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.
With the Navy cutting back on the production of nuclear-powered submarines, Mr. Colussy says he could also see a declining business in the production of the company's self-contained nuclear propulsion units -- "we liked to say, 'All you had to do was drop them in, add water and it runs for about 15 years.'
"We tried to sell [that business], but nobody would buy it." The solution: UNC convinced the Navy that there was not enough business for two suppliers of the units and that the military could actually save money by phasing out the UNC operations. The Navy agreed to refund UNC for its $80 million investment in the operation.
The agreement leaves UNC with an empty 500,000-square-foot plant on 240 acres of land assessed at about $25 million.
Mr. Colussy could have gone on and on. This UNC subsidiary had this problem, that one had that problem. Some subsidiaries were profitable, but the margins were too small.
An exception was TRT Telecom, a Washington-based telecommunication company that UNC acquired in 1985 for $57 million and sold three years later for $95 million.
Mr. Colussy calls last summer's phaseout of the nuclear propulsion business and the sale of an environmental business involved in nuclear-waste cleanup the watermark in the company's history. "It left us only with aviation companies," he says. "This was something I had been trying to implement for six years, and it was finally done."
The extensive makeover leaves UNC with four operating divisions (manufacturing, engine overhaul, accessory overhaul and aviation services) closely tied to the commercial aviation industry.
Despite some recent turbulence, civil aviation faces "fairly robust growth in the future," according to Robert Robeson, a vice president with the Aerospace Industry Association. Globally, estimates call for airline traffic to grow 5 percent to 6 percent annually for the rest of the decade. There are currently 8,857 airliners in operation around the world, according to a Boeing Co. estimate, and this is expected to rise to 14,191 by 2005.
UNC's manufacturing leg is composed of Tri-Industries in Terre Haute, Ind.; Alloy Spot Welders in Los Angeles; and Chemical Dynamics in Weatherford, Texas. They make original equipment and replacement parts (both engine and structural components) for commercial jetliners, military planes and helicopters.
UNC's manufacturing operation had operating revenues of $54.3 million last year.
Engine overhaul is divided into two groups: Airwork Corp. in Millville, N.J., which rebuilds small- to medium-size turbine engines; and Pacific Airmotive in Burbank, Calif., which overhauls larger engines such as the JT8 used on the Boeing 727 and 737, the DC-9 and the MD-80 jetliners. It had operating revenues of $155 million last year.
Accessory overhaul rebuilds about 28,000 different airplane parts, including equipment that is attached to an aircraft engine transmission and powers the generators that supply the plane's electrical power. With sales of $53 million, Mr. Colussy refers to it as "a darn good business" in an area where the company is still looking to expand.
The final leg of the company -- and the part with the most dependence on military spending -- is aviation services, a division that generated sales of $94 million last year. Based in Annapolis, it employees about 700 workers, most of them retired military pilots, who train new pilots to fly helicopters and a fixed-wing, two-engine prop plane used for observation flights. It also does minor maintenance for about 1,000 Navy planes.
Glancing down at the corporate organization chart on the table in his office, Mr. Colussy says with satisfaction: "These are all profitable. We don't have a loser here."
For the year that ended Dec. 31, UNC reported income from operations of $29.1 million, up from $21.1 the previous year.
Mark Hassenberg, an analyst who follows the company for Donaldson, Lufkin & Jenrette Inc., wrote in a recent research report, "We believe that UNC has done an excellent job restructuring its business and cultivating a profitable and focused group of companies serving the aviation industry. UNC of today did not exist five years ago."
Mr. Hassenberg said that UNC's customer base is diversified and includes airlines (28 percent of revenues); business aviation operators (30 percent); engine and airframe original equipment manufacturers (16 percent); and military service contracts (26 percent).
"Nevertheless," he said, "a sharp decline in any one of the first three segments would affect UNC's performance and would delay the company's ability to reduce its debt over the next three years. . . ."
UNC stock, which is traded on the New York Stock Exchange, traded last week at $5, nearly double their price of 15 months ago.
Cash generated from some of the discontinued businesses has been used to help pay down the company's big debt from 64 percent to 58 percent of total capital.
That debt was created in part from the 1985 takeover battle with Charles E. Hurwitz, head of Maxxam Group Inc., and the $57 million cleanup of a 1979 nuclear waste accident when a dam holding back a lake of contaminated water gave way and flooded a valley. Mr. Colussy said the company wrote down about $63 million of debt last year, and the plan is to cut it to 50 percent of capital by paying off $10 million this year and each of the next two years.
Mr. Colussy accepted the challenge of rebuilding UNC on the condition that he be allowed to move the corporate headquarters to Annapolis from Falls Church, Va., if he could prove the move would be economically viable. The lure of the Chesapeake was too much for the sailing enthusiast, who owns a 41-foot ketch-rigged sailboat. He made his case and moved the company to a site off Riva Road in 1986.
What's ahead for UNC? Mr. Colussy says the company you see today is pretty much the company of the future. There may be a few small acquisitions, he says, to fill in some niches, but no major purchases. "This is the real UNC."