Taking the Right Tack

Yachtsmen who have sailed aboard Rupert C. Thompson's 40-ft. cutter Dorinda know that, come what may, Thompson is as placid as pool water at the helm. While his tense crew struggled to run down a damaged sail and hoist a new one in the midst of a hot race last year, Thompson looked on with barely a word, leaving his men to perform their work unbothered. That is just the kind of ship that "Rupe" Thompson, 59, runs as chairman of Textron Inc., New England's second largest firm and certainly one of the nation's most widely diversified. Once a badly ailing textile firm, Providence-based Textron has abandoned fibers completely and, in an adroitly executed corporate tack, sailed into 65 other profitable lines that have helped raise its sales to $720 million and its profits to $22 million.

Organized into five product groups composed of 30 different companies, Textron sells such diverse items as golf carts, gas meters, roosters, engines for the Agena rocket, mailboxes, a rocket harness that jet-propels the human body, and the helicopters being used in Viet Nam. Last week Textron's hustling Bell Aerospace division, the leading producer of U.S. helicopters, won a record foreign order for 406 helicopters for the West German air force. The award, which will bring in about $65 million for Textron ($65 million more will go to West German firms working on contract), was especially satisfying because Bell edged out United Aircraft, the only New England manufacturer still larger than Textron. Based on the West German order and the company's large backlog, Textron's stock hit a new high of 611 last week, making Principal Stockholder Thompson's 54,000 shares (or 1%) worth $3.3 million.

Rigid Auditing. A longtime Providence banker who was brought into Textron by Founder Royal Little in 1954 as Little's heir apparent, taciturn, trim-waisted Rupe Thompson runs his far-flung company with a staff of only 83 people on one floor of a Providence office building. He allows his divisions to operate almost autonomously, much as at General Motors, a corporation that Thompson has studied minutely and admires mightily. His staff coordinates the company's affairs, channels profits where needed. "I'm all for delegating responsibility," says Thompson, "but I also ask for accountability." That takes the form of monthly profit-and-loss reports, quarterly budget reviews, divisional five-year plans and a performance plan that gauges projects by cost.

Thompson completed the move out of low-profit textiles begun by Royal Little--but the company's growth is by no means completed. Textron has a vice president for acquisitions who scrutinizes at least half a dozen proposals weekly. It is now interested in overseas firms (it has two plants abroad) and in U.S. consumer and industrial lines that would balance the defense division's 35% of total sales. Prospective acquisitions, however, must meet rigid guidelines: $15 million to $30 million in annual sales ("We're not trying to compete with General Motors," says Thompson), well-established lines, no overlap of competition with existing Textron divisions, and enthusiasm for merger. "The management," says Thompson, "must want to be with us."

Six Failures. Textron has not changed course without running aground on a few shoals. It has had six failures among its acquired companies, blames them on its overeagerness to use up a $42 million tax-loss carry-over from its old textile operations. The worst failure was that of the S.S. Leilani, a converted troop transport that Textron bought in 1956. Before Textron finally scuttled her, she lost $6,000,000 cruising to Hawaii. Sailor Thompson and Textron President G. William Miller, 40, both keep a model of the Leilani in their desks. Whenever any Textron executive suggests acquisitions that sound farfetched, they quickly pull it out to silence him.

This file is automatically generated by a robot program, so reader's discretion is required.