AVIATION: Comeback for Martin

Only three years ago, the Glenn L. Martin aircraft company was a dying duck. Its liabilities exceeded assets by $105,000; the company owed more than $50 million, and was losing money at the rate of $22 million a year. But last week, when Martin directors issued their third-quarter report, the once-dying duck looked like an eagle. The company had earned $7.6 million, or $3.37 a share, and would probably earn $9.50 for the whole year. To celebrate, the directors voted the first cash dividend ($1 a share) since 1947, and as a bonus, a 10% stock dividend.

The directors’ optimism was also based on some invigorating future prospects. Martin is busily turning out a wide range of products, including the B57 Canberra bomber, the Matador guided missile and the P5M flying boat for the Navy. In addition, Martin has the first high-speed jet Navy seaplane (the P6M) as well as a new Navy missile and a classified high-speed plane for which it just won a contract.

Change of Pilots. Martin owes its comeback to George M. (for Maverick) Bunker, a 46-year-old troubleshooter who became president in 1952. Until then all decisions—big and small—were made by Glenn L. Martin, the company’s founder, chairman and namesake. But when the company tried to raise new capital from investment bankers three years ago, it was told that the new management would have to come first. The bankers’ choice was George Bunker, and his first step was to move Glenn Martin out of the pilot’s seat.

With Bunker at the stick, Martin was able to sell $6,000,000 worth of notes, convertible into common stock at $6 a share. Within three months, by selling more stock to Martin shareholders, Bunker was able to pay off $4.3 million of the notes. The rest were converted into stock. This year Martin paid off the last of its interest-bearing debt, and the stock rose to $33.50.

Meanwhile, Bunker was also unclogging Martin’s production line. In addition to its drawbacks, the company had distinct assets. Among them: a $369 million backlog, a $40 million tax-loss carry-forward, and “one of the best technical groups in the business.” Bunker freely admitted that he knew nothing about airplanes, but he did know about good management, which was Martin’s sorest need. He boosted morale by giving his top-management men leeway to make their own decisions, thus speeded up lagging production. To reward them, Bunker set up plans for bonuses and stock options. (Bunker himself has a $1.4 million paper profit on the option he got to buy 70,000 shares of Martin stock at $9.75 a share.)

Soup to Meat. Glenn Martin was not the first company that Troubleshooter Bunker brought to life. Graduated from M.I.T. during the Depression, Engineer Bunker got his start washing soup kettles for Campbell Soup at 38¢ an hour, helped build a power plant for the company before he left three years later. He put in two years as an engineer for the Wilson meatpacking company, worked with the Government on war contracts, became a vice president for the Kroger Co. in 1942. Hired by Cincinnati’s Trailmobile Co., in two years he doubled sales to $52 million and boosted the stock value 400%. Bunker now votes about 230,000 shares of Martin, enough for control. Does he plan to move on and cure some other ailing company? No, says Bunker: “It’s too tiring. It puts an awful strain on you. This is for me. I like this.”