Mark S. Foster

"Kaiser was unconvinced by industry representatives’ claims that, with plants operating at 28 percent of capacity in the throes of the Depression, price fixing was inconceivable. 69 However, he was so busy with dams and other jobs in 1933 that he postponed building his own cement plant. Losing the Shasta job provided him the incentive he needed. The “Big Five” cement producers confidently expected a lucrative contract at Shasta; who could challenge them? Kaiser entered the list. Time was one ally; he knew it would be more than a year before Pacific Constructors required cement deliveries at Shasta. Still, Bureau of Reclamation officials were incredulous when Kaiser informed them he intended to bid on the cement contract. From his office in Denver, Chief Engineer R. F. Walter opposed Kaiser’s plan on several counts. His most significant objection was based on disbelief that a single plant could maintain steady deliveries of cement over three years, in the face of possible labor problems, machinery breakdowns, and faulty batches of cement. Kaiser noted that the bureau planned to obtain sand, gravel, and other materials from single suppliers; if the chief’s logic applied to him, it should also affect other potential vendors. Bureau engineers also stressed that Kaiser had neither experience nor a cement plant.70 Kaiser informed Walters that he had already taken steps to enter the industry. Engineers located plentiful limestone deposits along Permanente Creek in Santa Clara County, and Kaiser leased the land with an option to purchase. Kaiser’s assistants also arranged financing from the Bank of America for plant construction, and arranged with railroads for delivery to Redding, which was close to Shasta.71 Kaiser faced a tough battle persuading government officials to take him seriously, but he had one significant advantage. West Coast cement suppliers had established a pattern of submitting nearly identical bids on contracts. Kaiser learned that this practice had alienated Ickes, who abhorred even the hint of price-fixing. A month before bids were opened, Kaiser presented a list of the “monopoly’s” trangressions to Ickes’ office. In addition to its usual activities, the cement trust had allegedly interfered with construction of his cement plant, organizing neighborhood protests against his planned facility, pressuring railroads to hike rates for shipment of Kaiser’s cement, and engaging in other restraints of trade.72 Despite Kaiser’s bold initiative, industry officials were still surprised at the outcome of the bidding for cement at Shasta in the summer of 1939. The West Coast combine came in at $1.41 per barrel, close to negotiated prices on many other jobs. They were shocked when Kaiser bid $1.19 per barrel and tried to convince bureau officials that accepting Kaiser’s bid was far too risky. Bureau officials wavered. Combine leadership included some of the West Coast’s most powerful men: A. E. Wishon of Pacific Gas and Electric; George Cameron,…"

"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."

"In the early 1940s, Kaiser established a research and development laboratory in Emeryville, near Oakland; Howard V. Lindbergh supervised several engineers, who tested products with potential for postwar consumer markets. At “hobby-lobby,” the first Kaiser automobile prototypes and many other experimental products were developed. Kaiser’s engineers came up with dozens of their own ideas, and they tested many more. Inventors of gadgets attracting Kaiser’s interest sent samples to Emeryville, where engineers examined them thoroughly. The handful meriting serious attention then were test marketed. After Kaiser started building houses, it seemed for a time that Lindbergh and his engineers specialized in home appliances. Between 1945 and 1948, the laboratory tested an endless stream of dishwashers, air-conditioners, washer and drier combinations, kitchen ranges and cabinets, lawn mowers, and vacuum cleaners. Only a few products passed muster. In such cases, Kaiser usually bought the rights to manufacture the item, and production was turned over to Kaiser-Fleetwings, a small aircraft plant in Bristol, Pennsylvania, which he had acquired in 1943. In 1945 Kaiser’s manager at Fleetwings, Sherlock D. Hackley, proposed turning out 100,000 dishwashers, featuring almost no moving parts. Those not used in Kaiser Community Homes kitchens would be marketed through two hundred retail stores within a four-hundred mile radius of Bristol. The eastern plant eventually offered four models. Kaiser’s commitment to appliances paralleled his commitment to home construction: high initial enthusiasm followed by gradually diminishing interest. Yet as late as 1952, the organization was still cooperatively producing and marketing many kitchen and bathroom items through Sears, Roebuck, and Company."

"Kaiser left the creation of Kaiser Industries in the hands of financial advisors and highly capable administrators. As an entrepreneur and “business thinker,” Kaiser was essentially an old-school, “seat-of-his-pants” operator. He lived in the realm of big ideas and long-range future possibilities. He was very gifted at delegating authority to subordinates; “detail work” in Kaiser’s companies usually represented significant challenges for even the most gifted individuals."

"on one issue, Kaiser experienced continued frustration. From the start of shipbuilding, he almost never had enough steel plate and other important supplies. To keep vessels rolling down the ramps, Kaiser mastered evasion of bureaucratic regulations.53 In the early fall of 1942, Office of Price Administration (OPA) officials charged him with paying black market prices for steel from a willing supplier in Cleveland. In the ensuing ruckus, columnist Raymond Clapper rose to Kaiser’s defense: “If you have to be a scofflaw to get steel out of the arsenal of bureaucracy, then that’s okay with me. If that’s the way Old Man Kaiser has to get his steel to build ships to carry American forces to the fighting fronts, then I hope the old fellow breaks every law in the books.”"

"With typical exuberance, Kaiser did not wait for final approval to get started. Fourteen months earlier he had commandeered the services of Clay Bedford in setting up the Richmond shipyards. In mid-February 1942, he called chief engineer George Havas and rumbled, “George, you’re going to build me a steel mill.” Havas, as familiar as Bedford with his boss’s style, asked, “What kind of a steel mill?” Kaiser replied, “Oh, just a steel mill, a small one.” Yet from the beginning, Kaiser had no intention of being limited to a “small” mill. The initial RFC loan was a modest $22 million, but Kaiser was back in Jones’ office within weeks, seeking another $100 million for plant expansion."

"Together, they tackled thousands of problems—which Kaiser renamed “opportunities in work-clothes.” Kaiser’s qualities included a vivid imagination, phenomenal foresight, and an enormous capacity for hard work; they comprised his genius."

"His company had achieved success with traditional shipbuilding techniques. Reilly valued his position and did not challenge convention. By contrast, Kaiser was almost contemptuous of traditional methods. His partners had long since despaired of getting him to follow customary procedures. While other partners were used to Kaiser’s propensity for tackling several jobs at once, Reilly was not."

"Kaiser encouraged his people to check constantly with each other and to remain aware of all important developments within their operating divisions. Engineer Louis H. Oppenheim recalled how Kaiser would ask one manager a question; then a few days (or hours) later he might ask another for the answer. Executives failing to maintain contact with peers quickly found themselves outside the decisionmaking process.10 Kaiser never articulated this strategy; he practiced it subconsciously. Ambitious men thus developed versatility, and they faced the challenge of frequent changes in assignments. When a key man was needed on a new job, Kaiser could tap several subordinates capable of taking charge. Above all, Kaiser kept men on their toes."

"Kaiser used the integrity issue to teach lessons in management. A bright, aggressive young man had worked his way up from the mail room to salesman in one company. Unfortunately, greed overcame him and he offered a prospect an “under-the-table” deal. Kaiser called a conference to discuss the violation of company ethics. All present agreed that the culprit should be fired. Kaiser leaned back, lit a cigar, and started talking. He reminded them that the man had a superb record, except for one serious slip. He then turned to the salesman’s superior and said, “…you have had this boy for all these years, you have trained him. You should have instilled in him all of the rights and wrongs and…that you never do anything under the table even if you loose [sic] the contract. If anybody gets fired, you’re the one that should get fired.” While the men sat, stunned, Kaiser said, “Now, let’s go around the table again.” Once more the vote was unanimous. The salesman kept his job and later headed his division. Everyone learned a valuable lesson."

"Motivated in part by concern for workers, Kaiser insisted that they have the most modern tools available. He drove men to their limits with long hours, but he was very interested in lightening physically demanding tasks. As noted, he rigged up wheelbarrows with wide rubber tires, which were easier to push through gravel and mud than old-fashioned, iron-wheel models. He preferred to wear out machinery rather than workers. When he purchased new trucks, he had them outfitted with sideboards so they could carry larger loads. Ordway warned that trucks would break down more quickly under excessive weights. Kaiser replied, “Ord, our profit is in the overload.”"

"Kaiser remained somewhat removed from the day-to-day operations in his many enterprises. He approved creation of Kaiser Industries; when commitments involved tens of millions of dollars, he made the ultimate decision. However, he included promising subordinates in his deliberations. In addition, rising executives and established senior managers made many important operating decisions. The tougher the choices, the more men grew; he tolerated mistakes as long as men learned from them."

"Kaiser benefited tremendously from the dynamics of the process. In selling ideas to his top managers, he consistently refined and sharpened his thought process. Bedford recalled that he sometimes argued both sides of an issue, testing his subordinates’ mental skills. Nevertheless, when he was determined to do something, his decisions sometimes defied logic. Bedford claimed that many top executives, himself included, opposed the automobile venture. But Kaiser was determined to make cars, and they had to make the best of it.6"

"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."

"Kaiser baldly proclaimed his managerial philosophy: “You find your key men by piling work on them. They say, ‘I can’t do any more,’ and you say, ‘Sure you can.’ So you pile it on and they’re doing more and more. Pretty soon you have men you can rely on absolutely. You have an organization that can really get things done.” Ambitious executives adopted the boss’s work habits. William Soule, who joined Kaiser in 1941, recalled that it was “a challenge I could not refuse. I was drawn to it as a moth to a lighted candle.” After an exciting but exhausting three-decade career, Soule reflected on those years: “Fortunately, when I was lucky enough to come into that cone of light I was not consumed by the flame. Singed, perhaps, but not consumed.”"

"Typically, half a dozen top-level men would meet in someone’s office and hash over an issue. Kaiser might order in lunch, after which the informal conference often moved to another office. Kaiser demanded that every man present his views; then a vote would be taken. On occasion he overruled such “ad-hoc” decisions. Kaiser listened carefully to his managers, whether or not he followed their advice."

"In addition to his inveterate optimism and sense of urgency, two other qualities epitomized Kaiser. First, he was never satisfied that he and his men were reaching high enough. Kaiser constantly stressed his goal of creating “more things for more people,” to make the quality of life “a little better for the little guy.” A common thread joining most of his enterprises was an objective of producing vast quantities of goods at lower prices. Second, Kaiser’s future vision was breathtaking. Where many of his corporate peers looked a year or two ahead, Kaiser’s vision was measured in decades."