UNC gets its act together

April 21, 1991|By Ted Shelsby

His fancy for sailing shows when he talks about "clearing the deck" of problems, but Dan A. Colussy's forte is aviation. Just look at the way he restructured problem-plagued UNC Inc.

The Annapolis-based company bears little resemblance today to the "bag of bones" floating in a sea of red ink that Mr. Colussy, chairman and chief executive, took over six years ago.

In 1985, UNC was your classic mini-conglomerate. It was in about 20 lines of business, including uranium mining, contract drilling, shipbuilding, machine tooling for the auto industry, mortgage servicing and the production of propulsion systems for nuclear submarines. It even offered a computerized legal data service for lawyers.

"They were scattered all over the map, and they were all losers," Dan Colussy says as he looks back on the dramatic reorganization that involved the divestiture or closing of 21 businesses, the acquisition of seven others and the transformation of UNC into a company focused on the growing commercial aviation industry.

Along the way he fought off three takeover attempts and struggled with cleaning up a nuclear waste spill that many Wall Street investors thought was going to kill the company. UNC survived its hardships but was up to its neck in debt. That financial burden still casts a dark cloud, albeit a much smaller one, over UNC, a company that posted sales of $356 million last year.

Mr. Colussy came to UNC from Canadian Pacific Airlines Ltd., a $1.5 billion operation based in Vancouver, British Columbia, wherehe served as chief executive. He also is a former president of Pan American World Airlines.

He laughs when he talks about the chain of events that brought him to the helm at UNC. "It was not an easy decision," he says. "The chairman [at Canadian Pacific] said, 'Are you out of your mind? Why would you want to go to that bag of bones company?' "

The answer has a lot to do with life in Canada, the fact that Baltimore-Washington International Airport was grossly underused in the early 1980s, and the lure of the Chesapeake Bay.

He certainly was aware of what he was stepping into when UNC's directors asked him to take over. He was on the board himself.

Mr. Colussy had 30 years of experience in the aviation industry when he came to UNC, dating back to his first job as an engineer with the aircraft engine division of General Electric Co. in Lynn, Mass.

He was still with Pan Am in the early 1980s when he saw the potential for increased service at BWI. He also saw this as a great chance to form his own airline. He invested the bulk of his savings to form Columbia Air Inc., a commuter airline that would use BWI as the hub for flights to destinations along the East Coast and throughout the Midwest.

It was a great idea -- as Piedmont proved about five years later -- but Mr. Colussy's timing was terrible. Just as Columbia's initial public stock offering was to go forward, President Reagan fired the striking air traffic controllers, and airports throughout the region immediately withdrew Columbia's landing rights. It was a crashing blow to the new company, and there was no recovery.

Needing a job, Mr. Colussy moved on to Vancouver, British Columbia, where he served as president and chief executive officer of Canadian Pacific. When the board of UNC (formerly United Nuclear Corp.) offered him a job, Mr. Colussy faced a tough decision. He missed living in the United States, where his two daughters were graduating from college in New York. He also saw the UNC situation as a personal challenge "to build something from scratch that I could say I had a part in."

"When we first started out, I was trying to determine what businesses we should be in," he recalls. Looking over the company, he didn't see a lot that he liked, except for a small operation in Connecticut that made aerospace parts and had sales of about $8 million a year.

"You could look at all the others and see they had no future. I look back on them now, and they still don't have any future. Nothing has changed."

Take, for example, a uranium mining operation that once was the backbone of UNC. In the 1970s, when uranium was selling for $40 a pound, he says, "it was a very profitable business. But then in the late 1970s the price fell, practically overnight, to $15 a pound."

Noting that the cost of mining the ore was $30 a pound, he laughs and says: "When you're selling it for $15, you aren't making a lot of money."

UNC's shipbuilding operation was involved in the construction of small vessels that carried supplies to off-shore oil rigs. When the domestic oil industry went bust, UNC's shipbuilding company went along with the slide.

And a company in Richmond, Ind.,, that made machine tools and plastic injection machines for the auto industry "was left in the dust" by foreign competition that introduced new technology.

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