TOWSON -- When Nolan Archibald left Beatrice Cos. Inc. in the summer of 1985 to become president of Black & Decker Corp., it was a bit like jumping out of the fire and into a waiting frying pan.
As a senior vice president at Beatrice in charge of most nonfood units, Archibald left a company whose executive ranks had been cut under the dictatorial rule of then-chairman James Dutt.
When he took over as the new president and chief operating officer at Black & Decker, Archibald walked into a company that not only makes electric frying pans but also was about to announce a $158.4 million loss.
By Archibald's count, though, he had successfully turned around five other losing operations. So he was less afraid of Black & Decker's recent failures than comforted by the company's inherent strengths.
"It was a company that had a great name, not only in the United States, but throughout the world," said Archibald, 44.
During the past 2 1/2 years, Archibald has moved to restructure Black & Decker, and has smoothed the aggressive push out of the workshop and into the kitchen the company already had begun with its 1984 acquisition of General Electric Co.'s small-appliance division. So far, Archibald's moves seem to be paying off in higher profits and improvements in other financial measures.
Founded in 1910 by S. Duncan Black and Alonzo G. Decker, the company evolved from a small machine shop to the world's leading producer of power tools.
Besides its famous line of power drills, it makes cordless Dustbuster hand vacuum cleaners, blenders, irons and accessories.
In the 1960s and early 1970s, the company was a darling of Wall Street, posting earnings of 15 percent annually. Although Black & Decker's earnings plunged with the economy in 1975, by 1979 and 1980 the company was posting record highs in earnings.
But another economic downturn in the early 1980s sent Black & Decker into a tailspin. The company lost $76.6 million in 1982. It had gains the next two years, but suffered the $158.4 million loss in 1985.
Charles Bromley, an analyst with Duff & Phelps Inc. in Chicago, watched the company flounder.
"It was total chaos. Leadership was totally lacking," Bromley said. "They had something like nine presidents in 15 years."
Though Archibald restored stability to that job, the reshuffling was hardly over.
Archibald brought in several key executives from outside the company -- some from Beatrice -- before he replaced Lawrence Farley as Black & Decker's chief executive in March 1986. Firmly in charge and with a young team in place, Archibald was ready to restructure the company.
Though mindful of Black & Decker's problems, he liked the company's strengths.
"This was a company that had a worldwide distribution system that was one of the best, a company with great manufacturing and engineering and technical ability, but a company that really had never been able to put it all together," he said.
Sales were stagnant and unit volume had been dropping for five years.
"We had over 100 different motor sizes at one time," Archibald recalled. "You basically only need five or six different sizes. You can imagine the duplication in development and manufacturing and inventory when you have all those different motor sizes."
As part of a consolidation and reorganization launched two years ago, the number of motors has been cut to fewer than 20 and will wind up at about five or six after the company's consolidation is complete in a few more years, officials say.
When Archibald found rampant duplication and underuse in little corporate fiefdoms in the company's units around the world, he began a consolidation that still is under way.
In 2 1/2 years, Black & Decker has closed five of 22 plants and slashed its work force to 19,500 from 22,000, including several hundred at corporate headquarters. At the same time, the company has renegotiated contracts to pay lower wages.
Overcapacity and duplication weren't the only problems. Describing employes then, Archibald said: "They were very cocky; they were arrogant. The company seemed to be saying: 'We're Black & Decker; we're No. 1. You need us more than we need you.'
"We were never able to supply product to customers when they needed it. We did not have programs or products tailored to different channels' needs. ... There were a bunch of customers who were unhappy with Black & Decker," he said.
To address that, the company set up advisory panels of dealers and distributors to learn what they thought the company should be doing. The strategy has begun to pay off.
Jim Sutter, the general merchandising manager for Handy Andy Home Improvement Centers Inc., said he has noticed improvements in with Black & Decker recently.
"There had been problems with delivery, but they have gotten better," he said.
Another problem Archibald faced was incorporating the GE small appliance division into Black & Decker. Less than a year before Archibald arrived, Black & Decker paid GE $400 million for the unit.
Archibald called the price "attractive from GE's point of view" for an industry where "there weren't a lot of people making much money."
Still, there were synergies that made some sense, he said. "The technology has a lot of similar characteristics -- cordless power tools, cordless kitchen appliances, some technological synergies and mutual channels of distribution, and similar marketing expertise."
The GE acquisition also has allowed Black & Decker to make a stronger run at the kitchen market. For instance, it unveiled an automatic shutoff iron and pushed itself to the top of a mature market.
New products are part of Archibald's strategy to make Black & Decker more profitable. At the National Hardware Show in Chicago last summer, the company introduced 30 products and more than 700 accessories.
The Archibald team's efforts have translated to the bottom line. In his first year, the company rebounded from the $158.4 million loss to post earnings of $6.3 million on sales of $1.8 billion in 1986.
Then in the year that ended Sept. 27, it posted earnings of $55.6 million on sales of $1.9 billion.
To ensure that the company remains profitable regardless of what the economy is doing, Black & Decker is aiming to become more diversified through broader product lines, such as power tool accessories, as well as what Archibald called a "modest" acquisition program.
For instance, early this year the company bought American Emblem Tool Co. of Shelbyville, Ky., a major supplier of saw blades and other accessories to Black & Decker.
As for further acquisitions, "anything that we buy will be totally consistent with our return on equity goals," Archibald said.
The company's return on equity in the past year has jumped to 8.8 percent from 1.1 percent. The company's goal this year is to go to between 10.5 percent and 11.5 percent, and the ultimate goal is 15 percent to 16 percent, he said.
Archibald, too, is cautious, but confident.
"We are in a position right now that if a recession does happen, we are in far better shape than we would have been two years ago, and in better shape than most of our competition would be."