The Rescue

In February 1962, Roger Lewis took over as president of General Dynamics, a sorely troubled company. Within a month, he flew from headquarters in Manhattan to the company's unprofitable and stubbornly independent Convair subsidiary in San Diego, where he boarded up the executive dining room, sold off the fleet of a dozen company limousines, and transferred the executive barber. Says Lewis, now 52: "That convinced them we meant business."

Under this we-mean-business management, the nation's fourth largest defense contractor (after Lockheed, Boeing and North American) is behaving like a lithe and freshly revitalized giant. In Miami last week, General Dynamics showed off the first scale model of its TFX adjustable-wing plane, for which orders may reach as high as $8 billion in the next five years, and in Washington the company was awarded a $237 million contract to build the Centaur mooncraft. In Quincy, Mass., it laid the keel for the first vessel--an attack submarine--that it will build in the shipyard it bought last January from Bethlehem Steel. In Groton, Conn., General Dynamics launched its first civilian submarine, a research sub for the University of Pennsylvania. It also broke ground for a lime-processing plant in Detroit and delivered a 160-passenger CL-44 turboprop plane to Icelandic Airlines. Altogether, General Dynamics has rebounded from a 1961 loss of $143 million--the largest deficit ever suffered by any U.S. corporation--to a 1963 profit of $50 million on sales of $1.4 billion.

"That's All Gone." Most, but not quite all, of the credit for this remarkable comeback belongs to Lewis. He benefited from the courage of his predecessor, Frank Pace, who wrote off all General Dynamics' losses in the year they occurred instead of stretching them out. That meant the company was unburdened of past losses and that Lewis began with a $143 million tax credit. But the tax credit has long since been exhausted, and the new chief has shown a big order of courage and savvy of his own. Lewis cut back the Convair division, shifted some of its projects and executives to other divisions in the company and fired more than a few. With his aides, he analyzed each one of the company's 100 major programs, from missiles (Mauler, Redeye, Terrier, Tartar) and planes (B-58, CL-44) to nuclear reactors and metal forming devices. He speedily closed down production of Convair's money-draining civilian jetliners, but put stronger emphasis on the TFX.

Most of all, Lewis restored central management to a company whose dozen divisions once traveled in separate directions. Says he with a smile: "We used to have a so-called management board--but, oh boy, that's all gone." Lewis, who likes to chop wood on weekends to release some steam, hacked away heavily at the loose hierarchy and put his mark on almost every important activity. Though many business theorists contend that a top executive should have no more than eight men reporting directly to him, Lewis deals face to face with 24. He writes no memos, and his company has no operational manuals or organizational charts. "Corporate policy," says he, "is formulated in conversation with the doers."

Sacrificing $1,425,000. In Lewis' book there are three kinds of executives --brilliant, mediocre and those in between. The job of the chief executive, he believes, is to inspire the in-betweens to rise to brilliance. At General Dynamics, he does it by grinding out a 75-hour week that inspires other executives to work almost as hard, and by running the company with a shirtsleeved informality. He has lured high executives away from such companies as General Motors and General Foods. Believing that "cross-fertilization" increases efficiency, he has also transferred 850 scientists and engineers to different divisions. Says Lewis: "If you shift a man from submarines to aircraft, pretty soon you'll find that two and two makes five--in productivity."

A Stanford economics graduate (B.A., '34), Lewis started as a metal cutter at Lockheed, rose during the war to boss of sales but quit in 1947 to join Canadair, a General Dynamics subsidiary. He was an Assistant Secretary of the Air Force when Pan American World Airways President Juan Trippe hired him in 1955 as an executive vice president. When he left Pan Am to join General Dynamics, he not only gave up an odds-on chance to succeed Trippe some day but made a tremendous financial sacrifice: he forfeited stock options that by now would have brought him a paper profit of $1,425,000. Last year, at General Dynamics, he earned a highly taxed $154,750 and picked up no options.

Lewis obviously delights in his job. "General Dynamics' history goes back 65 years," he says. "Thirty years from now, I hope someone will say, 'Brother Lewis didn't goof this thing. He kept this thing going.' " More than that, Lewis has succeeded in the most exhilarating job an executive can have: rescuing a mighty company.

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