Restructuring will force Sunbeam to post a one-time, pre-tax loss of $300 million in the fourth quarter. Mr. Dunlap insists the moves will save $225 million a year in costs, wipe out the company's debt within a year and give it a more focused product base. He plans to double Sunbeam's annual sales to $2 billion by 1999.
What does Mr. Dunlap get out of it? In addition to personal satisfaction, he stands to make a fortune from stock options. As of Nov. 29's market close, his Sunbeam options - granted when the stock traded for $12.50 a share - were worth $71 million.
At least Mr. Dunlap inherited a sturdy pair of brand names, Sunbeam and Oster. His handpicked team of executives elected to keep the product lines where those brand names make a difference to shoppers, like toasters, outdoor grills and hair clippers. Where brand names had less impact, as in patio furniture and bedspreads, Sunbeam pulled out.
Dave McGoldrick, a retired Sunbeam president living in Colorado, said there was "very little question" that the Sunbeam name had been overextended into peripheral product categories.
"When you try to spread a brand name over an array of products with different seasonalities and different channels of distribution with different merchants and buying techniques, you disrupt your ability to produce on a timely basis and your ability to maintain the technology of your manufacturing processes. You're trying to get your arms around too much," said Mr. McGoldrick, who retired in 1990.
Mr. Dunlap intends to speed up the development of new products and make a bigger splash in foreign markets, especially Asia. In the $4billion-a-year U.S. market, where appliance makers do well to introduce one home-run product every three years, Mr. Dunlap plans to launch at least 30 new items a year. To hit the $2 billion mark in 1999, Sunbeam's sales growth will have to exceed 25 percent a year.
"Essentially he has to be five times better than the rest of the industry," Paine Webber analyst Andrew Shore said. "He has to make acquisitions. The numbers don't work."
Mr. Dunlap is ready to give it a shot. Sunbeam will finish the year with a $12 million advertising blitz centered on the slogan "There's a New Sunbeam Shining." Mr. Dunlap said premium, microchip-controlled products like Sunbeam's auto-shutoff steam iron and its Blanket with a Brain will lead the way.
"If you make a me-too anything, you're going on the shelf with a lot of other me-too products, and consumers are going to go by price. Selling on price is a fool's game," said Mr. Dunlap, who quotes frequently from his current book, Mean Business: How I Save Bad Companies and Make Good Companies Great. "But if you couple a brand with innovation, and it makes people's lives easier and healthier, it changes the whole dynamics."
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