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Feb 26, 2007

In praise of rewards

226_rales I would like to get the reaction of the most diehard Lefty you know, on the subject of Steven and Mitchell Rales two borthers who created the Danaher Corp(DHR).

These two brothers, when they were in there late thirties, early forties, a few years after getting BA's from "no-name colleges" got their start in their father's real estate business.  Their father Norman who grew up in a Manhattan Jewish Orphanage had built the real estate business himself.

226danaher_03 One of the first companies they were involved with, Jacobs Vehicle Systems, was using the Japanese streamlined production system that used team work, cost reductions create by line employees and tight quality control. Seeing the startling results at Jacobs, the Rales brothers began using the Jacobs managers, buying similar production oriented companies and implimenting the same cost reduction, team work systems in the companies they bought.  They bought new companies with the earnings of the companies their were streamlining.

226tools_mechanics In fifteen years the stock of the Rales' parent company went from under $10 to over $75 and a value of $20 billion.  The company, Danaher Corp, still has 600 operating subsidiaries and has overhauled many others that were spun off.  The most amazing evidence of the efficiency of the Rales' operation is that their current 40,000 employees are governed by a tiny headquarters staff of 40 people.

These two fellows have streamlined hundreds of companies, drastically reduced the costs of tools, medical equipment and instruments in the world for the benefit of everyone.  Their reward...they are both in the one hundred wealthiest Americans.  Isn't that a fair reward that only a commercial society, like America, could generate?

Both Steven and Mitchell are prominent art collectors and well known philanthropists, which is irrelevant to me.

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