Since I am out of the country for a few weeks I am featuring some writing from Doug Alward, Applications Engineer from Wright Industries. I have prepared these excerpts from the introduction to Doug’s book ahead of time; as you read this I am in La Cruz, Costa Rica.
Lessons of Automation -Doug Alward
(continued from last week)
Yet, as quickly as the industry blossomed it was abruptly, almost overnight changed. A merger and acquisition craze began whereby folks with no understanding of this business were suddenly in charge. Coupled with that was extremely bad timing. The economy soured after 9/11 and the pyramid game of obtaining continuing new business to generate the cash flow necessary to complete existing business on your floor, came crashing down. DT Industries, The Hudson Group, acquired numerous profitable independent companies. Fuel by the ability to issue stock, they paid ridiculous amounts of money for these companies. Way beyond book value, they were able to use an accounting trick whereby they posted “Goodwill” to their balance sheets for these overpayments. Everything was leveraged sacrificing the independence that the founding owners of these companies held. Now the banks were watching quarterly reports and calling loans.
The cards came tumbling down! What the original company founders had spent years and resources developing was simply gone. This is a story of that era. Of how tremendously talented people, and their families, were discarded with no consideration of their human dignity and their years of prior performance. Of how lawyers and bankers became involved in an industry with absolutely no understanding of the value of human capital and subsequently suffered the consequences. Of how Accountants were able to steer business practices when they should have been retained in the back room counting the beans.
To be continued next week…