Paul A. Gorman

Paul Albert Gorman (December 16, 1907 – January 11, 1996) was an American business executive who held senior positions in the telecommunications, railroad, and paper industries. He was president of Western Electric from January 1964 through November 1969, succeeding H. I. Romnes and preceding Harvey G. Mehlhouse.

After leaving Western Electric, Gorman became president of the financially troubled Penn Central Transportation Company. He served as its president from December 1, 1969, until August 11, 1970, and additionally as chairman and chief executive officer from June 9 until his resignation. His tenure encompassed Penn Central's June 1970 bankruptcy, then the largest corporate bankruptcy in United States history. He later headed International Paper, where he directed a restructuring program from 1971 through 1973.

Early life and education

Gorman was born in Carrollton, Missouri, on December 16, 1907. He grew up in Carrollton and attended Carrollton High School. As a boy and teenager, he held several jobs, including sweeping floors in local stores, delivering newspapers, and working for a furniture and undertaking establishment and a frozen-food business.

Gorman studied business at the University of Missouri. To meet his expenses, he fired a furnace, waited tables, and worked nights at a campus drugstore. He received a Bachelor of Science in business administration in 1929.

In 1953, he transferred to the parent American Telephone and Telegraph Company as assistant vice president for personnel relations.

In 1956, Gorman became vice president for finance. Later that year, when Arthur B. Goetze was elected president of Western Electric, Gorman succeeded Goetze as vice president in charge of manufacturing. His manufacturing responsibilities included Western Electric's network of plants and its production of telephone apparatus, switching equipment, cable, electronic components, and military systems. He also served as a director of the Western Electric subsidiary Teletype Corporation.

New Jersey Bell and AT&T

Gorman left Western Electric's manufacturing vice presidency in early 1958 to become vice president for operations of New Jersey Bell. Paul R. Brousse succeeded him as Western Electric's manufacturing vice president. Gorman was subsequently elected president of New Jersey Bell during 1958.

At AT&T, Gorman was concerned with management, personnel, operations, and cost control across the Bell System. A 1959 profile described his management philosophy as emphasizing broad experience, informed judgment, and accepting responsibility for decisions. Gorman served through November 1969 and was succeeded in December by Harvey G. Mehlhouse.

His presidency coincided with the Bell System's transition from electromechanical to electronic switching. In 1965, Western Electric more than doubled production of electronic switching equipment and manufactured over nine million telephone sets, including nearly one million Touch-Tone sets and more than 400,000 Trimline telephones. Company employment reached approximately 168,800, and annual sales reached about $3.3 billion.

Gorman also represented Western Electric in public discussions of corporate responsibility. On February 10, 1967, he delivered an address, "The Business of Business," to the Cicero Manufacturers Association in Illinois. In April 1968, he participated in a Princeton University debate titled "Ideals and Profits—Can They Mix?," opposite student representatives including members of Students for a Democratic Society.

In 1969, the centennial year of Western Electric, Gorman gave a Newcomen Society address on the company's history. It was published as Century One ... A Prologue.

Penn Central

Appointment as president

In September 1969, Penn Central's board selected Gorman to replace railroad executive Alfred E. Perlman as president. The appointment was publicly announced on September 23, and Gorman assumed office on December 1. Perlman became vice chairman, while Stuart T. Saunders remained chairman and chief executive officer.

Gorman was recruited primarily for his reputation in corporate administration and cost control rather than for railroad operating experience. Saunders described him as an executive capable of bringing additional discipline to Penn Central's cost-control and management-efficiency programs. He received a salary of $250,000 a year.

Penn Central had been created in 1968 by the merger of the Pennsylvania Railroad and New York Central Railroad and had subsequently absorbed the insolvent New York, New Haven and Hartford Railroad. By the time Gorman arrived, the company was experiencing severe operating losses, problems integrating the predecessor railroads' computer and accounting systems, and increasing difficulty obtaining short-term credit.

Gorman's promotion occurred only days before the company exhausted its remaining sources of private credit. Penn Central Transportation Company petitioned for reorganization under Section 77 of the Bankruptcy Act on June 21, 1970.

Congressional investigations later concluded that Penn Central's collapse had developed over a period substantially predating Gorman's presidency. Investigators found that serious operating losses, inadequate financial controls, misleading accounting, and undisclosed problems in non-rail subsidiaries had left senior management and creditors without a reliable picture of the company's finances. William H. Moore was selected as president and chief executive officer later that month and took office September 1.

International Paper

In 1971, Gorman became chairman, president, and chief executive officer of International Paper. He was recruited after a sharp decline in earnings and an increase in long-term debt associated with the company's expansion and diversification.

Gorman initiated a restructuring program intended to improve profitability and concentrate resources on viable operations. The company established a reserve of approximately $78 million for plant and asset write-offs, closed or sold inefficient facilities, disposed of several noncore businesses, and reorganized its international operations along product lines. Facilities affected included a specialty-paper mill at York Haven, Pennsylvania, and operations in Ecuador, Italy, Puerto Rico, and West Germany.

International Paper reported that although its 1971 earnings were the lowest in a decade, earnings increased by approximately 30 percent during the first half of 1972. At the 1972 annual meeting, Gorman said that the company's packaging operations were improving.

Gorman also addressed environmental and resource-policy questions affecting the paper industry. In 1971, the Congressional Record identified him as president and chairman of International Paper in discussion of environmental and industrial policy. J. Stanford Smith joined International Paper as vice chairman in 1973 and succeeded Gorman as chairman and chief executive officer on January 1, 1974. Gorman remained associated with the company for a time as a director and chairman emeritus.

Other activities and honors

Gorman served on corporate, educational, and civic boards during his business career. His directorships included Teletype Corporation, Sandia Corporation, and other organizations associated with the Bell System.

In 1960, Delta Sigma Pi named Gorman its "Deltasig of the Year", recognizing his professional achievement while he was an AT&T executive vice president.

A Western Electric management conference informally named a humorous "Paul Albert Award" after him. A 1967 Sandia publication recorded its presentation to Sandia president John Hornbeck in recognition of the development of the Rolamite mechanism.

Personal life and death

Gorman's first wife was Betty Edwards, whom he met while attending the University of Missouri.

After retirement, Gorman lived in Delray Beach, Florida. He died on January 11, 1996, after suffering injuries in a fall at his home. He was 88. Gorman, Paul A. The Business of Business. Address to the Cicero Manufacturers Association, February 10, 1967. Gorman, Paul A. Century One ... A Prologue: Western Electric Company. New York: Newcomen Society in North America, 1969.