Sunday, June 18, 2000

Old, new economies reflected in father, son

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From dot-com to manufacturer, both CEOs help drive business world

By John J. Byczkowski
The Cincinnati Enquirer

        At his white Hyde Park mansion overlooking the Ohio River, Daniel J. Meyer opens the door to the June heat in full blue-chip business regalia — dark suit, white shirt, tie.

MILACRON INC. CHIEF EXECUTIVE DANIEL J. MEYER (RIGHT) AND HIS SON, DANIEL B. MEYER, CEO OF GIAGE, (Michael E. Keating photo) | ZOOM |

        This was supposed to be casual. “I'll take my jacket off,” the affable Milacron Inc. chief executive officer says.

        Ten minutes later, his son, Daniel B. Meyer, pulls his Range Rover into the driveway. He, too, is in full business regalia, but this time it's dot-com de rigueur: stone-washed blue jeans and a white polo shirt. The only adornment is the name “Giage Inc.” — the Internet company Dan the son leads — embroidered on the shirt sleeve.

        When these father and son CEOs talk management, what do they talk about? “I know one thing we joke about is dress code,” the son says.

        The old economy/new economy dichotomy doesn't get any clearer than at the kitchen table of the Meyer household. And the two men are finding companies' worlds being pulled uncomfortably toward each other.         Dan the Elder is chief executive of Milacron Inc., a 116-year-old company whose name was once synonymous with metalworking machines. An electrical engineer by training, he took night courses to become a CPA. He has spent 30 years with the company, and as chairman of the powerful Cincinnati Business Committee, is a card-carrying member of the city's establishment.

        During his 10 years as CEO, he pulled Milacron out of building metalworking machines to focus on plastic-molding machines. As Milacron has moved to sell metalworking supplies over the Internet, it's had to appease long-time distributors whom the Internet threatens to bypass. And the company has a big challenge attracting young workers to an unglamorous industry.

        Dan the Younger (we'll call him Junior, though technically he's not) is CEO of Giage, a growing company whose software helps erase the boundaries between information on your hard drive and that on the Internet. He has a bachelor's degree in economics from Princeton, and a Stanford master's in business administration. He spent several years in Silicon Valley before returning to Cincinnati. Giage is the third company he's worked for since leaving Stanford.

        While their technology may be revolutionary, Internet companies are, in a sense, devolving. Investors want to see sales and profits, forcing dot-coms to acquire old-economy values like quality and service.

        The kitchen-table conversation was to be casual, but each man brought a sheet of notes and talking points — Senior's handwritten on notepaper, Junior's typeset from a word processor.

Daniel J. Meyer

• Age: 64.   • Company: Milacron Inc., maker of plastics-molding machinery and metalworking supplies.   • Position: Chief executive since 1990.   • Web site: www.milacron.com.   • Education: Bachelor's in electrical engineering from Purdue University, master's in business administration from Indiana University. Took night courses to become a certified public accountant.   • First PC: IBM PC in 1985.   • Favorite high-tech gadget: A toss-up between his computer and his cell phone.

Daniel P. Meyer

• Age: 34.   • Company: Giage Inc., software. Makes WebSpace, a program that helps organize information in various formats from different locations.   • Position: Chief executive since May 1999.   • Web site: www.giage.com.   • Education: Bachelor's in economics from Princeton University, master's in business administration from Stanford University.   • First PC: TRS-80 in 1979.   • Favorite low-tech gadget: A toss-up between his electric screwdriver and his gas grill.

        “Funny,” Senior says, “when I was 33, I'd worked at three companies by then. You think you'll continue that process, then all of a sudden you find something that turns you on and works, and it's amazing how time flies.”

        It's probably no accident that the son of a CEO becomes one himself. “I see a lot of kids of CEOs sort of free-ride it, and not really do anything,” Junior says. “It's a lot of work. There's always been a notion in our house that hard work pays off.”

        He looks across the kitchen table toward his father. “I always use the example: Whenever we would go for a vacation, we'd always have all this stuff on the driveway and you'd say, "I know, it'll all fit in the trunk.' And I'd be thinking "no way.' And even if it had to be constructed five different ways, that stuff was fitting in the trunk.

        “That's an attitude right? That sort of optimism — we can make it work, we can get it done — I definitely have. And I think that counts for a lot. I think that's a lot of what leadership is about. I think that as CEO of a large company or small company, you've got to be the optimist. You always have to be looking at the future, you have to be cheerleading people through the hard times and the good times, and you've just got to be real optimistic, I think.”         Senior, at 64, finds the work doesn't get any easier. The company's sales and profits both rose in 1999, yet the stock sells for half what it did in early 1998, even as stocks of profitless dot.coms soared. “It's not the flavor of the month,” said Junior, a Milacron shareholder.

        No one would blame Dan the Elder if he didn't think the whole thing was unfair. He won't make excuses.

        “I'd like to think anything that doesn't benefit all the hard work we're putting in comes under the category of being unfair,” he said. “But you can't really be successful in business these days and just say it's unfair. You have to run with the ball.

        “In our case, I think the industrial marketplace has not been shining like the electronic or PC or communication marketplace. ... I think the market is properly evaluating growth, and companies with growth opportunities and proof of this are going to be those winners.”

        Regardless of what the market says about the company, Milacron moves ahead, using the Internet to sell products and cut costs. “All functions of the business have never worked together as much as they are now, trying to apply the new technology to every phase of the business,” Senior said. “It's a good effect. It's very cohesive.”

        Though Milacron's Millpro Web site for ordering metalworking supplies is considered innovative, finding the people to build these systems hasn't been easy.

        “How do you get young people turned on to work in this online system in the old economy, when the real pizazz for growth and publicity is in the new economy?” Senior said. “We pay people in salary and bonus, and some stock options. They pay some salary, some bonus, maybe more stock options.” ×SubHed New work force

        Junior said Giage has no trouble hiring the workers it needs, but the collapse of many Internet stocks this year means the Microsoft ploy — paying below-market salaries while dangling options — doesn't work so well anymore, especially with old-economy companies like Milacron offering higher salaries. And, he's concerned that too many employees don't understand stock options.

        Senior worries that what he has to pay for technology workers is upsetting the company's whole salary structure. For Y2K programmers, “We had to give not just options but restricted stock or sometimes a bonus guarantee to people so they could carry us through the millennium,” he said.

        Get over it, Junior said. “How much are you worried that you just hired somebody in your information organization who's three years out of school and you're paying him more than the 20-year person in purchasing? What's more strategic to your business?” he said.

        Don't knock purchasing, Senior replied. “Purchasing is one of those points where we're making the most productivity gains,” he said. “And that's to a good extent through the Internet and faster contact with the customer.”

        Junior envies Milacron's resources, in particular the capacity to train and school people for new tasks. “We're moving so quickly we can't really invest in the people. It's more on-the-job training,” he said. “We're not necessarily able to make the sort of investments in skill development and retraining and retooling. We're more likely to replace or hire new as our needs change.” ×SubHed Questions of loyalty

        In that, however, Dan the Elder sees another problem: If new-economy companies like Giage can't invest in their own people, when will they ever invest in the community? “It's a real concern,” said Senior, who's a trustee of the United Way and the National Underground Railroad Freedom Center.

        “A lot of the very good, bright, potentially upcoming people are leaving the large companies to start their own businesses. ... These people do not feel as bound in their loyalty to their community as they were with the larger company. It's something that the fund- raising arm of the community has to contend with.”

        Cincinnati can't depend on the Krogers and Procters forever, he said.

        “We need to find other ways to bring these bright young people along to provide more infrastructure support,” he said.

        Junior agreed, but with a qualification. “We're redefining the landscape of the city with this. The time frame is great,” he said. “I don't have the time, but what better time to make an impact? Why wait till it's settled?”

        As CEO of a young company, with employees holding stock options, “I really have to justify my involvement in these things,” he said. “It's not like I can sit back and say our revenues are where they need to be and our customer base is where it needs to be. We're not at that stage of the business.

        “It is pretty delicate. It's not like we have as much depth of talent experience in the organization as we need, so that I as CEO could kind of step back. ... We're just not there as a company.”

        On the other hand, is the Cincinnati's clubby establishment ready for an insurgence of dot-coms? “Start-ups in a couple years could be as large as companies that are in the club today,” Junior said. Look at Silicon Valley: Yahoo! is already worth as much as P&G, Palm Computing as much as Kroger.

        “There's tended to be in our community this sort of threshold of size and longevity ... of what it takes to get in the club, right?” Junior asked.

        “Should we embrace these people or wait 'till they hit the threshold? Should we revise the criteria? You've got people out there who could be very good change agents, (but) I'm not sure they're invited to the party because they don't meet the criteria.”

        Senior could only agree. “That's a good way to look at it,” he said. He said both the city and the state need to do more to support technology start-ups. “I think we need to get up to speed, like some other states are, in supporting these companies and offering the attractions necessary to have a good business environment here.”

        Both men pointed to the effort by the Greater Cincinnati Chamber of Commerce to support high-tech businesses in this region as an indication some leaders locally are beginning to understand the needs of new-economy companies.

        “I'm particularly excited about that initiative because you take the chamber — which is pretty much the embodiment of the old economy in Cincinnati ... you've got at least one vehicle in the city that's looking at running things out, mixing the pot,” Junior said. “There's some light on the horizon.”

       

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