Chairman and chief executive officer, Masco Corporation
Born: 1936, in Detroit, Michigan.
Education: Yale University, BA, 1960.
Family: Son of Alex Manoogian (founder, Masco Corporation); married; children: three.
Career: Masco Corporation, 1968–1985, president and chief operating officer; 1985–, chairman and chief executive officer.
Address: Masco Corporation, 21001 Van Born Road, Taylor, Michigan 48180; http://www.masco.com.
■ Richard Manoogian joined Masco Corporation in 1958. He was elected chairman and chief executive director in 1964 and took over leadership of the company in 1968 when he was named president and chief executive officer. He became chairman in 1985. Originally known as the Masco Screw Products Company, Masco had been founded by Richard's father, Alex Manoogian, eight days before the U.S. stock market crash of 1929. The primary business was manufacturing machined automotive parts. The company later expanded operations into the building and home improvement industries. In the 1950s Masco revolutionized the faucet industry by perfecting the design of the single-lever hot and cold faucet. The Delta faucet was one of the first one-handled faucets on the market and quickly became the best-selling faucet brand in the United States. The success was due in part to Masco's innovation in marketing and product distribution. The company was the first to market faucets directly to mass market consumers via television advertisements. The result was a shift in distribution from plumbing wholesalers to retail outlets.
Masco manufactured a variety of consumer products that included Merillat cabinetry, Delta and Peerless faucets, Behr paints and stains, Weiser locks, Thermador appliances, and Baldwin brass. The company's manufacturing facilities were located throughout the United States and Europe. The international operations were located primarily in Belgium, Denmark, Germany, Holland, Italy, Spain, and the United Kingdom. The company's common stock was offered for public trade in 1936.
The first 10 years of Manoogian's tenure with Masco were spent working with his father to increase the company's value from $55 million to $8 billion. This goal was met primarily through mergers and acquisitions. Masco acquired more than one hundred companies in the 1960s through 1980s. The strategy was to reinvest surplus earnings and create opportunities for new growth into different, but related, market sectors.
Masco's strength was automation of the manufacturing process. Manoogian wanted to apply experience and success to new industries, such as furniture and other home furnishings. This effort produced mixed results. The acquired cabinetry business developed into a core product line that greatly increased Masco's income. However, acquisition of several furniture makers proved ill-advised.
There were several issues with the furniture manufacturing acquisitions. First, the furniture industry did not lend itself easily to automated manufacturing. The process of making furniture required too much handwork, and product lines were vastly diverse, so few opportunities existed for mass production of furniture components. In addition, Manoogian acquired several companies that had been fierce competitors and had no real intention of working together effectively once they shared the same parent company. Finally, the furniture and home furnishings market was struggling in a down economy, and sales were sagging. As a result, the questionable investment decisions caused Manoogian great difficulty with Masco's shareholders.
In addition to the furniture fiasco, there was trouble in the industrial division of the company. In the 1980s Manoogian had spun off the industrial parts manufacturing operation to create Masco Tech, which did not perform well and incurred further losses. Because Masco was a 50 percent owner of Masco Tech, investors were extremely displeased with Manoogian's performance. He promised to sever ownership of Masco Tech but was unable to find a buyer for the struggling company.
Major criticisms were that Manoogian was running Masco as a private family business although stock was publicly held. Shareholders were angry about diversification attempts and Manoogian's investment in noncore competencies such as home furnishings. Although revenue climbed an average of 10.3 percent annually throughout the 1990s, Masco wrote off $841 billion owing to poor business decisions, and there was approximately $1.2 billion of debt on the books.
By the mid-1990s the damage done by the floundering furniture business was readily apparent. With a flat economy, consumer confidence was down and a dramatic decrease in the number of home remodels and major improvements being done translated into decreasing demand for Masco's products. Masco Tech's poor performance contributed to the mounting losses. Masco's stock performance rating slipped, and shareholders became even more displeased about the diversification attempts. When Standard & Poor's downgraded Masco's credit risk rating, Manoogian was finally forced to recognize that the furniture division was dragging down the performance of the entire company. Manoogian sold the business in a leveraged buyout by management, and the company took a $650 million dollar write-off. The sale of Masco Tech was completed in 2000.
Admitting that the shareholders' criticism was fair, Manoogian turned his attention to debt reduction, share buyback, and a different acquisition strategy. To recover losses and resume growth, Masco needed a new growth income generator. Manoogian separated the building products division from the industrial businesses in an attempt to reduce the bottom-line impact of economic cycles in the automotive and housing markets. In 1996 Manoogian effected a culture change at Masco. He initiated severe cost-cutting measures and reduced his own salary from $1.4 million to $1 annually. These combined efforts were successful in stabilizing the company's bottom line and restoring profitability.
Associates described Manoogian as straightforward and talkative, the kind of person who would not stop working long enough to eat lunch. He served on the boards of directors for Ford Motor Company, Bank One Corporation, and Metal-dyne Corporation. Manoogian was one of the foremost collectors of 19th-century American paintings. His collection of more than one thousand paintings was valued at more than $250 million, making it one of the most complete in the United States. Under Manoogian's leadership, Masco was a substantial contributor to educational, civil, and cultural organizations, primarily through the Masco Corporation Foundation.
See also entry on Masco Corporation in International Directory of Company Histories .
"Manufacturers," Forbes , October 11, 1999, p. 338.
Reingold, Jennifer, "The Masco Fiasco," Financial World , October 24, 1995, pp. 32–34.
Romero, Gina, "Art Imitates Masco," Forbes , October 24, 1988, p. 398.
Rossant, Juliette, "Throwing in the Towel," Forbes , February 26, 1996, p. 14.
Salomon, R. S., Jr., "Can an Old Boss Learn New Tricks?" Forbes , July 29, 1996, p. 102.
Tatge, Mark, "A Leaky Affair," http://www.forbes.com/global/2002/1209/028.html .
—Peggy K. Daniels