How business, doctors and journalists prey on your food anxieties I

The folks at United Dominion Industries
knew what they wanted to do, but they
went about it rashly <strong>and</strong> foolishly .
Staying power
By Neil Weinberg
Wllliam Holl<strong>and</strong>, chlef execctlve of Unl'ed Dominion Industries
"The debt was like a disease ."
THE SAGA of United Dominion Industries
is a story of a company that
embarked on a neupath without
having a proper map . This $2 billion
(sales ) company was almost destro}ed
by a nrairagement too eager to mok e it
into faster-growing <strong>business</strong>es .
"I learned that when cou grow
through acquisitions, a sound strate-
R, alone isn't enough . Fou also need
financial staving power." So savs William
Holl<strong>and</strong>, the company veteran
eho has headed United Dominion
since 1986,
Now headquartered in Charlotte . .
N .C ., United Dominion is an outgrowth
of an old Canadian consuvction
company, Dominion Bridge . It is
4146 owned by Canadian Pacific Ltd .,
which plans to unload its stake bv
year-end .
Bogged dokk n in socialism, the Canadian
economv seemed to be going
nowhere in the 1970s, so United
Dominion's then chairman, Kenneth
Barclay, used borrowed ntoney to buy
more than a dozen U .S . manutacturing
outfits, doubling United Domim
ion's sales to orer S 1 billion by 1981 .
But with the 1980-82 recession,
United Dominion began to sink under
its acquisition debt . In 1986, the
year Bill Holl<strong>and</strong> repLaced Barclay as
chief executiM the company, burdened
with S50 million in interest<strong>and</strong>
preferred dividend payments, lost
S73 million .
"The debt was like a disease," saes
Holl<strong>and</strong>, who .ras forced to r.lise cash
by selling several of the best <strong>business</strong>es
Barclay had acquired . These in-
= cluded machine tool maker Giddings
-& Lewis ; United Dominion sold it to
= public investors for 5140 million in
' 1989, <strong>and</strong> it is currently worth $600
million .
But shrinking the company saved
it, <strong>and</strong> by 1989 United Dominion's
debt was equal to 13% of capital,
down from 60% four years earlier . It
has been profitable ever since .
Having injected some sraving power
into United Dominion, Holl<strong>and</strong>
began acquiring again, but this time
in a more disciplined fashion . He
would avoid excessive debt <strong>and</strong> would
apply three strict criteria : An acquisition
must be first or second in its
markets, must have the potential to
increase earnings immediately, <strong>and</strong>
must in some %vav mesh with United
Dominion's other holdings .
The Marlev Co . passed the tests . A
top maker of such industrial equipment
as cooling towers <strong>and</strong> petroleum
pumps, Kansas Citv, Mo .-based
Marlev was purchased from Kohlberg
Kravis Roberts in 1993 for S356 million
. Holl<strong>and</strong> quickly reduced the
ptvchase price by selling two of 94arley's
six <strong>business</strong>es for nearlv $20
million .
Holl<strong>and</strong> also cut bfarlcv's annual
operating costs S8 million by folding
its headquarters into United Dominion's
<strong>and</strong> pushed through a price
increase at Sfarley Pump .
After btq'ing bfarley in 1993, United
Dominion last vear increased its
operating income 24%, to S62 million
. With joint ventures in China,
Indonesia <strong>and</strong> Malavsia, .9larlev gives
Holl<strong>and</strong> a strong start in his plan to
push United Dominion's foreign
sales front less than 20% of the total
last year to 35% by 1999 .
In 1993 Holl<strong>and</strong> sold United Dominion's
original construction compan},,
.biontreal-based Dominion
96
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http://legacy.library.ucsf.edu/tid/agf97d00/pdf
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