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Banking Berkshire CEOs pull back the curtain on Buffett and business

Berkshire CEOs pull back the curtain on Buffett and business

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Robert Francis
Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

The recent opening of the giant Nebraska Furniture Mart may be the most public face the “Oracle of Omaha” has shown to North Texas.

With his ukulele in his hands, one of the wealthiest men in the world serenaded Texans with a rendition of “Deep in the Heart of Texas,” on April 9 in The Colony as part of the Nebraska Furniture Mart’s grand opening.

But Warren Buffett, CEO of Berkshire Hathaway Inc. has been serenading Fort Worth – and North Texas – for many years, dating back at least to the acquisition of Justin Brands in 2000. Buffett is known for his hands-off style, rarely interfering with management unless things are seriously out of whack.

On Monday, May 18, an executive panel featuring the CEOs of four Fort Worth-based Berkshire Hathaway companies – Dennis Knautz of Acme Brick, Carl Ice of BNSF, Randy Watson of Justin Brands and Paul Andrews of TTI – sat with moderator Matt Rose, executive chairman of BNSF, and discussed working with Buffett. The event, titled Breakfast with the Berkshires, was presented by Leadership Fort Worth at the Fort Worth Club.

Rose started things off with his favorite quote from Buffett: “Go to bed a little wiser each day than when you woke up,” then asked the executives about their experiences with Buffett.

TTI’s Andrews said, “Warren is exactly what you’ve heard. He’s honest. He has high integrity. He’s a workaholic. He’s involved in so many things, including in several social areas.

“What you see is exactly what you get. He doesn’t dictate what you should or shouldn’t do. If you ask Warren for an opinion, he won’t give you one. When we were acquired by Warren, I had a million questions…and he’d be just totally quiet. He wants to hear your answers.”

Justin CEO Watson said he spent time preparing for his hour with Buffett after Justin was acquired. He was more than a bit nervous.

“What do you tell Warren Buffett about P&L or a financial statement?” he asked.

Watson said his hour was planned out and well-rehearsed.

“So [Buffett] comes in and I said, ‘Let me tell you a little bit about Justin, Tony Lama, Nocona, Chippewa, Justin Work Boots and so on. And he says, ‘Before you do that, do you mind if I say something?’’’

Watson paused, deadpan, and the audience laughed.

“[Buffett] proceeded to take my entire hour telling me about his philosophy and the way Berkshire Hathaway operates,” Watson said. “If that tells you anything about the man. He wanted to sell me on Berkshire Hathaway.”

BNSF’s Ice noted that Buffett was focused more on people, less on assets.

“As Warren was starting to acquire our stock – he’d gotten up to 15 or 20 percent – we decided we should take him out on a train ride. So we rode from Kansas City to Chicago.

“And when we’re out on the railroad, we’re sitting in an observation car that has a glass window on the back because we’re checking the track…Warren sat on the front seat, which is the prime seat to do that. But he spent the whole time turned around looking at us. He owned a big part of the company at that point, the assets we were running over, but he was watching the people. I think that says a lot about Warren.”

Buffett, Ice noted, took a long view toward his investments.

“When he made the offer to purchase all of us [BNSF], what he said to us, a relatively small group, was, ‘Think of this company as a family-owned business you’re going to have for over 100 years.’ There’s a couple of really important things in this. Family-owned. That’s speaking toward ownership which we’ve always tried to encourage. Then, 100 years, is a really long time frame. And that’s one thing we all say is great about Warren, is that he has that long term perspective. Again, I’d say we’d all say that, too, but it’s great to be lined up with a world class group of companies that you know that’s the way the thinking is.”

Acme Brick’s president and CEO Knautz got to see firsthand how Buffett allowed the executives to work through the economic and housing collapse of 2010-2011.

“The economic collapse that we’ve been through was all during Warren’s ownership of our company,” he noted.

“We had gone on a stretch of 19 consecutive years of setting sales records … All the sudden, after one month housing started collapsing, bookings collapse and we started going down and I had a chance to talk to Warren about that. But he had a real hands-off side.

“[H]e expected me to address the issues we were facing in our company and make appropriate adjustments. The cycle we went through was something that had been unprecedented in my lifetime. Not since World War II had housing collapsed to the point it did during the 2010-2011 period.”

Knautz said he got nothing but support from Buffett.

“If we hadn’t been owned by Warren Buffett I’m sure I would have gotten lots of calls from bankers wondering where the money was going and what I was doing. It allowed me to try and control and reduce the size of our business and make adjustments at the appropriate time. I didn’t have to just cut and slash and burn to get to a certain number this quarter. He knew it was important to try and manage the business not just for this quarter but for this year, next year and the year beyond that.”

Aside from BNSF, Acme, Justin and TTI, Berkshire Hathaway continues to have a big interest in North Texas. In October, Berkshire Hathaway acquired Dallas-based Van Tuyl Group, which has several Fort Worth area dealers and is the largest privately owned U.S. auto dealership group. Several other Berkshire Hathaway companies either have large operations here or are subsidiaries of other Berkshire companies. NetJets operates Dallas Jet Charter, and Mouser Electronics in Mansfield is a subsidiary of TTI. Speaking just prior to the panel discussion, Fort Worth Mayor Betsy Price said Berkshire brands contribute thousands of jobs and billions of dollars to the region.

Buffett’s investments continue to pay off. Berkshire Hathaway reported a first-quarter profit up 10 percent from last year. That despite a drop in investment gains and reflecting higher operating earnings across all its businesses and a continuing improvement in revenues.

TTI’s Andrews said North Texas will continue to draw the attention of Buffett.

“This is such a great place to have a business and a great location, being the center of the country with [Dallas/Fort Worth International] Airport right here,” he said. “We can get to either coast in a matter of hours.”

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