Machan, Dyan. Rust belt rich. Nova Iorque: Forbes;; Vol.164, art.9, pg.154; 11 de outubro de 1999.
Rust belt rich
Forbes; New York; Oct 11, 1999; Dyan Machan;
Connell Limited Partnership is a privately owned conglomerate of four smokestack-industry outfits with twangy American names: Wabash, Mayville, Yuba and Danly. Their combined revenue is $12 billion. They are anything but digital. They make things that go clunk when you drop them. With a net worth of $600 million, William Connell just missed making this year's Forbes 400. How he ascended to undesired fame is discussed in a profile of Connell. Connell Limited Partnership was created in the mid-1980s, when Ogden Corp. decided to keep its services business and get out of the grittier stuff.
Copyright Forbes Oct 11, 1999
[Headnote]
William Connell made his money the old-fashioned way: with things you can touch.
I JOKED THAT IT WAS BETTER THAN THE OBIT PAGE," SAYS William Connell, 61, about first making The Forbes 400 in 1996. Connell has been one of the quieter members. Kind, unpretentious and polite, he relishes privacy. His six kids call him Mr. Basic. His company, Connell Limited Partnership, is a privately owned conglomerate of four smokestack-industry outfits with twangy American names: Wabash, Mayville, Yuba and Danly. Their combined revenue is $1.2 billion. They are anything but digital. They make things that go clunk when you drop them. With a net worth of $600 million, Connell just missed making this year's 400.
Connell was raised not to "sit down and trumpet your talents, your achievements or your wealth to your pals." So, when this American dream story of an immigrant's son became public, life's little things changed for him.
"We've had a tiny condominium in Lincoln, N.H. since the kids were babies," he recalls. "The little ski shop where we used to go had the page [from The Forbes 400] ripped out, with that picture, on the wall. And the shop had written, `Guess who shops here!' So my wife and my kids said, `We can't go in there."'
To find out how he ascended to undesired fame, we meet at his downtown Boston office. Connell leads us to the back of his office and a museum-style glass case.
The hard metal items are laid out like Faberge eggs: a shiny die set (the piece that secures the mold), lying next to, but not touching, a ball bearing. Pins and springs that go into the die set are within easy reach.
Connell unlocks the case to show off a self-lubricating bearing. Carefully, he pulls it out and spins the little ball bearings with his thumb. Then there are a couple of wear plates for use on an aerial cam (part of a machine for stamping rounded pieces of metal), and a miniature replica of a feedwater heater that would go on a power plant or an oil refinery. A real feedwater heater, he laughs, wouldn't fit in the room.
It is a perfect day to talk about belching smokestacks. We ascend to the 36th floor of the nearby BankBoston building, site of the Boston College Club, to find a normally stunning view gray with fog.
Connell Limited Partnership was created in the mid-1980s, when Ogden Corp. decided to keep its services business (like airline food) and get out of the grittier stuff (like heat transfer equipment). The cast-off divisions were named Avondale Industries. Connell, who was executive vice president of operations and an Ogden director, saw a different future for them.
"I just couldn't believe manufacturing was going to cease, that you could physically get rid of it all," he said. This was his instinct-despite evidence all around him of America's deepening industrial crisis. New England lost its textiles, then its furniture industry and, in western Massachusetts, machine tools.
Polaroid, Raytheon, Western Electric (now Lucent) and Motorola were still doing fine. If they would still manufacture, Connell would supply them, damnit!
If Connell had stayed at Ogden he might have won the chief executive position within a few years. But why coast to an easy retirement? In 1987 he bought Avondale for $148 million, cashing in his Ogden stock options and other savings, to take an 85%, or $2.5 million, stake in the sliver of equity that financed the heavily mortgaged buyout. Two years later he was able to buy out a bank's 15% minority share to own it all.
You know the end of the story, because Connell made The Forbes 400. But it wasn't easy. Looking at his neatly manicured hands and then out the window into grayness, Connell begins his tale in a gentle voice with a Boston Irish lilt.
Between 1985, when Ogden put Avondale up for sale, and 1987, when Connell purchased it, the cast-off divisions were owned by an employee stock-ownership plan. One of the businesses, Danly Machine-the stamping presses-was crashing, but neither Connell nor Ogden management knew it. The man running Danly chose to keep its rotten numbers to himself. Danly had an overvalued inventory and cost overruns totaling $80 million that year.
This called into question the sum the ESOP paid Ogden, triggered a lawsuit and ended up encouraging a pirate-like move from the profitable Avondale shipbuilding division. The shipbuilders, Avondale's biggest division, didn't understand why their stock had to be punished by some loser Rust Belt company. They tried to make Connell the scapegoat, but Connell sued to retain his job.
A real mess.
Then, when the case was moved from Boston to Delaware, Ogden's counsel tried to prevent Connell from getting a decent lawyer. Its lawyer sent a tiny piece of business to all the good law firms, just enough business so each firm would have to turn Connell down as a conflict of interest. He got a lucky break when a partner of Skadden Arps was on vacation and hadn't opened his envelope from Ogden before he spoke to Connell.
[Photograph]
Caption: It was a vintage year for Connell, even though the onetime member of The Forbes 400 missed the cut this year.
With Skadden Arps at his side, and some eleventh-hour help from Ogden chief Ralph Ablon, who reined in Ogden's lawyers and pushed for a resolution, Connell kept his job.
The shipbuilding group splintered off from Connell Limited Partnership, taking back the Avondale name, and was recently sold to General Dynamics. Finally Connell was left alone. He bought nine aluminum recycling plants to buttress what he had. He sold other businesses-Luria Brothers, a scrap metal company in Cleveland, and Danly's stamping machine division in Chicago. They needed capital, capital that Connell didn't want to feed them.
His orphaned industrial children have thrived. Wabash Alloys, of Wabash, Ind., is the number one maker of recycled aluminum. Just a few years ago the average car used 85 pounds or so of aluminum. Now it's 250 pounds. Wabash's customers are General Motors, Ford, Chrysler, Fiat and their biggest suppliers.
Mayville Metal Products, of Creedmoor, N.C., makes hopelessly low-tech metal boxes, but its customers need them to house their high-tech hardware. Mayville has grown with its largest customers: Lucent, Motorola, Applied Materials, Nortel and Ericsson.
Danly Die Set, of Chicago, is the largest U.S. supplier of die sets. Danly precision-made products cost $8 to $8,000 apiece. Even if it's an $8 item-say, the die set used to manufacture a window screen-it has to work.
Last, there's Yuba Heat Transfer, of Tulsa, Okla., among the top three worldwide makers of Godzilla-size parts, like condensers, for power plants.
Since Connell took over Ogden's castoffs, revenues have doubled, and he sees more opportunity in basic industry for himself and other would-be Mr. Basics. Knocking on the table, he says it's easier to own a business dealing with finite things. "Take Control Data. Wang. Or some of the Internet companies. Wonderful companies. But today competitors take what the leader does and figure out how to do it better and cheaper. Bang! You're out of business. It's harder to obsolete aluminum. You can't obsolete a table to eat on."
Yeah, but obsolescence isn't the only way to kill a company. What of the Ross Perot idea that basic-industry jobs will get sucked to whatever country pays the lowest wages?
"Overworked," says Connell. As productivity has risen, labor has become a smaller component and transportation prices a larger one. He notes that in output per man-hour, no other country can beat the U.S. in steel production. "So what if [a foreign competitor] can cut labor in half? What if their ship has to wait in the harbor?"
When Connell was growing up in a Boston industrial district, he aspired to get a job at a General Electric plant and maybe work on an associate's degree. His father, a bus driver with six years of formal education, encouraged him to aim higher, to try college.
Connell wanted to study physics. But after a nun gave him a bad conduct grade after a milk fight in high school, the priest in charge of admissions at Boston College sentenced him to study business. "Physics is only for serious students," the priest admonished Connell. "And I say a prayer of thanks to that priest every day," he says, smiling broadly.
Connell graduated with a degree in accounting from Boston College in 1959, and went on to Harvard Business School in 1961 after two years as an officer in the Army. He went on the 1996 Forbes 400 with a net worth we estimated at $560 million.
"What is rich today?" we ask him. He shifts in his chair, then slowly responds: "It used to be the guy with the new car. Then I thought it was the druggist because he went on a vacation. Then it was someone with a three-story home. Then it was someone who owned their own home. That was rich."
Connell pauses to sign for the check. He reluctantly adds, "When you get into the realm of The Forbes 400, people consider it a scorekeeping exercise. I don't think I kept score."
We're the last people in the restaurant. Connell, seemingly oblivious to what's going on around him, notes that the Rockefellers had it right because they endowed universities and cured diseases.
"People are rich when you have what you need in the world. A nice family, a good education, to participate in the community. To see your children do well. That is rich."
Does he mind that charities can target him more easily? Connell is almost offended by the question. "Charities should find me. I was trained that even when you didn't have, you gave. My mother and father, who had little, wouldn't think of a Sunday without giving to the offering plate. You come into the world with nothing and you leave with nothing. It's not like you can pile it into a casket."
On this foggy day, it was nice to dine with a man who has a clear vision of basic industry and the basics of life.