The Birthday Girl (9 page)

Nelson stood up and straightened the creases of his trousers. He picked up his briefcase and looked at Freeman expectantly. 'We could wait for him in the boardroom,' he said.

They took the stairs. It was only one floor up to the executive offices and the elevator was notoriously slow. Katherine's father always said that he preferred to be closer to the workforce than to the accountants, and after Freeman took over as chairman he saw no good reason for moving upstairs. Anderson excused himself and popped into the bathroom. Nelson seemed more impressed by the offices on the executive floor and he nodded his approval as Freeman showed him into the wood-panelled room. The oak table was big enough to seat twenty and was more than fifty years old. On the wall behind the head of the table was a gilt-framed oil painting of Charlie Williamson, a Bible in his right hand and an evangelical gleam in his eyes.

'That's your father-in-law?' Nelson asked, nodding at the painting.

'Uh-huh,' Freeman said. 'The man himself.'

'He looks like a guy who was used to getting his own way.'

'He was strong-willed, all right,' Anderson agreed as he walked into the room. 'Charlie Williamson wasn't a man you'd want to cross.'

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They were interrupted by the arrival of Katherine and Josh. Freeman introduced them to Nelson and then they took their places, Freeman sitting at the head of the table, the dour visage of CRW's founder staring over his shoulder. A few minutes later, Bill Hannah arrived, apologising profusely for being late. He was followed by Freeman's secretary who quickly handed out copies of the minutes of the previous meeting to those who hadn't already received them.

With a dearth of new orders, most of the meeting was taken up by Josh describing the progress his research department was making with new products. He tried to be as upbeat as possible, but it was clear that it was going to be a year at best before he had anything close to a saleable system. Throughout Josh's presentation, Nelson leant back in his chair and played with his gold pen, a look of barely concealed disdain on his face.

There were only two items of Any Other Business: one raised by Anderson, the other a request by Nelson to say a few words. Anderson's was short and to the point. He'd been looking around for additional investment resources and one of the company's backers, a New York-based venture capital outfit, Ventura Investments, had agreed to put an extra half a million dollars into the business in exchange for shares. Anderson was enthusiastic about the deal, but Nelson frowned and tapped his pen on the oak desk. 'What's their holding just now?' he asked.

'Seventeen per cent,' Anderson said. 'It'll go up to twenty-one if this deal goes ahead.'

'It'll mean the existing shareholders will see their stakes diluted,' Nelson said. 'Will they be happy with that?'

Katherine nodded. 'If it means extra money coming into the company, I don't see how we can refuse,' she said.

Hannah nodded in agreement, but he seemed less happy with the prospect.

'Who are these people?' Nelson asked.

'They're a group of local businessmen who've pooled their funds to back various speculative investments,' Anderson said. 'Total worth is about twenty million.'

'How long have they been investors in CRW?' Nelson asked.

Anderson folded his arms defensively and thrust his chin up. 'Why? What's the problem?'

'No problem,' Nelson said. 'I was just wondering how long they'd been shareholders.'

'It's in the accounts.'

'The accounts only show shareholders with more than five per cent of the company. They could have had a small stake for years.'

Anderson nodded, conceding the point. 'About three years,' he said. 'They came straight in with their seventeen per cent holding.'

'How did they hear about the company?'

Anderson looked across at Freeman as if pleading for support. There was nothing Freeman could say. It had been Anderson who'd brought them in as investors. At the time Freeman had been chained to a boiler in a cellar in Sarajevo. 'I can't remember,' Anderson said. 'I'll go back through the file. I still don't see what the problem is.'

'To be honest, Maury, CRW doesn't strike me as a speculative investment. Venture capital is like seed corn, it's not fertiliser. You don't use venture capital to shore up a loss-making company.'

'They thought our problems were temporary, that we're due for a turnaround,' Anderson said.

Nelson scribbled a note on his leather-bound writing pad. He nodded without looking up. 'Where would they get that impression from?' he asked.

Anderson was lost for words. He looked at Freeman, then at Katherine, then back to Freeman. Freeman shrugged. 'I don't get this,' Anderson said. 'The banks won't lend any more to us, diis guy's waiting like a vulture for the first signs of weakness, but when I come up with people who are willing to invest in us, he sits there asking why. Look, Lonnie, have you ever heard the expression “don't look a gift horse in the mouth”? Like, maybe we should just thank them and take their money?'

Nelson studied Anderson for a few seconds. He seemed totally relaxed, except for the slow tapping of his pen, whereas Anderson had wound himself into a state of considerable I � � . . THE BIRTHDAY GIRL 69 agitation. 'First of all, it's Lennie, not Lonnie. Second of all, if ,: we're throwing proverbs around, what about “beware of Greeks bearing gifts”? There's a very good reason why the banks won't increase your credit lines just now. There's no good reason why a group of venture capitalists would want to put more money into | ; the firm. That's all I'm saying.'

'; Anderson's cheeks had reddened and he was clenching and unclenching his hands like a weightlifter preparing to go for his personal best. 'So, what do you suggest, Lennie?' he said. K Nelson smiled and shook his head. 'I'd just like to know more about them, that's all. You're CRW's financial director. It goes without saying that I trust your judgment.'

I ', 'Well, that's something,'Anderson said, though he didn't look any happier.

'We're still going to have to vote on whether or not to issue the new shares,' Freeman said.

'And it'll have to go before a full shareholders' meeting,' Nelson said. 'The annual meeting is next month, right?'

Freeman nodded. 'That'll be soon enough, right, Maury?'

Anderson said nothing, but he nodded. At least he'd stopped clenching his fists. Freeman called for a vote, and it was unanimous. The board's decisions usually were. Jo minuted the decision and Freeman turned to Nelson. 'There was something you wanted to say to the board, Lennie?' he said.

Nelson pushed his chair back and stood up, surveying the room for a moment or two before speaking. 'I wanted to say a few words about the business, and where I see it going, so that we can all give some serious thought to the future of CRW.' He looked at the portrait of the firm's founder. 'The defence industry has changed a lot since Mr Williamson began manufacturing armoured vehicles in his barns near Annapolis. He was astute enough to see in the early years the importance of electronics, and to redirect the company to its current activities missile guidance systems and video circuits. But I think it fair to say that if he were alive today, he'd realise that the company must undergo another change if it is to survive into the next century.'

Katherine looked over at Freeman, and he knew exactly what she was thinking. What right did this man have to say that he j>%

knew what her father would think? He'd never met the man. And if they had met, Freeman doubted that {Catherine's father would have been impressed by the thrusting young banker.

'The whole defence industry is labouring under heavy debt with shrinking profits and low margins, and it seems to me that the larger contractors have sought various solutions: some have gone after more international orders, others have diversified into other businesses, down-sized or gone into joint ventures. What I have in mind for CRW is a combination of these solutions, tailored to meet our needs.'

Freeman exchanged worried looks with Anderson and Katherine. He didn't like the way the conversation was going, but Nelson was effectively holding a loaded gun to their heads. Without the bank's backing they were dead in the water.

'Joint ventures, coupled with aggressive down-sizing,' Nelson continued, oblivious to their looks. 'That's the way to go.'

Freeman frowned. 'Aggressive down-sizing?' he said.

'Many developing nations are lining up to get involved in licensed production of weapons systems. It gives them an opportunity to build up an indigenous defence industry, while at the same time earning foreign currency. There are lots of examples, especially out in Asia. Countries such as Singapore and South Korea, Indonesia and Taiwan. Of the countries I've looked at, Taiwan and Singapore have the most appeal.'

Anderson leant forward, his chin in his hands. 'The most appeal for what?' he said.

'For the sub-contracting of the company's manufacturing interests.' Nelson waited for them to react.

Katherine's mouth dropped. Even the portrait of her father seemed to express disbelief. 'You mean close down the factory?' she said.

'Only the manufacturing facilities,' Nelson said. 'Sales and administration would continue to be based here, but obviously a smaller workforce would require fewer support services. Personnel, accounting, clerical - there would be savings in all departments.'

Freeman held up a hand like a policeman stopping traffic. 'Wait just one minute,' he said. 'Are you saying that we stop THE BIRTHDAY GIRL 71 manufacturing here in Maryland? That we lay off our employees and move to Taiwan?'

'I estimate that we would save approximately six million dollars in operating costs in the first twelve months, though admittedly that doesn't include the one-time closure costs. But diere would also be one-time profits from the sale of the company's properties.'

Freeman shook his head emphatically. 'Let's get something straight,' he said. 'We're a manufacturing company. We make things. We make things and we sell them. That's the way it's always been. That's the way it'll stay.'

'It doesn't make sense,' Nelson said patiently. 'You can halve your manufacturing costs by switching production to the Far East. You can put the company back on a firm financial footing.'

'This is a business,' Katherine protested. 'It's made up of people. Human beings. We owe them our loyalty. Some of those men have been on the payroll for more than thirty years.'

Nelson sighed patiently. 'It's those men who are dragging this company down,' he said. 'Think of CRW as a tree, a tree that's starting to die. You can either stand by and let it wither away or you can prune the dying branches.' He looked at the board members one at a time as he spoke, like a defence attorney giving his closing speech to a jury. 'And I can tell you here and now, if you don't do something, the bank will. In my opinion, you have something like six months to act. After that there'll be nothing left to save. Even Chapter 11 won't be an option.'

'That sounds like a threat,' Katherine said.

'Mrs Freeman, we're a bank, not the Mafia. We don't make threats, we make loans. But we have the right to foreclose on those loans.'

'But we're talking about people here. Men with families. Men who depend on us for their livelihoods.' Katherine took a cigarette from her handbag. Her hand shook as she lit it and inhaled. Her eyes narrowed as she studied Nelson through the smoke. 'You know nothing about this company, Mr Nelson. You don't have the right to tell us to throw our workforce on the scrapheap.'

'I know numbers, Mrs Freeman. That's what I do. You can be as sentimental as you like, but when all's said and done it all comes down to money. I admire your loyalty to the employees, but I'm afraid it's misplaced. Do you seriously believe that the employees are going to stand by you if this company goes under? Do you think they'll have any sympathy for you while you're standing in the unemployment line?' He shook his head, answering his own rhetorical question. 'They'll be taking care of themselves. They won't give you a second thought.' He paused for a moment. Tm sorry if you're upset by what you're hearing, but you have to realise that the bank has your best interests at heart. We're the only friends you have.'

Anderson sniggered. 'With friends like you ...' he said, leaving the sentence unfinished.

Nelson pretended not to have heard him. 'You have to look at the benefits of this,' he said. 'The company will be profitable in a way it's never been before. You'll have more money for research and development of new products - something that I'm sure Josh would appreciate. And during the development phase, you won't be saddled with a cash-draining workforce. You go to the Taiwanese with the product, and they'll manufacture it to order. I'll tell you something else - the quality of their work will probably be better than you get here in the US. And once you've filled the orders, you stop production. The Taiwanese don't have the same labour laws or unions that we do.'

Anderson massaged the bridge of his nose. 'This is just your way of getting the bank's money back, isn't it?' he asked.

Nelson rested his hands on die back of his chair. 'Absolutely not,' he said. 'You know as well as I do, Maury, that if the bank was to foreclose on its loans tomorrow, we'd recover our money in full. But if CRW aggressively down-sizes, transfers its production overseas and gets new products in development, I think you'll see the bank taking a much more relaxed view of your operations.'

Anderson sat back in his chair heavily. Freeman could see that the finance director wasn't convinced by Nelson's scenario, and Katherine had a look of dismay on her face. Josh seemed unimpressed, but he usually expressed little interest in anything THE BIRTHDAY GIRL 73 that took place outside his laboratories and test rigs. Bill Hannah raised a hand, like a child wanting to ask a question of his teacher.

Freeman nodded at him. 'Yes, Bill?'

'What about the technology transfer?' Bill asked. 'I'm sure the Defense Department would have something to say about us giving our military technology to the Taiwanese.' Nelson smiled. 'Good point,' he said. 'That might have been the case with the missile guidance systems, but the bottom has dropped out of that market. Products such as the MIDAS minefield system are actually quite low-grade in terms of technology. It's not as if we're talking about ballistic missiles.'