"Hi," he says from the door.
I roll my hand, motioning him to come in.
"Just wanted to mention to you that Bill Peach called this afternoon," says Lou. "Weren't you supposed to be in a meeting with him today?"
"What did Bill want?" I ask, ignoring the question.
"He needed some updates on some figures," he says. "He seemed kind of miffed that you weren't here."
"Did you get him what he needed?" I ask.
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"Yeah, most of it," Lou says. "I sent it to him; he should get it in the morning. Most of it was like the stuff I gave you."
"What about the rest?"
"Just a few things I have to pull together," he says. "I should have it sometime tomorrow."
"Let me see it before it goes, okay?" I say. "Just so I know."
"Oh, sure," says Lou.
"Hey, you got a minute?"
"Yeah, what's up?" he asks, probably expecting me to give him the rundown on what's going on between me and Peach.
"Sit down," I tell him.
Lou pulls up a chair.
I think for a second, trying to phrase this correctly. Lou waits rxpectantly.
"This is just a simple, fundamental question," I say.
Lou smiles. "Those are the kind I like."
"Would you say the goal of this company is to make money?"
He bursts out laughing.
"Are you kidding?" he asks. "Is this a trick question?"
"No, just tell me."
"Of course it's to make money!" he says.
I repeat it to him: "So the goal of the company is to make money, right?"
"Yeah," he says. "We have to produce products, too."
"Okay, now wait a minute," I tell him. "Producing products a just a means to achieve the goal."
I run through the basic line of reasoning with him. He lis- tens. He's a fairly bright guy, Lou. You don't have to explain ery little thing to him. At the end of it all, he agrees with me.
"So what are you driving at?"
"How do we know if we're making money?"
"Well, there are a lot of ways," he says.
For the next few minutes, Lou goes on about total sales, and market share, and profitability, and dividends paid to stockhold- ers, and so on. Finally, I hold up my hand.
"Let me put it this way," I say. "Suppose you're going to re-.-. rite the textbooks. Suppose you don't have all those terms and vou have to make them up as you go along. What would be the minimum number of measurements you would need in order to know if we are making money?"
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Lou puts a finger alongside his face and squints through his bifocals at his shoe .
"Well, you'd have to have some kind of absolute measure- ment," he says. "Something to tell you in dollars or yen or what- ever just how much money you've made."
"Something like net profit, right?" I ask.
"Yeah, net profit," he says. "But you'd need more than just that. Because an absolute measurement isn't going to tell you much."
"Oh yeah?" I say. "If I know how much money I've made, why do I need to know anything else? You follow me? If I add up what I've made, and I subtract my expenses, and I get my net profit-what else do I need to know? I've made, say, $10 million, or $20 million, or whatever."
For a fraction of a second, Lou gets a glint in his eye like I'm real dumb.
"All right," he says. "Let's say you figure it out and you come up with $10 million net profit... an absolute measurement. Offhand, that sounds like a lot of money, like you really raked it in. But how much did you start with?"
He pauses for effect.
"You see? How much did it take to make that $10 million? Was it just a million dollars? Then you made ten times more money than you invested. Ten to one. That's pretty goddamned good. But let's say you invested a billion dollars. And you only made a lousy ten million bucks? That's pretty bad."
"Okay, okay," I say. "I was just asking to be sure."
"So you need a relative measurement, too," Lou continues. "You need something like return on investment... ROI, some comparison of the money made relative to the money invested."
"All right, but with those two, we ought to be able to tell how well the company is doing overall, shouldn't we?" I ask.
Lou nearly nods, then he gets a faraway look.
"Well..." he says.
I think about it too.
"You know," he says, "it is possible for a company to show net profit and a good ROI and still go bankrupt."
"You mean if it runs out of cash," I say.
"Exactly," he says. "Bad cash flow is what kills most of the businesses that go under."
"So you have to count cash flow as a third measurement?"
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He nods.
"Yeah, but suppose you've got enough cash coming in every month to meet expenses for a year," I tell him. "If you've got enough of it, then cash flow doesn't matter."
"But if you don't, nothing else matters," says Lou. "It's a measure of survivaclass="underline" stay above the line and you're okay; go below and you're dead."
We look each other in the eye.
"It's happening to us, isn't it?" Lou asks.
I nod.
Lou looks away. He's quiet.
Then he says, "I knew it was coming. Just a matter of time."
He pauses. He looks back to me.
"What about us?" he asks. "Did Peach say anything?"
"They're thinking about closing us down."
"Will there be a consolidation?" he asks.
What he's really asking is whether he'll have a job.
"I honestly don't know, Lou," I tell him. "I imagine some people might be transferred to other plants or other divisions, but we didn't get into those kinds of specifics."
Lou takes a cigarette out of the pack in his shirt pocket. I watch him stamp the end of it repeatedly on the arm of his chair.
"Two lousy years to go before retirement," he mutters.
"Hey, Lou," I say, trying to lift him out of despair, "the worst it would probably mean for you would be an early retirement."
"Dammit!" he says. "I don't want an early retirement!"
We're both quiet for some time. Lou lights his cigarette. We sit there.
Finally I say, "Look, I haven't given up yet."
"Al, if Peach says we're finished-"
"He didn't say that. We've still got time."
"How much?" he asks.
"Three months," I say.
He all but laughs. "Forget it, Al. We'll never make it."
"I said I'm not giving up. Okay?"
For a minute, he doesn't say anything. I sit there knowing I'm not sure if I'm telling him the truth. All I've been able to do so far is figure out that we have to make the plant make money. Fine, Rogo, now how do we do it? I hear Lou blow a heavy breath of smoke.
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With resignation in his voice, he says, "Okay, Al. I'll give you all the help I can. But..."
He leaves the sentence unfinished, waves his hand in the air.
"I'm going to need that help, Lou," I tell him. "And the first thing I need from you is to keep all this to yourself for the time being. If the word gets out, we won't be able to get anyone to lift a finger around here."
"Okay, but you know this won't stay a secret for long," he says.
I know he's right.
"So how do you plan on saving this place?" Lou asks.
"The first thing I'm trying to do is get a clear picture of what we have to do to stay in business," I say.
"Oh, so that's what all this stuff with the measurements is about," he says. "Listen, Al, don't waste your time with all that. The system is the system. You want to know what's wrong? I'll tell you what the problem is."
And he does. For about an hour. Most of it I've heard before, it's the kind of thing everybody's heard: It's all the union's fault; if everybody would just work harder; nobody gives a damn about quality; look at foreign labor-we can't compete on costs alone; and so on, and so on. He even tells me what sorts of self- flagellation we should administer in order to chasten our- selves. Mostly Lou is blowing off steam. That's why I let him talk.