Buffett protege turns to job cuts, a move to revive Berkshire units
TRACY Britt Cool earned Warren Buffett’s trust overseeing a constellation of smaller units at his conglomerate, Berkshire Hathaway.
The billionaire’s annual report gives a glimpse into one thing she’s been doing: Cutting jobs.
All four of the subsidiaries under Cool’s supervision – either as chairman or chief executive officer – reduced staffing in 2015. The biggest decline on a percentage basis was at Pampered Chef, a kitchenware retailer that she began running as CEO in late 2014.
Buffett, 85, has long stressed the importance of efficiency, and he devoted a passage in his annual report Saturday to the subject.
Gains in productivity, he wrote, are the “all-powerful trend” driving America’s growth in prosperity. But he has also shied away from personally making deep cuts at the businesses that Berkshire owns, preferring to buy operations that are already lean and to leave the cost- cutting to others.
Cool, 31, has carved out a role as one of Buffett’s problem solvers. After joining Berkshire in 2009, she began helping her boss keep tabs on the company’s far-flung operations.
In 2012, she was named chairman of four businesses: Picture-frame maker LarsonJuhl, paint manufacturer Benjamin Moore, buildingproducts company Johns Manville and party- supply retailer Oriental Trading. Shortly after taking on the portfolio, she brought on new CEOs at two units and began turnaround efforts.
“Tracy is available to work on things that I probably should work on, but either am too busy or too lazy,” Buffett said in an interview for a 2014 profile of his deputy. “She thinks like I would.”
Results at Benjamin Moore contributed to a 30 per cent increase in pretax earnings at Berkshire’s building-products division in 2015, according to the annual report. Pampered Chef has been cutting jobs for years amid a sales slump. Berkshire didn’t disclose 2015 results for that business.
The annual reports don’t offer much detail about smaller operations, which makes it difficult to glean information about the other two businesses Cool runs, except their headcount. Pampered Chef employed 433 people at the end of 2015, a decrease of 17 per cent from a year earlier.
The report doesn’t say how much of the reduction came from attrition versus firings. In a statement, a Berkshire spokesperson said three of the four businesses that Cool oversees had “significantly increased earnings in 2015, with two of them setting records.”
The person didn’t provide specifics.
Cool stepped down from her role at Johns Manville in 2014 around the time she took over at the kitchen- supply business. She is also on the board of Kraft Heinz Co., the food company that Berkshire helped create through takeovers in the past three years.
Buffett’s partner in those deals, 3G Capital, runs Kraft Heinz. The buyout firm’s managers have fired thousands of workers, shuttered factories and taken away perks to boost profit margins. Buffett wrote in his letter that he supported 3G’s approach. — WP-Bloomberg