Lockheed

"Anders had a very clear and specific strategic vision that called not only for selling weaker divisions but for building up larger ones. After making early progress on the sales front, he turned his attention to acquisition, and the military aircraft unit, the company’s largest business, was a logical place to start. On top of the economic logic of growing this sizable business unit, Anders, a former fighter pilot and an aviation buff, loved it. So when Lockheed’s CEO surprised him by offering $1.5 billion, a mind-bogglingly high price for the division, Anders was faced with a moment of truth. What he did is very revealing—he agreed to sell the business on the spot without hesitation (although not without some regret). Anders made the rational business decision, the one that was consistent with growing per share value, even though it shrank his company to less than half its former size and robbed him of his favorite perk as CEO: the opportunity to fly the company’s cutting-edge jets."

"Can Michelin for that matter celebrate? Not at all. In 1976, François Michelin told his shareholders that his operations in the United States would bring profits within two or three years. “I am,” he said, “in the same situation as Boeing at the end of the fifties when Lockheed was raking in profits but Boeing had machines ready to roll out in its hangars.” In the early eighties, profits were still awaited (the MTC likely lost about fifty million dollars in 1980)."

"Ultimately, I helped to save Lockheed the old-fashioned banker’s way—by cobbling together a group of reputable investors and creating a sensible business model for the company. The company would be forced to endure some painful restructuring, it would need to abandon its dream of the Tri-Star, the banks would need to agree to be more indulgent, and the Pentagon and the government would have to provide strong financial support and guarantees. When this was all worked out, Lockheed was saved. A national resource, I felt with pride, could continue its necessary work in protecting the country."

"Similarly, I came to believe that an institution like the RFC could still be used to promote the economic revitalization of such crucial national assets as Lockheed. A government agency should be formed, I felt, that would work with business and labor to supervise a national recovery program. In exchange for new capital, this agency could demand the management changes, the increased labor productivity, and the price disciplines that would be necessary to bolster American businesses and even its cities during the economic and social crisis caused by the current recession and oil embargo. I had found a disciplined and yet effective plan, I was certain, for the United States to make its way successfully through a time of financial uncertainty and emerge with confidence into a new, prosperous era."

"Then, Lockheed foolishly decided to return to the commercial aviation business. It announced that it would manufacture the Tri-Star, a three-engine commercial jet. Its partner would be Rolls-Royce, which agreed to develop a new type of engine for the plane. The timing of the venture was terrible; the oil embargo and the Vietnam War had wreaked financial havoc on the airline business. Rolls-Royce went bankrupt, and in the ensuing chaos it seemed inevitable that it would drag its Tri-Star partner down, too."