The glass company’s cash hoarding moves and folksy history are a lesson for everyone.
FT: [Wendell] Weeks, 49, is chairman and chief executive of Corning, a 157-year-old company set in the idyllic rural enclave of the same name in upstate New York. Originally a maker of glass for applications such as cookware and light bulbs, the company has an impressive record for innovation…
But, as the global slowdown threatens to disturb even this tranquil outpost of corporate America, Mr Weeks appears fairly relaxed. He believes that a combination of the close-knit links in the town and his extreme aversion to risk may provide a defence mechanism.
Corning’s top management is unusual, being based in a small community where everyone knows each other. Mr Weeks says this creates a set of inbuilt checks that prevent the company’s taking extreme or misguided decisions. His family history reinforces his own attitude to risk – he has painful memories of the collapse of his father’s small business…
“My father set up a small business [designing and installing plumbing systems for households]. The business failed. It was not because of my father’s lack of technical competence. It was because he overextended the business financially. As a result, we went through a very hard time as a family. That’s why I took up accountancy. I thought to myself, ‘If there’s one thing I’m going to do, it’s to understand how money works’.”
His conservative accounting principles are one reason, Mr Weeks says, why Corning has hoarded cash – even in the good times of the early years of this decade. It has resisted the temptation to borrow for big acquisitions or plant investments.
Corning’s debts of $1.5bn are more than balanced by $3.1bn of cash. The company has a good chance, he says, of maintaining this healthy ratio even if a severe downturn bites. “We are part of the economy like everyone else, so it’s impossible to say we won’t be affected. But over the next three to five years, we have a clear runway [in terms of providing cash to creditors] while we are looking to a range of different end markets to provide a stream of revenue growth.”
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