Thanks for the Job, Mr. Rumsfeld

John Ransom
Posted: Jan 04, 2014 12:01 AM
Thanks for the Job, Mr. Rumsfeld

When I was in high school, one of my part-time jobs was driving a hotel van to and from the airport for the Howard Johnson in Skokie, Illinois, a suburb just north of Chicago. It was a great job. I got to know a ton of different types of people.

To this day, it’s the second favorite job I ever had.

One type of person that I got to know driving to and from O’Hare International Airport were pharmaceutical sales reps from a company, also headquartered in Skokie, called Searle Pharmaceutical.

Searle, like a lot of companies in the mid-1970s had fallen on hard times, relatively speaking. Profits were hard to come by, the regulatory burden was incredibly draining, and the hostility to business from government was intense.

The company was rescued by former- White House Chief of Staff, former- NATO Ambassador, and former-Secretary of Defense, Donald Rumsfeld, who was tapped by the Searle family to turn things around.

By the time I was old enough to work, not only had Searle’s stock price surged under Rumsfeld, but the company was contributing to the community in many ways, including support jobs, like mine, driving between the Howard Johnson and the airport.

To some extent, what Rumsfeld did at Searle became the textbook for how to save an ailing public company, and ailing communities too.

Rumsfeld first came to Searle in 1977, after leaving public service in the wake of President Ford’s defeat. He had served Ford as both a chief of staff and Secretary of Defense.

The Searle family was looking for someone who had both the executive skills and the public relations savvy to turn the ailing family business around. The company had invented a new artificial sweetener in 1965 called aspartame, but the FDA had not approved the sweetener for sale. Patents had expired on drugs that Searle developed and they now had to compete with generics. It had been years since the company had developed new drugs for commercial sale.

Searle also warehoused a ton of money in Puerto Rico, and a sizable portion of the company’s earnings came from the tax advantages realized in keeping the money out of the continental United States. But by the time Rumsfeld took over, the tax advantages of offshore warehousing had been played out for the company.

By 1977 the company’s stock had moved down from $25 to around $6 per share amid congressional investigations of the pharmaceutical industry’s safety protocols in releasing new drugs to the public. The investigations were holding up FDA approval of aspartame with a blanket hold put on all Searle drug applications.

Daniel Searle, the company’s patriarch, knew Rumsfeld from the politician’s time as congressman representing Illinois’ 13th Congressional District, which included about 100,000 voters from Chicago. Rumsfeld, first elected in 1963, served as the 13th District’s congressman until 1969, when he left to be an undersecretary in the Office of Economic Opportunity. From there Rumsfeld moved on to become U.S. ambassador to NATO before taking up duties as Ford’s chief of staff.

So when one of the richest men in Chicago was looking for someone to make him even wealthier, Rumsfeld was a well-known quantity to Searle. Searle had the added advantage of being a Navy man, as was Rumsfeld. Rumsfeld was a pilot and flight instructor in the United States Navy from 1954 to 1957.

Rumsfeld says that bad news never travels up the chain of command, but rather down the chain. In an effort to identify problems at Searle, and get the bad news from down the chain of command, he gave investment analysts unfettered access to his company, with the proviso that they report back both the good and bad news that they found.

The subsequent improvements in process and workforce started paying off immediately.

Rumsfeld also went to work bringing home the offshore money, which he put into research and development. He sold off non-performing subsidiaries, and cut the workforce by as much as 60 percent.

Not content to cut, Rumsfeld also devoted $100 million in repatriated money to the drug-maker’s research pipeline in a way that mirrors today’s pharmaceutical business model. Today, biotech and pharmaceuticals live off of their research pipeline and distribution networks, just as Rumsfeld engineered at Searle.

By 1981 the company had finally secured approval from the FDA for the marketing of aspartame under the name NutraSweet. The company had also formed what became known as Pearle Vision Centers, thereby diversifying their portfolio of health care products.

In 1980 Rumsfeld was named Outstanding Chief Executive Officer in the Pharmaceutical Industry by the Wall Street Transcript. In 1981 he received a similar award from Financial World.

I was barely aware of any of this at the time that I was driving my van between the airport and the Howard Johnson. I didn’t even know then what I know now: Rumsfeld and I both graduated from the same high school, New Trier, and he was born in Evanston, Illinois, the town near Skokie where I grew up.

I found these facts out only as I prepared to interview him for an “Evening with Donald Rumsfeld” at the Atlanta History Center sponsored by Talk 920 AM WGKA. There were close to 400 people there for the event.

These facts were impressed upon me as living things when a man showed up while Mr. Rumsfeld and I spoke back stage for an hour before the public interview. The man was a classmate of Rumsfeld’s, one year back, and had a picture of the football team that they both played on. It was clear from the back and forth that Rumsfeld not only remembered people he went to high school with, he was still in contact with many of them.

He and I spent another hour and half together, mostly with me asking questions, and he answering on stage. The crowed was wowed, as was I.

But in all that time there’s one thing I forgot to say to him. Thanks for the job, Mr. Rumsfeld.