Perhaps the most surprising thing about Mac Baldrige is that he usually mumbles. To make matters worse, his office–built during the presidency of a man who had been an even more outspoken secretary of commerce, Herbert Hoover –is about the size of a basketball court and like most basketball courts has poor acoustics. So most visitors end up sitting tilted like satellite dishes to pick up the flow of words from across his desk.
Psychoanalysts might listen to the low-voltage transmissions and picture someone who, if not ill at ease, at least would rather work quietly behind the scenes than in the limelight. They would be right. Baldrige boasts that he didn`t hold a get-acquainted press briefing until six weeks after he took office in 1981. He also is ”not too keen,” he says, ”on the chicken-and-dumplings circuit,” his term for Washington`s nightly round of dinner parties.
But there clearly is more at work here than shyness or a taste for solitude. Baldrige`s motto, aides are quick to say, is, ”Underpromise and overdeliver.” And, says Heminway Merriman, a former business associate, ”Mac once said, `I speak really low so people will have to pay attention.` ”
For much the same reason, Baldrige bristles at the bureaucratic penchant for vague and stilted writing. ”Who will follow you,” he asks his Commerce charges, ”if you write, say, that you hopefully intend to optimize your interface with departmental inputs as per the plan enclosed herewith?”
He forbids Commerce employees to use such fuzzy words and redundant phrases, urging them instead to write ”like a cross between Ernest Hemingway and Zane Grey,” the popular Western writer. One inspired ex-employee even went so far as to program some word processors to light up in indignation if their weak-willed users succumbed to the temptation of a fatuous phrase.
”He`s a very practical guy,” Merriman says. And despite Baldrige`s forceful views, Merriman adds, ”he was always willing to compromise if someone could convince him of their position.”
Friends say perhaps the best example of his mediating skills as well as of his pragmatism came when he helped ease racial turmoil in Waterbury, Conn., in the late 1960s. At the time, Baldrige was the chief executive of Scovill Inc., then one of country`s leading makers of brass products and the town`s biggest employer. He was also chairman of an advisory board to the mayor.
Like many old industrial cities, Waterbury, which lies in the Naugatuck Valley in central Connecticut, prospered in the first half of the century. During World War I, for instance, Scovill and two other brass companies drew workers from all over the country to make cartridge shells for the military.
”People say there wasn`t a cold bed in Waterbury,” says Merriman, a former Scovill vice president, referring to round-the-clock shifts, ”because when one guy would go to work, another would jump in.”
By the late 1960s, however, employment had tapered off. Many poor blacks couldn`t find work, and like their counterparts elsewhere, black leaders started agitating for more jobs and better schools and housing.
As tensions escalated, Baldrige made a surprise phone call one day to Hubie Williamson, one of the city`s fieriest black leaders, and invited him to his office at Scovill`s 100-acre manufacturing complex at the edge of the downtown area.
”I was a little apprehensive,” says Williamson, who is now 48 and heads the Pearl Street Community Center in Waterbury, which sponsors educational and sports programs for mostly low-income children. ”I was wondering what he wanted from me. But he was very soft-spoken and very folksy, and five minutes after I was in his office, I said to myself, `This guy is not trying to throw me a curve ball.` And when I left, I thought, `He reads the Waterbury paper every day; he knows what`s going on. What he really wants me to do is turn the pages for him and give him a sense of the (black) community.` ”
Over the next few months, Williamson says, he gave Baldrige regular soundings on the mood in the black neighborhoods. Baldrige, in turn, started hiring more blacks at Scovill and privately pressed the black leaders`
grievances at City Hall.
The relationship climaxed when the Rev. Martin Luther King Jr. was slain in Memphis in April, 1968. As Williamson tells it, he and other black leaders huddled and decided to call for a one-day closing of all of Waterbury`s industrial plants in honor of the civil-rights leader. Baldrige responded with a counteroffer.
”He said, `If you want us to, we will shut Scovill down,` ” Williamson says. ” `But we stand to lose thousands and thousands of dollars if we do that. If you let us stay open, we will hold a moment of silence to honor Dr. King, and we`ll donate $50,000 to a job-training program.` ”
Williamson says the black leaders talked again, ”and we decided that the best posture was to take the $50,000. We felt it was the best way to continue our work toward Dr. King`s goals.”
The next day brought another call from Baldrige, asking Williamson if he would like to go to King`s funeral in Atlanta in a Scovill jet. Baldrige also invited five other black leaders–and surprised some of them by going with them. For Williamson, the high point of the day came when he spotted Baldrige standing alone at the funeral and he went over to talk to him. ”He took off his suit jacket, pulled his tie down to where it was all but gone and rolled up his shirt sleeves,” Williamson says, ”and he and I walked for 2 1/2 hours away from the crowd and just talked about what was going on in Waterbury.”
The upshot of Baldrige`s efforts, civic leaders say, is that the racial turmoil didn`t get as bad as many had feared it would. A black man was wounded by a policeman in a controversial incident, and there was some rioting, including one four-hour disturbance in which a police car was bombed, a number of storefronts looted and 16 people injured. But there were no killings, and the rioting never reached the intensity that it did in some cities.
Still, says Williamson, a big man with a gray-specked beard, there is one thing that bothers some black leaders about Baldrige, the man who raised much of the money for the Pearl Street center: How can he serve in the Reagan administration, which has often been accused of insensitivity to blacks?
Baldrige, a lifelong Republican, says that he got involved during the 1960s because he ”felt there was actual discrimination,” and adds, ”There`s obviously still discrimination in this country.” But echoing the President`s position, he says, ”I think we`ve about run out of laws to pass” to ensure civil rights. A better answer, he contends, is to try to create more general economic prosperity and more jobs.
President Carter`s first commerce secretary, Juanita Kreps, used to joke that her department was like Noah`s Ark, except it had only one of everything. Besides playing key roles in trade promotion and oversight, the bureaucratic colossus–some 32,000 workers–embraces agencies ranging from the Census Bureau, which tracks the country`s population, to the National Weather Service. Others collect and analyze economic data, approve patents and measurement standards, chart the seas and skies, promote tourism and aid minority businesses.
As a man who prides himself on his management prowess, Baldrige hasn`t been able to resist trying to tame what many in Washington felt had become an unwieldy monster. He has clamped down on a number of agencies, and longtime Washington lobbyists credit him with bringing a little more order to the chaos.
But like many of the 25 other men and women who have run the department since it was separated from Labor in 1913, Baldrige has focused most of his energy on trade issues and on his role as industry`s spokesman at the White House.
Aides say such a path was natural for Baldrige, who started his career in manufacturing in 1947. His first job wasn`t very glamorous: He poured iron for two years at a mill in Cleveland. Nor was his second: superintendent of the foundry`s machine shop.
”I remember using a whole keg of soap washing his socks–and wondering what I`d gotten myself into,” says his wife, a banker`s daughter who quit her secretarial job at a New York publishing house to join him in Cleveland after they married in 1951.
It didn`t take Baldrige long, however, to climb out of the grime and into middle management. As his wife remembers it, Baldrige applied for and won a two-year job in India. But before he could accept it, his firm, Eastern Co., which made iron and steel products, asked him to take over a ”sick” plant in Syracuse, N.Y. ”He thought that if he wanted to work in the foundry business, his name would be mud if he turned down this opportunity,” she says, so they moved to Syracuse in late 1951.
Six years later Eastern promoted Baldrige to vice president and moved him to its headquarters in Naugatuck, Conn., four miles south of Waterbury. He became company president in 1960.
Baldrige didn`t make his mark on the business world, however, until he moved once again–up the road to the much bigger Scovill two years later.
When he joined Scovill as executive vice president, the company, founded in 1802, made brass products, Hamilton Beach home appliances, tire valves and clothing snaps and zippers. It was fat, stodgy and marginally profitable. After he was named president and chief executive in April, 1963, Baldrige immediately began reshaping the operation, which then had sales of about $170 million a year.
One of the first things he did, he explained in the company`s 1966 annual report, was to get rid of management committees to make sure each decision was made by ”the man farthest down in the chain of command who is able to make it.” This reflected his belief, he said, that ”the fewer people you have involved in running anything, the faster the job gets done.” He also stepped up cost-cutting efforts and started building low-cost plants in the South and overseas to stay ahead of foreign competitors.
By the time he resigned as board chairman in early 1981 to take the Cabinet post, he had sold Scovill`s fading brass division, sharply expanded its other divisions and bought several companies that make home-construction products, including Yale locks. In all, stock analysts say, he had transformed Scovill into a lean and solidly profitable company with nearly $1 billion in annual sales.
As Baldrige sees it, his chance to view industry from bottom to top has been crucial to the development of his strong trade views and his
determination to help get American manufacturers back on track.
As an old factory hand, he says, he can`t fail to see one of the country`s biggest trade problems: ”We`re being outcompeted on the factory floor. The Germans, the Japanese put their best people in the factory, so at least they understand what it takes to get quality and low costs.”
But in the U.S., where finance and marketing are seen as the more glamorous specialties, ”Most businesses have been too shortsighted to put their best people in their factories. And I`d say that business schools haven`t put the kind of attention they should on teaching competitive manufacturing techniques.”
The competitive problems, then, are ”the fault of management,” he says, ”not of labor or any other convenient whipping boy.”
He stands up and walks a few feet along the wall behind his desk, stopping in front of an old photograph of himself and 15 young men who worked for him in the machine shop in Cleveland. ”A distinguished group of iron and steel executives,” he says, calling out the laborers` names–Al Witkowski, Joe Kostar, Joe Dvorak, ”Sea Biscuit” Svinski–in a kind of ethnic chant that conjures up images of the burly men who made American industry great.
”Yeah,” he responds with disgust, when asked if today`s business-school graduates fail to measure up. ”They all want to run up to the ivory tower and play around with computers. They all want to be consultants, when they haven`t had the experience they need to get good judgment.”
Baldrige says that at Scovill he also got a close look at the other side of America`s competitive problem–the growing willingness of foreign governments to intervene in the marketplace to aid their own manufacturers.
When he took over at Scovill, the world was still basking in an era of relatively free trade, a prosperous period that began shortly after World War II. With much of Europe and Japan in ruins, the U.S. had become the uncontested powerhouse of the world economy. In search of markets and hoping to keep its vanquished foes leaning Westward politically, it began pushing other countries to expand their trade ties.
The main focus was on eliminating tariffs and duties, surcharges that countries can tack on to the cost of imported goods to keep them from selling for less than homemade products. And for nearly two decades, round after round of trade talks produced cuts in tariff levels and maintained the ideal of free trade, which holds that everyone would be better off if each country focused mainly on making goods for which it has the largest natural cost advantage.
But by the late 1960s and early 1970s, Japan and Europe had rebounded economically to the point where both wanted a bigger share of world trade. Japan needed to boost its exports to earn money to pay for its massive food and energy imports, and most European countries were having trouble creating jobs.
As a result, Japan and the European Common Market stepped up their use of export-financing subsidies to ”dump” goods in the U.S. and other markets at prices well below their true cost. Japan also started pumping more money into research subsidies to develop new export industries. And it joined a number of developing nations in expanding use of nontariff barriers–such as stringent quality-control standards on imported goods–to protect its businesses.
Baldrige says he personally ran up against such barriers when Scovill tried to extend its home-appliance sales to Japan in the 1960s. ”It was clear that the Japanese tried one thing after another to keep from giving (our products) certification,” he says. After spending five years trying to meet changing Japanese specifications, Scovill gave up.
He says this was especially frustrating to him because as an Army captain stationed in Japan after World War II, he had watched Gen. Douglas MacArthur lay the seeds for these practices by setting up ”a whole web of protectionist measures” to give Japanese industries a chance to rebuild. ”But what was never put in the MacArthur program was a stop level,” he says.
Concern about such tactics increased throughout the 1970s, as the car, steel and other U.S. industries fell victim to foreign advances. To be sure, not all the foreign goods were subsidized, and in many cases, superior quality was the key to their appeal. But by the time Reagan became president, many Americans were outraged that Japan, particularly, seemed to be reaping huge profits and taking jobs from relatively open U.S. markets while restricting sales of many American goods to its own consumers.
Consequently, Baldrige says, he quickly set his sights on two main goals: prodding U.S. industry to shape up and helping it to regain what he calls ”a level playing field.”
There is one other reason that Baldrige zeroed in on trade issues: The President had promised to expand the secretary`s authority in that area.
”Mac made it clear that if he came to Washington to do the Commerce job, it ought to be the premier position for formulating and implementing trade policy,” says one senior administration official who was involved in the Cabinet selection process. ”The President agreed, and he told Mac, `You`re going to be the top guy on trade.` ”
Baldrige, however, says he`s ”not sure that No. 1 on trade is the right description” for what Reagan promised him. But he agrees that ”what we talked about was the need for a general consolidation of trade authority.”
Historically U.S. trade power has been splintered among a number of agencies. Prestigious departments like State, Treasury and Defense and plodders like Agriculture and Transportation all have had some say over specific issues affecting trade. These have ranged from the size of foreign-aid shipments to controls on the sale of defense-related goods.
In an effort to give the nation`s manufacturing woes more attention, President Carter convinced Congress in 1980 to pass a law shifting powers to police foreign dumping practices from Treasury to Commerce. But the law also made it clear that the top gun on trade policy was to be the U.S. trade representative, who runs a tiny agency charged with fighting efforts by other countries to close their markets to U.S. goods.
So Baldrige, with Reagan`s blessing, immediately began drafting a plan for a new Cabinet-level trade department that would include the trade representative`s office and the economic agencies at Commerce. He also jumped into the battle with Stockman over export-financing subsidies and joined Drew Lewis, then transportation secretary, and William Brock, Yeutter`s predecessor as U.S. trade representative, in pushing the White House and the Japanese government to agree on ”voluntary quotas” for Japanese car imports.
Baldrige acknowledges that the quotas, which went into effect in 1981 and lasted four years, were protectionist to a degree that he normally wouldn`t support. But, he says, he felt the administration had no choice if it wanted to avoid more drastic solutions. ”I was looking at the fact that there were at least 20 bills in Congress that had legislative quotas that were much more severe,” he says. ”And if it`s legislation that Congress passed, it gets close to impossible ever to take it off.”
Stockman, of course, was on the other side of the fence in that fight, just as he was again in 1982 when Baldrige worked out a deal to limit European steel imports after Commerce investigators found that the products were being dumped here.
Stockman`s argument, basically, was that it was silly for the Europeans to sell their steel for less than it was worth. But if they were stupid enough to do it, then American consumers should welcome the price break.
Baldrige counters that Stockman`s arguments were right, as far as they went. ”But,” he says, ”they don`t also add up the fact that those practices put American workers out of jobs by transferring unemployment from the country that`s doing the dumping or subsidizing to the United States. And with the people unemployed, you`re not going to have consumers to benefit from lower prices.
”Business must have a way, a remedy, to be able to fight unfair trading practices, or we wouldn`t have free trade,” he adds. ”Now to me, that`s a simple, logical, inescapable fact. To a great many others, it is not.”
Still, Baldrige and Stockman weren`t always at odds. Stockman no doubt was pleased in mid-1982, when U.S. negotiators, using Baldrige`s hard-won funding for the Export-Import Bank as leverage, convinced other countries to cut back temporarily on export subsidies. Stockman also supported Baldrige that year when he got Congress to pass a law easing antitrust restrictions on small companies trying to band together to sell goods overseas.
But 1982 was also the year that Baldrige`s luck started giving out. For one thing the nation`s trade problems suddenly turned worse as the world slid into a recession. A sharp increase in the federal budget deficit, an unintended byproduct of the administration`s generous tax cut, kept interest rates high and pushed up the value of the dollar. This made U.S. goods more expensive overseas and caused the competitive woes to spread to other industries, such as agriculture, that had thrived in the 1970s.
Another disappointment came when Reagan dropped Baldrige`s proposal for the new trade department from that year`s legislative agenda. The White House was battling Congress on several other issues and didn`t want to dilute its efforts. But officials say the proposal also fell victim to intense turf battles among Cabinet members.
State Department leaders vigorously opposed the idea because they felt it could tilt the balance of power that normally has subordinated trade issues to foreign-policy concerns. Others feared that melding the trade representative`s office, a ”neutral” agency with no built-in constituency, with the business- oriented Commerce units would reduce its traditional commitment to free trade. ”To some extent, people always are inclined to say the Commerce Department is protectionist because it represents the view of business,” explains Treasury Secretary James Baker.
The issue festered for nearly three years, and Baldrige found it harder and harder to get other Cabinet members to listen to his views. He managed to do such things as convince the Defense Department to ease controls on high-technology exports, but he couldn`t sway other top officials from their cherished belief in leaving trade markets alone to work their will.
Baldrige became frustrated, aides say, because as the budget deficit grew and the dollar`s value soared, he realized that the country`s mac-
roeconomic policies had become even more damaging to American traders than the increase in unfair foreign tactics. But he also got nowhere in urging the White House to intervene in currency markets to drive down the dollar`s value. The fight over the reorganization plan also strained Baldrige`s relationship with Brock, who had been his main ally in seeking stronger trade action. That, says one high-ranking official, left Baldrige ”a lone wolf.”
Finally, in early 1985, the Cabinet formally took up Baldrige`s proposal and junked it by a vote of 13-1 with Reagan`s concurrence. The high-ranking official, who asked not to be named, says Baldrige ”was pretty bitter about that for a while.” Baldrige admits to feeling some frustration. But like a good soldier, he shrugs his shoulders and says, ”We all came down here to help the President do what he thinks is best.”
He is less charitable, however, in describing what he learned in some of his fights with more ideological Cabinet members. ”There`s a lot of overeducation and underexperience floating around Washington,” he snaps.
