Malcolm Stevenson Forbes Jr., does not overpower a room when he walks in. His inconspicuous manner makes it easy to let your eyes pass him by in a crowd.
Despite this, when the topic of conversation turns to business or politics, Forbes, who is better known as Steve, quickly roars to life.
The media mogul joined his father’s empire, Forbes Inc., in 1971 as a researcher. By 1973 he was writing columns. When his father died in 1980, Forbes assumed the company reins as president and CEO. Today, he is rumored to be worth more than $435 million and is heir to approximately $1.4 billion.
While Forbes is well-known for his exorbitant spending during his failed presidential bid in 1996, he’s also well-respected for his depth of expertise in business. SBN Magazine sat down with Forbes during a recent visit to Akron University to talk economics, publishing and business.
As recently as last year, Forbes has had the highest revenue of any magazine in America. How has that changed in recent months?
Obviously, 2001 was a much different year than 2000 with the collapse of the dot-coms and telecom companies. It was a tough year. After Sept. 11th, it really slowed. People decided to save cash, sit on budgets and wait and see what happens early next year. I believe things will recover in spring, but between here and there it will be a challenging for a lot of companies.
Is it a smart strategy for companies to continue with their advertising, sales and marketing efforts?
Yes. I’m self-interested, but there’s a good objective case to be made. But when the economic storm clouds are gathering, it’s pretty easy for businesses to look at that as a way to conserve cash. It’s short term and somewhat short-sided, but very tempting.
What about the economy, itself?
If I really could predict it, I wouldn’t have to work for a living. Clearly, the contraction will continue. It’s going to be sluggish, (but) I think you’ll start to see an uptake in the spring. The question is, from what base? Two things have hurt. One is that the Federal Reserve still hasn’t pumped sufficient equity into the economy.
It’s lowered interest rates, but it hasn’t made money available. The key is to set the foundations for recovery next year. Second, Congress has to pass a good, strong, muscular tax cut and make the rate cuts effective across the board now, not five years or 10 years from now.
Many have said technology advances will force a nosedive and the newspaper with our morning coffee will be gone. What does the future look like for the publishing industry?
There have been contractions (and) job eliminations. Several magazines, including Mademoiselle, have bit the dust. I don’t think industry magazines, newspapers or journalism has gone through anything like this in several decades. But we won’t get rid of magazines or newspapers. The nice thing about paper is that it’s very easy to meet the desires of your own reading habits. If you want to flip to a page, you can. You don’t have to press anything. The ease and the flexibility will ensure that there will be a market for it.
Just as TV didn’t destroy radio, just as TV didn’t destroy the movies, so too the Net’s not going to destroy the printed page. Often, when you go on the Net now, you go for specific information. If something’s of any length, you usually print it out. And, even though I think they’ll make screens even clearer than they are now, it’s still not the same as having a piece a paper.
What advice would you share for companies trying to recover from the aftermath of Sept. 11th?
A lot depends on the industry you’re in. But the key thing is to make sure you survive by reducing expenses and making sure you have sufficient cash flow. You may have to shop around with some banks and lenders because they’re under pressure to cut back. But look ahead and say, ‘Alright, these things don’t last forever. What are our opportunities as things start to turn.’
Cleveland and Akron are very heavily manufacturing oriented. Any advice specific to manufacturers?
Manufacturing is clearly value added. We can’t compete with the rest of the world just in making things that everyone else can. Chipmakers have shown it’s not the commodity chips you make, it’s having what you might call the designer chips, the advanced architecture. The same is true in manufacturing.
Ford Motor Co., got in trouble not because Japan makes a car cheaper, but because of problems they had in bringing out new products and maintaining quality levels. GM has paid a little more attention to those things and, for the first time in memory, is gaining market share in the U.S. market.
Manufacturing has always been value added. Akron and Cleveland have demonstrated in the last 20 years, when the tire business first disappeared and everyone thought that the rust belt truly was gone, that it wasn’t. The economy changed and the economy came back. If you have the ability to adapt to change and get that value added, then this area should do fine.
Also, it’s important to adapt technology to manufacturing and become more efficient. The lumber business has machinery and technology that can more easily tell you what you have in your inventories and what you’re getting out of the mill. It cuts down the handling and the storage time. It’s not just technology; it’s what you use it for.
Many people have criticized NAFTA, saying it’s going to hurt our country, weaken the economy and steal our jobs. Do you agree?
NAFTA reduces barriers to do business with other countries. It has ended up creating jobs in Canada, United States and Mexico. The volume of trade has increased enormously, going both ways on the borders. Are there sources of friction? Sure. Consider Canada and the lumber business. But that’s always been true.
Clearly, it’s been a roaring success in terms of job creation, even though in certain industries and companies it has posed unique challenges.
Is there any country you see as a potentially good trading partner for the United States?
Russia. Russia’s had terrible problems, largely of their own making, such as the international monetary fund (fiasco). They haven’t established the rule of law there or a commercial code so you can do business. It’s been very arbitrary, very difficult, very corrupt and very ridden with local gangsters.
But I think Putin is, at least initially, starting to make some headway against those obstacles. Also, I hope Russia becomes a major oil producer. I’d like to have a source of oil other than the Middle East.
What do you think is Cleveland’s greatest asset?
I think getting the Browns revived, even though they test the loyalty of their fans, certainly was good. And perhaps next year the Indians will go a little further than they did this year. But I think the key thing is for the new mayor to sit down and put herself in the shoes of a business person and say, what are the obstacles to somebody who wants to do business in this area?
There are probably tax obstacles and regulatory problems. Then, when you see what creates opportunity, when you see what has helped other cities grow, you can take the necessary measures.
During a recession, while it poses some immediate problems, it also provides opportunities. People are going to be looking at where they can do business (and) break past habits. This is the time to get the name of Cleveland out there.
Are you considering running for office again?
I’ve no plans to do so, so I’ll be agitating from the sidelines. I think the President really made himself, not just in fact, but in spirit, the Commander-in-chief with the message he gave to Congress on September 20th. After the horrible events, I think the man realized this was his moment, this was his mission, and I think you see a very different president than you did before Sept. 11th. He’s risen to the occasion, provided the leadership and I am very impressed.