The Sunbeam Corporation and “Chainsaw Al”

The Chicago Flexible Shaft Company, or Sunbeam, as it had come to be known, was by the end of the 20th century, a household name. Over its 100 years of existence, the company had changed and grown with society and its needs. Sunbeam had facilities in Canada, England, Hong Kong, Mexico, the US, and Venezuela. The company was well known for its product lines for the home including: Coleman, Eastpak, First Alert, Grillmaster, Health o Meter, Mixmaster, Mr. Coffee, Mrs. Tea by Mr. Coffee,

Dunlap’s fourth and final step was to get a real strategy. Dunlap and his Dream Team defined this strategy as driving growth of the company through core business expansion, by further differentiating products, by moving into new geographical areas, and by introducing products that tied directly to emerging customer trends as lifestyles evolve around the world. They did this by changing appliances back to 220 volts so that they could be sold worldwide, and differentiating between the Oster and Sunbeam lines, and marketing them to different classes of consumers. Each line was designed, packaged, and advertised to target different markets, with Oster being the more upscale, and Sunbeam being the affordable middle-class brand. In 1997, ten Sunbeam Factory outlets were opened to increase brand awareness, sales, and the all important shareholder wealth. Each of Dunlap’s four rules had been reviewed and changes had been made within seven months of his hiring that had led to a complete turnaround of Sunbeam. Stock had risen to over 48$ per share, a 284 percent increase since July of 1996.

In July of 1996, Michael Price and Michael Steinhardt hired Al Dunlap as the CEO and chairman of the board for the Sunbeam Corporation. By hiring “Chainsaw Al,” they knew full well that his operating theory would mean huge cuts in all areas, as well as massive layoffs, but they had tried unsuccessfully to sell Sunbeam, and they were convinced that this was the only way to turn things around. The change was almost instantaneous. The turnaround took only fifteen months, and stock priced immediately jumped 49 percent. The jump increased share price from 12½ to 18 5/8 adding $500 million to Sunbeam’s market value. The stock continued to increase to a record high of $52 per share in March of 1998. But how was all this accomplished?

Was it possible that Dunlap’s rules had paid off? In short, no. Sunbeam was again facing rough times but not because of high costs or lack of strategy. The purchase of Signature Brands (Mr. Coffee), Coleman (camping gear), and First Alert (smoke and gas detectors), which had more than doubled the size of Sunbeam, and helped push it’s stock prices to $52 a share soon caused upheaval and restructuring , amongst rumors that the purchases were made to disguise losses through write-offs.

For starters, Dunlap’s acceptance of the position caused the initial stock increase, and although it was a great ego-booster, Dunlap soon realized that he needed to get started in the process of turning the company around. Dunlap’s first major move was to hire Russ Kersh, a former employee, whose contract was written over a weekend, so he could start the same day as Dunlap. Kersh was appointed Vice President of Finance and Administration. Only one executive from the old management team was retained, and Dunlap built his self proclaimed “Dream Team for Sunbeam,” from Kersh and twenty-five other people whom had worked for him previou

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