Kaiser

"Late in 1945 the Steel Workers made their initial moves. Their contract was due to expire, and they threatened a strike if Big Steel did not grant a substantial increase. President Truman persuaded Murray to extend their deadline to January 21, 1946, and created a fact-finding board to determine an equitable wage adjustment. The board recommended a basic hourly increase of $. 185. Murray accepted it, but Big Steel would not budge from a “final” offer of $. 15. Industry leaders would grant the full amount, but only if the government abolished price controls. Truman would have none of it and considered seizing the companies. 59 That was where matters stood on January 17, 1946, four days before expiration of the deadline. Truman invited Murray and Fairless to the White House, but the meeting stalled, and the steel man left in a huff. The next day, Kaiser, who “happened” to be in Washington, showed up at the White House and announced that he would accept the $. 185 increase. He realized full well the impact his concession would have. Kaiser unctiously stated: “I have informed the President... that I have sufficient faith in this great nation to humbly take the lead in peace—as I did in war—in helping our people and our world establish the sincere and honest relationship which these critical times require.” He chided his competitors: “... three-and-a-half cents is two percent of steel wages. Who can estimate costs down to two percent? Can anyone hesitate to save his country for three-and-a-half cents?” Murray chimed in, calling Kaiser’s concession “a great contribution to the nation.” 60 Once again, Kaiser won a media contest with his rivals in steel. The reactions of men such as Bethlehem’s Grace and Republic’s Tom Girdler have not survived, but their thoughts toward Kaiser must have been unprintable. In their view, Kaiser had simultaneously committed two unpardonable sins. That he had broken the ranks of “solid steel” was hardly surprising, since he had always been an outsider; but his break weakened their bargaining position. 61 Far worse, he had openly consorted with the enemy and had the gall to condemn their penuriousness from the most visible forum imaginable. To Big Steel, this was unconscionable grandstanding."

"has not ever crushed a flower half-hidden in the grass that he did not wish he might have walked some other way.” 25 Like many modern executives intent upon maintaining high worker morale, Kaiser sponsored frequent, elaborate awards ceremonies. He enjoyed overseeing many of the arrangements himself. For the “25 Year Service Awards Banquet” in December 1952, he rented the Colonial Ballroom in the St. Francis Hotel in San Francisco. Detailed arrangements prescribed not only the words, but the mood of the awards presentations: At the conclusion of the dinner the coffee is served... All service is removed from the tables.... Lights in house slowly dim while lights on the individual tables come on (This is the last function of the waitress at each table just before the change of lights). After a pause and on cue spotlight brightly on male octet in balcony behind the head table. Octet: “I am the builder. Come walk with me.” The singing continued softly in the background, while Henry Kaiser, Jr., speaking over a microphone but hidden from view, narrated a tribute to silver anniversary employees. The tribute was part poem, part song. At the end of a lengthy narration, the octet belted out “Give me some men who are stout-hearted men.” Henry Jr., still concealed, intoned, “My father will now make the awards.” 26 Cynics hooted at such theatrical antics. However, as Peters and Waterman observed, the “best” companies create awards ceremonies and similar nonmonetary compensation on the flimsiest pretexts. 27 Few cynics worked for Kaiser, and most attending such banquets came away with good feelings. It was evident to them that the boss cared about employees."

"In their influential, widely read study, In Search of Excellence, Thomas J. Peters and Robert H. Waterman, Jr., traced managerial development in several dozen of the “best-run” American corporations. In many examples drawn from the 1960s and 1970s, they observed that the most effective corporate leaders were highly visible and practiced “hands-on,” personal guidance of their operations. 1 Similar examples could have been drawn from Kaiser’s managerial activities decades earlier. Kaiser’s approach to management was hardly original or unique. His respect for his “associates” could have been borrowed from James Cash Penney, founder of the chain stores bearing his name, or from many other astute entrepreneurs. His skill in challenging bright young men to compete with each other might similarly have been patterned after that of Alfred P. Sloan, who created General Motors’ famed “decentralized” system of separate automotive divisions. In refusing to permit important decisions to become trapped by “study” committees, in abhorring bureaucratic red tape, in sensing instinctively who in his organization could provide immediate assistance in a crisis, Kaiser resembled many successful industrial leaders."

"By late 1942, however, Kaiser had more important things on his mind than one cement contract. Anticipating America’s involvement in World War II, he was preparing to enter other industries: magnesium, steel, aircraft, and shipping. When Kaiser delivered his last bag of cement at Shasta, involvement in dams was largely behind him. By then, he was turning out more cargo vessels than any other ship builder in the nation. The men who built dams in the 1930s and stayed with Kaiser in 1942 emerged into a wholly different world."

"In their influential, widely read study, In Search of Excellence, Thomas J. Peters and Robert H. Waterman, Jr., traced managerial development in several dozen of the “best-run” American corporations. In many examples drawn from the 1960s and 1970s, they observed that the most effective corporate leaders were highly visible and practiced “hands-on,” personal guidance of their operations.1 Similar examples could have been drawn from Kaiser’s managerial activities decades earlier. Kaiser’s approach to management was hardly original or unique. His respect for his “associates” could have been borrowed from James Cash Penney, founder of the chain stores bearing his name, or from many other astute entrepreneurs. His skill in challenging bright young men to compete with each other might similarly have been patterned after that of Alfred P. Sloan, who created General Motors’ famed “decentralized” system of separate automotive divisions. In refusing to permit important decisions to become trapped by “study” committees, in abhorring bureaucratic red tape, in sensing instinctively who in his organization could provide immediate assistance in a crisis, Kaiser resembled many successful industrial leaders."

"In 1942 Kaiser turned sixty, an age when it would be natural to shorten risks and time lines for future projects. That was when Kaiser launched into a series of vast new projects with unlimited futures. However impressive his postwar achievement in several major industries, the list of additional options seriously considered but rejected is equally remarkable. It is not far-fetched to claim that no other American industrialist surpassed the depth and breadth of Kaiser’s fundamental grasp of the nation’s industrial prospects at mid-century."

"Kaiser went on to describe a road to entrepreneurial success in terms that diverged from America's well-worn, self-made path, instead passing through the nation's capital along the way: "That is the first place you build it, and you keep steadily there all the time while you are making aircraft and while you are making ships, because you have got any number of people to see people who control the things that you need. . . . You have got to help them get the things. Anybody can come in and say, `Goodness, I need this. Don't you see how badly I need it?' Anybody can do that, but you have got to come to Washington and say, `Here is a way. Now I know this is right, see if I am right,' and if he thinks you are right he is tickled to death you came." 2"

"Kaiser, however, offered his listeners a different lesson than they may have expected to hear: "Every time I take anybody to a shipyard, they want to see the ways and they think that is the shipyard. Well, that isn't the shipyard at all, and when you go to an aircraft plant, you want to see the garage they keep the planes in or build them in. That isn't the aircraft plant. I will tell you where the aircraft plant is and where the shipyard is: it starts in Washington.""

"He was quick to enlighten me that Kaiser did not engage in lobbying in the classic sense. Instead, he led me to a host of relevant issues, from antitrust to regional economic development, on which Kaiser became an agent of government policy."

"have achieved his success in shipbuilding, steel, dam building, or aluminum without a healthy relationship with the executive branch. The Kaiser story is just one example of how government entrepreneurship relies on both an activist government and venturesome entrepreneurs."

"Kaiser's enterprises offer a view of the changing opportunities in this environment for government entrepreneurs during the first half of the century. Kaiser was one of many successful road builders during the "good roads" movement of the 1920s, a major dam builder during the West's golden age of public works in the 1930s, and America's most widely publicized shipbuilder during the war years. Finally, he was the most prominent western industrialist in primary metals after World War II."

"Kaiser did, of course, choose not to enter all industries, but such exceptions some of which have become nuggets of corporate folklore appear to prove the rule. In the 1920s, for example, Kaiser was offered half-ownership of a cemetery in Berkeley, California. An associate presented the idea as "a business that keeps growing." Kaiser would have none of it: "I don't want to wait until somebody dies to make a profit.""

"Kaiser's appetite for enterprise was legendary: he attempted ventures in any and all sectors of the economy. "Find a need and fill it" was his motto, and he launched more than a hundred businesses in a host of fields, ranging from construction to basic metals to health care to consumer products to broadcasting. Apparently, when Kaiser was in doubt, he started another company rather than wait for proper alignment of the economic heavens."

"Kaiser fostered the belief that natural and engineering laws did not apply to his organization either. Some of the most often told Kaiser stories involve dicey work on dams where "the boys" triumphed not only over nature but over skeptical engineering "experts." Kaiser described much of his success as "we didn't know enough to know we were licked." 21 This was the success of an innocent. After all, if you do not know what the rules are, they cannot hold you back."

"Kaiser also established an experimental laboratory in 1943 to pursue ideas that came from both within and outside the organization. Kaiser was deluged with fan mail by this point, much of which included ideas for inventions. The role of the "hobby lobby" was to turn these dreams into reality. According to popular belief, only an innocent would invite the public to contribute; jaded eastern business was too set in its ways to listen to the common sense of the man in the street."

"it seemed as though Kaiser needed no public relations assistance because of his combination of charisma, conviction, and capability. 23 Reconstruction Finance Corporation head Jesse Jones, aware of Kaiser's gifts of persuasion, told him: "I don't want you to deal with anyone around here but me. You'd talk them out of their watches, and when I'd ask them about it, they'd say, `See, he talked me out of my watch, isn't it wonderful?'""

"Kaiser's enthusiastic cooperation with the media's and the public's insa- Page 8 tiable appetite for American heroes he was, in Morris Udall's phrase, "unavoidable for comment" helped forestall the need to develop an extensive public relations function within his organization."

"Despite the public image he cultivated during World War II, Kaiser certainly did not fit the Progressive model of businessmen fighting against government. Nor was Kaiser out to "capture" government agencies with which he dealt, as New Left history might suggest. Instead, Kaiser learned to compromise with the desires of executive branch officials at the same time he was attempting to influence them through skilled use of the media. The Kaiser story was of neither battle nor capture, but rather a process of continuous negotiation."

"If Kaiser did not obtain a particular contract or job, he needed only to inform the press, and the resulting public outcry would take care of the rest.26 In a time of great sacrifice, the public needed an avenue to vent its frustration closer than its overseas enemies. A seemingly sluggish federal government would do nicely. Kaiser was the people's industrialist who would cut the red tape of the "Arsenal of Bureaucracy.""

"Margaret Mead expressed concern about both figures, warning: "If the war should ever come to seem a battle in which Roosevelt and MacArthur and Kaiser are supermen father figures who do our fighting or our thinking for us while we simply watch the show then there would be danger, for such an attitude would bring out not the strengths of the American character but its weaknesses." 32 She was responding to the fact that, in an age of authoritarianism overseas, both Kaiser and Roosevelt created institutions at home characterized more by a cult of personality than by any dominant strategy or structure."

"After the administration began to prepare for war in the wake of the Nazi invasion of the Low Countries in the spring of 1940, Kaiser quickly moved from domestic concerns to war production. Kaiser also offered the administration alternative entrants in industries that hesitated to increase production; his belief in production as the "Fifth Freedom" fit both prewar and wartime administration needs. By the time Kaiser and Franklin D. Roosevelt developed a personal relationship during the war, the president appeared sympathetic to Kaiser's goals for a simple reason: they coincided with Roosevelt's."

"."28 Kaiser demonstrated the dramatic success government entrepreneurs could achieve by being nimble enough to seize the opportunities presented by an activist government. His enterprises represented a confluence of administration policy and entrepreneurial zeal."

"In late 1942, Kaiser shifted again, from contract seeker to industrial statesman, as an apostle of postwar economic prosperity. Kaiser spoke frequently of America's coming need for transportation, housing, and medical care, while implicitly promising to back up his words with enterprise. Finally, Kaiser became politically active in August 1944, heading an organization to get out the national vote when voter turnout was the key re-election strategy of the Democrats."

"Roosevelt proudly recalled how well he bypassed bureaucratic red tape: "From Feb. 6 to March 4 [1917] we in the Navy committed acts for which we could be, and may be yet sent to jail for 999 years. We spent millions of dollars we did not have. . . . We went to those whom we had seen in advance and told them to enlarge their plants and send us their bills."37 Although Roosevelt oversaw the takeoff of the modern bureaucratic state, he had little patience for many of its organizational features. As president, Roosevelt devised another way to circumvent a recalcitrant bureaucracy: he created new agencies to do what he wanted. While Roosevelt established agencies in the public sector, Kaiser created enterprises in the private sector."

"Kaiser embraced a style of business operation "personal" capitalism that preceded the modern bureaucratic organization. He was comfortable operating in organizations with permeable boundaries, allowing him to enlist anyone for any task."

"Although the personalities of the sometimes abrasive Kaiser and usually smooth Roosevelt contrasted, their attitude and organizational temperament did not. Above all, they shared the classic American "can-do" attitude. The can-do president and the can-do entrepreneur shared a boundless optimism and personified the possibilities. And they were both nearly irresistible: few men in Washington have been more convincing in one-on-one situations than Roosevelt and Kaiser."

"Kaiser pursued entry into the metals industries and other defense work using a personal, idiosyncratic approach to government officials rather than an institutional and hierarchical one. At one point during the war, one of Kaiser's managers complained about "the Navy." Kaiser responded: "You know there is no such thing as the U.S. Navy! It's just Page 11 a bunch of guys down there in Washington. Now which one is your problem?''"

"Kaiser's approach to government officials and to getting information from within his organization reflected that belief: instead of operating "through channels," Kaiser sought the person immediately involved in his subject of interest.34 The willingness of this chief executive officer (CEO) to approach relatively junior members of government agencies surprised many, but most were favorably impressed."

"Roosevelt shared Kaiser's distaste for bureaucratic rules or structures that might get in his way. As Roosevelt biographer Frank Freidel puts it, he ''dearly loved a semblance of insubordination.""

"Kaiser was not a one-man show in Washington; he had effective agents operating on his behalf, most notably his Washington representative, Charles F. ("Chad") Calhoun. In contrast with some other Washington Page 12 representatives, whose principal role was to arrange meetings for executives with government officials, Calhoun offered Kaiser advice on myriad policy and organizational decisions. While Kaiser seized the headlines, Calhoun assembled contacts, collected information, and reported on the prevailing mood in Washington. More than any other individual in the organization, Calhoun was the driving force behind Kaiser's entry into industries ranging from magnesium to aluminum."

"Kaiser's most evident gift was his promotional ability so most of his early jobs were in the field of sales including working for a retailer of photography supplies, then a photography studio."

"When Kaiser was still in Canada, his right-hand man, A.B. Ordway, asked if Kaiser would give his men Page 20 the Canada Day holiday (July 1) off. Kaiser said no, there was no reason for Americans to observe a Canadian holiday. When Ordway asked if they could have the Fourth of July off, Kaiser said there was no reason to observe an American holiday in Canada. 22 Kaiser was going to squeeze every minute of labor he could from his men."

"Kaiser's first job in California gave him an opportunity to demonstrate some of his best promotional skills. Not content simply to build the road, he boasted that he was doing so, or would do so, in record time.29 It is not clear how Kaiser knew what the old ''record'' was, but the challenge seemed to spur his men to greater achievement, and the "records" helped to establish relationships with state officials. Kaiser did naturally what many professional promoters did: announce a new record by virtue of being the first to keep track of milestones. The public, meanwhile, enjoyed the idea of a record-breaking performance.30 This was a golden age of self-promotion in the United States. A trait commonly associated with the American character was being institutionalized in the new profession of public relations, as personified by Ivy Lee and Edward Bernays."

"Kaiser's perception of the possibilities afforded by job breakdown transcended industrial boundaries. Kaiser applied assembly-line principles to road building, then to dam building. Later, as a shipbuilder, Kaiser suc- Page 21 cessfully executed others' ideas of breaking up shipbuilding crafts into multiple lower-skilled jobs. In so doing, Kaiser both opened wartime production to a large segment of the nation's workforce and employed a prefabrication strategy based on assembly-line principles. Kaiser followed a similar path in auto construction and, some would argue, in health care."

"Kaiser not only had done considerable work for the state by this point, but his self-promotion had clearly paid off. The state engineer noted: "The work done by this firm has *always been completed in record time,* and their . . . experience and ability to carry through the contract of the above nature is unquestioned."35"

"In early 1921, A.B. Ordway took his first vacation since Kaiser hired him in 1912 (vacations, or the lack thereof, are a common theme in many Kaiser stories)."

""[Kaiser] was the first contractor I had ever met who didn't look upon my machines as trick instruments to do small jobs faster. He saw them as instruments to make big jobs small."27 LeTourneau was describing Kaiser's extraordinary skill at "job breakdown." Kaiser's ability to perceive the rhythms of labor and to organize materials enabled him to envision which jobs were fit to be split into simple, repetitive tasks or even mechanized in short, applying assembly-line principles to road construction. Kaiser's perception of the possibilities afforded by job breakdown transcended industrial boundaries. Kaiser applied assembly-line principles to road building, then to dam building."

"Kaiser, not content with a passive role, displayed some of the salesmanship that would latewin federal contracts for his companies. Perhaps sensing he would not be the low bidder, Kaiser submitted a project plan to accompany his bid. The plan warned that "unless the job was carefully executed on a carefully estimated and preconceived plan, it could easily be disastrous to both the contractor and the public." Kaiser went on to list the equipment needed to complete the job successfully, noting that his organization already had such equipment. Kaiser closed by warning that "the problems on this job are of such a serious nature that there would be dire consequences unless the organization doing the work is thoroughly equipped and trained." Kaiser got the job.36"

"Kaiser's abilities in self-promotion would later intertwine with an image of innocence. Part of this image came from the East Coast media, as a way of patronizing a westerner. Part of it had to do with the nature of the contracting business. Not all of the risks were immediately obvious even to an experienced contractor bidding on a job. The unforeseen seemed to be the rule rather than the exception, to the extent that unexpected risks resulted in one of the industry's rules of thumb, as related by a Kaiser associate: "It is an axiom among contractors that you never can get a second job next to the one you are doing. Another and a new man always wins. This is probably due to the original contractor knowing too much of the bad conditions of which the new man knows nothing.""

"Kaiser did not need any professionals because he had a natural sense of public relations. Kaiser had made himself a builder, but he had been born a promoter."

"Kaiser's use of equipment and his relationship with LeTourneau reflected his vision of possibilities. As LeTourneau wrote, "[Kaiser] was the first contractor I had ever met who didn't look upon my machines as trick instruments to do small jobs faster. He saw them as instruments to make big jobs small."27 LeTourneau was describing Kaiser's extraordinary skill at "job breakdown." Kaiser's ability to perceive the rhythms of labor and to organize materials enabled him to envision which jobs were fit to be split into simple, repetitive tasks or even mechanized in short, applying assembly-line principles to road construction."

""Now you mention about the speed you are developing. . . . Henry, you cannot keep up the gait you are going without taking some relaxation; all the business in the country cannot be done in one year." Kaiser was certainly going to try."

"Kaiser both opened wartime production to a large segment of the nation's workforce and employed a prefabrication strategy based on assembly-line principles. Kaiser followed a similar path in auto construction and, some would argue, in health care."

"The industry's self-image suggested, then, that many of the greatest construction feats were accomplished because the contractors did not know what they were up against. Most contractors including Kaiser had many stories of success in the face of stiff odds. It is not surprising that one of the principal characteristics associated with Kaiser the man, from his road-building days onward, was innocence the idea that he succeeded because he never realized the odds against him."