News Column

Berkshire Hathaway's Texas CEOs, Big Hands-off Fans

Oct. 31, 2012

Steve Kaskovich, Fort Worth Star-Telegram

Berkshire Hathaway

Warren Buffett is one of the nation's most successful businessmen. So what's his key to managing Berkshire Hathaway, a corporation that operates 80 businesses with annual revenue of more than $140 billion?

Not managing, according to four Fort Worth executives who work for him.

The top executives at BNSF Railway, Justin Boots, Acme Brick and TTI came together Tuesday to share stories about the Oracle of Omaha before 550 people at a Fort Worth Chamber of Commerce breakfast. Together, the companies employ about 4,250 people in Tarrant County.

"I would describe it as very strange and almost bizarre the way he manages, because he doesn't manage," said Matthew Rose, chairman and chief executive of BNSF Railway, which Berkshire acquired in 2009. At BNSF and other businesses, Buffett mostly involves himself in financing, insurance and acquisitions, areas where "he loves to play," but leaves day-to-day strategizing to the companies.

Buffett is legendary for buying well-managed companies and letting them operate independently. The group of Fort Worth executives testified to that trust, but also noted that their boss remains attentive to details.

Dennis Knautz, the CEO at Acme Brick, said he was amazed when Buffett, asked by CNBC about the state of the housing industry, quickly recited Acme's current production rate, pricing and volume "off the top of his head."

Buffett also is decisive.

In 2005, at the height of the housing bubble, Acme wanted to build a new brick plant.

It spent six months finding a site and putting together a detailed plan. But this time, the answer was no.

"He said, 'You know what? I understand what you're doing and can see all the work that you've put into this project ... but I just don't think housing is going to continue at this level for a long, long period,'" Knautz recalled.

"And he was right. That was right before the collapse in housing."

Paul Andrews, the Fort Worth entrepreneur who sold his privately held electronic parts distributor, TTI, to Berkshire Hathaway in 2006 and stayed on as chief executive, recalled how that deal came together at a meeting in Omaha, Neb., arranged by Fort Worth businessman John Roach, who was chairman of Justin Industries when it was sold to Berkshire in 2000.

Berkshire's headquarters is small, with only about 20 people, and to Andrews' surprise there are no conference tables. So the two men sat together on Buffett's couch, where the investor could ask him a few questions and look him in the eye.

"I think what he's doing is sizing you up as a person versus all the numbers," Andrews said. "Then he looked at me and he said, 'OK, let's go do this. Let's get a hamburger.' And that was it. It took probably, at the most, 40 minutes."

One requirement for Berkshire CEOs is to attend the company's shareholders meeting in Omaha, which draws thousands to what is billed the Woodstock of capitalism. Justin Boots has gained a reputation for its Western-oriented displays, which have included longhorns and a stagecoach.

Randy Watson, Justin's CEO, was apprehensive one year about sending an annual budget to Buffett until his boss called, told him he had received it, and asked, "So what are you doing next year at the shareholders meeting?"

Distributed by MCT Information Services

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Source: (c) 2012 the Fort Worth Star-Telegram

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