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Article | March 31, 1998
New definition for 'buying in'
These days, manufacturers need a whole new dictionary to understand all the latest trends preached and proselytized by the gurus of management. "Asset redeployment" or "optimalization" have come to replace "downsizing" or "re-engineering" as terms that denote a plan (ideally) that usually shifts jobs or "labor" off the balance sheet.
Index of competitors? Not long ago PW participated in a focus group with readers at a major food company. We gained valuable insights into specific reader needs and on page 123 you'll see evidence of at least one of the needs we're trying to meet. This month we introduce our monthly Company Index a regular department that will list as many manufacturers that we write about as we possibly can. Not only do we include an alphabetical list we'll also have the page reference to the news report or feature article in which they participate. Except for very large issues the Index will be regularly found on the second to last page of each issue not including the back cover. During the focus group we learned that one of the more powerful incentives to reading an article or story was if it was about a competitor. Here's where you can find out if we're writing about your competitors and where the article is located. We hope you find it useful.
Packaging World has also examined in a statistical way how "outsourcing" has begun to affect the companies about which we write. In some instances we've also reported how companies have elected to use "insourcing" as a way to shift certain types of responsibilities and functions from the manufacturer's ledger to those of another company-often one with a long-term supply contract. All too often it appears these strategies are targeted to improve only the price of the common stock of a publicly traded company. Some of these shifts may be sound decisions. Others though seem like quick fixes by executives whose bonuses are paid in stock options. Thus the higher the share price the greater the bonus. One company however is returning the horse to its rightful position before the cart. Wellman Inc. (Shrewsbury NJ) has announced an aggressive policy that interweaves management's future with long-termgoals. This resin manufacturer and recycler of plastics is requiring its management and its board of directors to take a significant monetary stake in the company. It has developed a plan that will force its policy-making directors and operating management staff to tie their own financial futures to the results of their company decisions. In general the Wellman plan requires directors to own company stock equivalent to five times their annual directors' retainers. The company also terminated a retirement plan for directors. In turn Wellman's 11 senior executives must own stock valued at up to four times their base 1998 compensation. In other words the company management individually and together will have very significant financial reasons to be concerned about overall company performance. For any part of the packaging business this is definitely "putting your money where your mouth is." This is an especially gutsy move for a company subjected to raw materials prices that can be as volatile as recycled plastics. It reminds us of the entrepreneurial spirit that so many companies displayed in their fledgling years. "We believe increased ownership of Wellman common stock by officers and directors will more closely align the interests of management and stockholders and further motivate officers and directors to manage for long-term growth and profitability"says Thomas H. Duff Wellman president CEO and also a director. Wellman's stance requires a major dose of courage. Each of us may embrace differing concepts of management but when someone seriously risks his or her personal financial future few decisions will be taken lightly. But isn't that the way it should be?
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