The tools to do the job: when Hughes Tool went public, James Lesch was ready to lead it through a decade of rapid growth

Nation's Business, Feb, 1984 by Grover Heiman

The Tools To Do the Job

JAMES R. LESCH began working for a privately owned corporation in 1946, eventually rising to senior vice president. Then, in 1972, the company went public, and Lesch became president and chief operating officer.

In all of his 26 years with the corporation while it was privately owned, Lesch never saw, spoke to or otherwise communicated with the sole stockholder, Howard R. Hughes, Jr.

Hughes, the legendary billionaire recluse, was not a stockholder in the company after it went public. As a result, Hughes Tool Company escaped the turmoil that has enveloped the Howard Hughes estate since Hughes' death in 1976.

Lesch, who became president and chief executive officer of Hughes Tool in 1979 and chairman in 1981 (he gave up the presidency in 1982), has been a guiding force in the transformation of Hughes Tool. Once a small company that made bits for drilling through rock, along with other oil drilling equipment, Hughes Tool has become a large firm that supplies a variety of equipment and service to the oil and gas exploration and production industries throughout the world.

After Hughes Tool went public, sales rose from $100 million to a peak of $1.76 billion in 1981. The pronounced slump in the petroleum and natural gas industries pushed sales down to $1.6 billion in 1982 and to an estimated $1.2 billion last year.

But now the number of drilling rigs in operation is rising, and that is the measure of Hughes' prospects.

From a peak of 4,530 active rotary rigs in the United States at the end of 1981, the count dropped to al low of 1,807 in April, 1983; it inched back up to slightly over 2,000 by the end of July.

Hughes had geared up for the higher figure, and when the bottom fell out of the industry, Lesch and his management team developed a strategy for managing during a downturn: reduce costs, inventories and accounts receivable. The payroll was reduced by 6,500 from a high of 19,300 worldwide.

"When the drilling upturn occurs,' says Lesch, "Hughes Tool Company intends to be in a position of strength and leadership in our industry.'

Lesch thinks that increased domestic drilling is crucial to the nation as well as to his company. "We are of the few industrialized nations that could become self-sufficient in energy,' he says. "I'm still an advocate of that--we should continue to get a percentage of our oil from foreign sources--but we shouldn't let ourselves get into a critical position from a national preparedness standpoint.'

He laughs when he recalls his first brush with an acute fuel shortage. During World War II, while General George S. Patton's Third Army was making a dash to the Rhine, Lesch was commanding an ordnance repair company. His outfit raced into Metz, France, with the fast-moving armored columns. When a temporary retreat became necessary, his vehicles were out of gas.

Luckily, Lesch found a shot-up tank car that still had a small supply of 65 octane fuel in its unpunctured bottom. "It got us out of there,' he says, "pinging all the way.'

Earlier in the war, when Lesch was stationed at Rock Island, Ill., he, another lieutenant and the lieutenant's wife played a lot of bridge. "We got tired of playing three-handed,' Lesch says, "so I called up "Zee' Meeks, a girl I had been dating for several years in Tipton, Okla., and asked if she would like to come up and make a fourth. I wouldn't have married her if she hadn't known how to play bridge.'

The former Zelma Meeks is the mother of Lesch's four sons.

Lesch himself grew up as one of 10 children, on a marginal grain and cotton farm in southern Oklahoma. He was born there on July 13, 1921.

Living with a sister, Lesch attended the last two years of high school in Tipton. He says his sister had the most influence on his career. She urged him to go to college, and since he had a mechanical bent--whetted by working with farm equipment--he decided to be a mechanical engineer. He enrolled in the University of Oklahoma in 1938 and began working his way through, holding as many as four jobs at one time.

When the United States entered World War II, Lesch was in his last year of Army reserve officer training at the university. He volunteered for the armored forces, even though his training had been preparing him for service with the field artillery. In May, 1942, the Army commissioned him in the ordinance corps, and two years later Lesch, as a first lieutenant, commanded his own vehicle maintenance company.

His experience during World War II, Lesch says, was great management training and played an important part in shaping his management philisophy.

Leaders, he feels, must be visible-- out front. He was impressed by Patton's visibility (Lesch saw him many times). Moreover, keeping Lesch's unit capable of doing its job called for a resourcefulness that is invaluable in a manager; for example, Lesch's men always ate well during the famous dash to the Rhine, because Lesch was quick to help when the quartermaster trucks carrying supplies needed repairs.