Now the world’s second-largest home-improvement chain and the nation’s ninth-largest retailer, Lowe’s Cos. grew out of North Wilkesboro Hardware Co., which Carl Buchan’s father-in-law opened in 1921. Buchan and his brother-in-law opened a second store in 1949. Buchan, eager to expand, became sole owner of both in 1952. When Snow Hill native Leonard Herring, then 28, came to work as the company’s financial manager in December 1955, the chain had six stores, from Asheville to Durham. By the time he retired as CEO in 1996, there were 375 in 23 states. Lowe’s now operates more than 1,650, with sales of $48.2 billion last year, a commerical empire not even the ambitious Buchan would have envisioned in the autumn of 1960.

It was a typical Friday afternoon, which meant that I was making my float calculations and preparing to get checks mailed. Most of the general-office staff had trickled out, headed for the pleasures of an October evening: a last cookout, maybe a game of touch football with the kids or a drive to enjoy the autumn color on the mountainsides.

Sometime after 5, Carl Buchan came into my office. He had been out all day, and whatever he was doing had made him as nervous as a cat. He was smoking, although he had more or less given up the habit years before, and he seemed distracted as he asked about various pieces of ongoing business. I knew there were personal issues that could account for his edginess. He and his wife, Ruth, were not getting along: That was why he had been staying out at the farm in Sparta, leaving the big brick house on Finley Avenue to Ruth and their daughter, Mary Elizabeth. He had told our team to contact him at the farm if we needed to reach him after business hours, so the arrangement wasn’t exactly a secret. Still, I wouldn’t bring up the subject, even to sympathize. If he wanted to tell me what was on his mind, he would. Otherwise, it was the kind of sleeping dog that I generally let lie.

He stuck to business, and it wasn’t long before he said goodnight and left the office.

Every Saturday morning at 9, Carl Buchan’s team met with him at the general office to review the week’s sales figures and touch base on other business. That particular Saturday, the team consisted of Pete Kulynych, Joe Reinhardt, John Walker and me. Bob Strickland was on his way back from a trip to Bermuda sponsored by one of our vendors. Nine o’clock came and went, and we were waiting for Carl. It was odd, because he was never late. Early, yes: Things just couldn’t happen fast enough for Carl Buchan. But he never kept people waiting.

I don’t remember precisely when the feeling of foreboding hit me. I suppose it’s always easy, after the fact, to say, “I knew something was wrong.” Nevertheless, in my gut I did feel that something was wrong, maybe because Carl had seemed so wound-up the previous evening. After waiting more than half an hour, we phoned Carl’s farm; but there was no answer. Then we thought of calling Max Freeman, Lowe’s pilot.

In those days, the runway was literally a grass strip cut in a pasture. Two years before, Carl had decided that Lowe’s needed an airplane. A pilot named Max Freeman came to demonstrate a single-engine Cessna 182 to Pete and ended up signing on with Lowe’s full time. Max had logged a lot of hours since then, flying Carl and any of the executive staff who needed to make a quick trip into or out of North Wilkesboro. Sometimes he was the only Lowe’s employee who knew where Carl was.

But he didn’t know today. Speaking for the group, I said, “Max, take the plane and fly up to the farm. See if his car is there.” I thought something might have come up to delay him.

Within an hour, Max phoned back. He had flown over the farm and had seen Carl’s wood-grained Buick station wagon parked in front of the house. He buzzed the house, flying low for maximum noise, but nobody came out. “Max,” I said, “You’d better drive up there and see what’s going on.” Sparta was just a short flight from North Wilkesboro but a longer drive, more than 30 miles away over a mountain. There was no point in our hanging around. We all dispersed to our own offices or wherever else we needed to be.

It was an hour or so later when I answered the phone at home. Max said simply: “Carl’s dead.”

When he had arrived at the farm, Max stopped to pick up the caretaker, Bob Farmer, and they went to the house together. They rang the bell and pounded on the door, but nobody answered, so they walked around the outside of the house, looking in windows. When they got to the master bedroom, the curtains were closed except for one small gap. Max peered in and saw Carl lying awkwardly on top of his bed, which had not been turned down.

They jimmied the backdoor lock and went through to the bedroom. Carl had apparently died while getting ready for bed the previous evening. By now, rigor mortis had set in. Max called Carl’s local doctor anyway, and the doc came right over. There wasn’t anything he could do for Carl, but he began to fill out forms and make arrangements. He sent Max to tell Northwestern Bank President Ed Duncan, whose farm was nearby. Max found Ed on the road and gave him the news.

Carl Buchan was dead. I was shocked but not surprised. He had been a high-pressure achiever, intense and driven. He was a sometime smoker who never exercised, and he liked to have a steak for breakfast every morning. His youngest brother, Billy, had died of a heart attack at the tender age of 27. In view of all that, we were lucky to have had Carl as long as we did.

But now he was gone, and everything was up in the air. I would think about it later. Right now, someone had to break the news to Carl’s wife.

I picked up Pete, and we went to get the Presbyterian minister, Rev. Watt Cooper. We explained the situation and took him with us to see Ruth Buchan. Even if you’re not getting along with your spouse, his sudden death at age 44 can only be a devastating shock. There was nothing much that Pete and I could say to comfort Ruth at that moment, so after a little while we excused ourselves and left her with Rev. Cooper.

Pete came home with me, and we made calls to key Lowe’s people who hadn’t been reached earlier. Bob and Betty Strickland were just arriving home from Bermuda when they heard the phone ring; they were naturally appalled by the news. General counsel Bill McElwee and his wife, Doug, were on their way out west to Warm Springs, Ark., or maybe somewhere in Colorado, but we left word with Bill’s office. When he called and got the news on Monday, he came right home. Pete himself was badly shaken, thinking not only of Carl’s death but of the implications for Lowe’s. I told him “Stay calm; the company won’t fall apart overnight.” Business routines would prevail, I said; Lowe’s stores would open as usual on Monday morning. The thought seemed to help him relax a little. The funeral was held two days later. The men that Carl had so recently called “my team” were now his pallbearers, along with Ed Duncan, outside auditor Ed Beach and Bill McElwee. As I recall, the whole community turned out for the burial service in Mount Lawn Memorial Park. In addition, messages of condolence were arriving from all over, including a telegram from Gov. Luther Hodges and a telephone call from the Democratic Party’s presidential nominee, John F. Kennedy, to whose campaign Carl had contributed. Less than three weeks later, JFK would be elected the 35th president of the United States. He and Carl Buchan were nearly the same age.

I can’t remember if I even voted that year. I probably did, because I always do, but God knows how I found the time. Carl Buchan’s death marked the start of the most hectic 12 months of my life.

The moment I heard that he was dead, I went into survival mode. My main response to his loss was professional rather than personal. I had liked the man, yes, and admired him greatly; but he was my boss more than my buddy. We trusted each other and would have worked well together for decades, probably, if he had lived. But after his death, my overwhelming feeling was not so much grief at the loss of a friend as an urge to do everything necessary to keep his business from running off the rails. After all, Lowe’s was my business too, and the rest of the team’s, providing a livelihood for hundreds of families. Carl would not have wanted me to feel any different.

For the five of us on Carl’s team, the first week or so after his death was largely occupied with what we would now call “spin control.” In the public mind, Lowe’s was identified with Carl Buchan: He had been its creator, its guiding genius and its front man. Lowe’s without Carl Buchan was unthinkable. Everyone assumed that his estate would sell the chain to a larger company somewhere or that individual stores would be sold off piecemeal.

We had other plans for Lowe’s. I don’t think that Pete, Joe, Bob, Johnny or I ever doubted that we had the ability to keep Lowe’s going, moving in the direction that Carl had charted for it. Every one of us knew his job and was damned good at it. We just had to convince the rest of the world.

We started with Lowe’s own people — the general office staff and the store employees. They had to be reassured that their jobs were safe, that Lowe’s wasn’t going to shut down. In the fall of 1960 there were 15 stores in the chain: North Wilkesboro, Sparta, Asheville, Asheboro, Charlotte, Durham, Winston-Salem, Greensboro, Raleigh, Roanoke and Richmond, Va., Chester, S.C., Knoxville and Bristol, Tenn., and Oak Hill, W.Va. Even now, I can reel off that list, as I visited the stores routinely. At the time, all of us on Carl’s team could tell you each store’s number, its street address, the date it opened and anything else about it that mattered. When I was asked, “How do you do that?” I used to say, “These stores are like my kids. If they were your kids, you’d remember the important things about them.”

Because of the way Carl had delegated authority, all Lowe’s store and general-office employees knew at least one person on the executive team pretty well. All the office personnel in the stores knew me. Johnny Walker was responsible for the sales people. Warehouse employees knew Joe Reinhardt. Anyone involved in marketing knew Bob; the purchasing staff knew Pete. And I’m just talking about direct-reporting relationships. Flow charts aside, Lowe’s was still a small-enough company that just about everyone was acquainted with the executive team well enough to have a casual conversation with any of us.

What I’m getting at is that there was a comfort factor making it easy for us to reassure people inside the company. But we also had to deal with Lowe’s vendors. Naturally they wondered if they should continue shipping products to us. Would we keep Lowe’s doors open, honor our obligations and continue to deal with them the way Carl Buchan had? The customers were worried, too. Most of them were professional contractors. Would they have to look elsewhere for their essential supplies?

I was Lowe’s financial officer, so in some ways my function was at the epicenter of the earthquake that was Carl Buchan’s death. Here was the central problem I had to deal with, the problem from which other shock waves radiated: Lowe’s had essentially belonged to Carl. It was a private company, and he owned 90% of its stock. Just a few weeks earlier, he told us that he was drafting an agreement for the profit-sharing plan to buy a portion of his stock from him incrementally during his lifetime and the balance at his death. We had all shaken hands on it. But the draft agreement was sitting on Bill McElwee’s desk when Carl died. It was never signed.

The plan had included a provision for Lowe’s to buy life insurance on Carl, and we had gone ahead with that. A half-dozen policies had been taken out, with a total death benefit of about $2 million. The thinking was that when (in the fullness of time) Carl died, the life insurance payout would give the company some cash with which to buy the portion of Carl’s stock that had not been sold to the profit-sharing plan during his lifetime.

As it turned out, Carl died too soon, before the profit-sharing plan could buy any of his stock at all. Whatever we did next, we were going to need cash, but getting the insurance companies to pay wasn’t going to be easy. The situation looked suspect because the policies had been written so recently. In fact, the first premium checks hadn’t even cleared our bank — Northwestern Bank — when the insurance companies found out that Carl had died. They instructed their banks to call our bank and say “When you receive this check, just send it back to us.” Meanwhile, I had visited Ed Duncan to tell him, “When these checks come in, clear them right through!”

The executor of Carl’s estate was Wachovia Bank and Trust, largely because of Carl’s longtime friendship with Robert Hanes of Winston-Salem, who had built Wachovia into a statewide financial powerhouse and served as its president for 25 years. Hanes had retired from the bank in 1956, the year before Carl invited him to become Lowe’s first outside shareholder. Robert Hanes financed Lowe’s Winston-Salem store, which had opened in 1957. He died in 1959. Now Wachovia had to settle Carl’s estate. It was important that they understand our position, so on Bill McElwee’s advice I called Leon Rice, a partner in the Winston-Salem firm of Womble Carlyle Sandridge & Rice. Leon Rice had often represented Wachovia’s trust department. He invited me to his office to explain our situation.

The rest of Carl’s team had agreed that I was the natural point man on the financial/legal front. Whatever thoughts any one of us might have been harboring about his own superior qualifications for eventual leadership of Lowe’s, we all knew that we had to stick together in the present crisis. That had become apparent on the evening after Carl’s funeral, when I drove Bill McElwee to Sparta to see Carl Buchan’s doctor, the one who responded when Carl was found dead. Bill suggested that we invite Jim Lowe — Carl’s brother-in-law and former partner — along, so he wouldn’t feel that we were trying to exclude him.

In the years since Carl bought out his interest in Lowe’s, Jim had been involved in several enterprises including Lowe’s Foods (which he started and sold), a motel and a stock car that raced on the fledgling NASCAR circuit. In the next few years, he would own part or all of a bowling alley, a skating rink and, I believe, a barbershop. But in October of 1960, in the wake of Carl’s death, Jim was flirting with the idea of giving the hardware chain a second chance.

On the drive to Sparta that evening, we decided that Bill McElwee would interview the doctor by himself. He wanted to hear exactly what the doctor thought about Carl’s death, so that he would know how to proceed with the life insurance companies, who would certainly be investigating the claims that Lowe’s would file. So when we got to the doctor’s house, Bill went in alone. Jim and I waited in the car.

It wasn’t long before Jim started talking about Lowe’s — what he thought needed to happen in the company, what things should be cut from the budget, what he would do if he took over. I didn’t say much, because I didn’t have to; Jim wanted to do the talking. But it’s a good thing that it was dark by this time, so he couldn’t see my face. Pete had once told me, “Jim Lowe could sell a refrigerator to a penguin.” But Jim was strictly a small-town entrepreneur. He hadn’t even wanted Lowe’s to expand to Asheville. In my opinion, putting him in the driver’s seat would have been like parking Lowe’s and throwing away the keys.

When I told the rest of the team about Jim’s apparent interest, their eyes rolled just like mine had. None of us wanted to work for him. In fact, if we couldn’t work for Carl Buchan, we didn’t want a boss at all. But our only hope for autonomy lay in presenting a solid front on every issue like this that arose. If Jim Lowe or anyone else succeeded in driving a wedge into our group, we would deserve what we got.

Behind closed doors, however, we all had doubts about the future. Joe Reinhardt brought his concern to my office shortly after Carl’s funeral. Like me, Joe was building a house, but his was in an earlier stage of construction. Building a house meant making a long-term commitment to staying with Lowe’s, staying in North Wilkesboro. Joe was wondering if he should put the construction on hold, but I told him that he should go full-speed ahead. I knew that it would take time to work through everything we had before us, no matter what the eventual outcome might be.

What our team needed was structure and a sense of order so we could be confident that our right hands knew what our left hands were doing. Of us five, I guess I was the one best able to organize procedures in a way that the others would accept. I proposed regular weekly meetings, sent out an agenda for each meeting beforehand and wrote up minutes afterward.

As a result of one of those meetings, I called Bob Schwartz at Met Life and offered to put the proceeds from the $1 million loan it had just made to Lowe’s into escrow until Carl Buchan’s estate was settled. I knew that the loan had been a big deal for Schwartz and thought he might justifiably be nervous about it now. But he wasn’t nervous; or if he was, our offer somehow calmed his nerves. He said there was no need to do that, so we didn’t. It was like a vote of confidence in us, and we were glad to have it.

Because the operation of Lowe’s had a direct bearing on the value of Carl’s estate (which consisted mainly of Lowe’s stock), part of Wachovia’s job as executor was to run the company. The first thing they did was put our expansion plans on hold. Then they set up a liaison committee, and I was made chairman because I was Lowe’s secretary and treasurer. Every week or two, Wachovia would send someone up to meet with us and get reports on how Lowe’s was doing. Sometimes it would be Dick Page, who was head of the trust department. Other times it would be Edgar Roberts, another trust department executive who was incidentally the husband of Della Roberts, the noted botanical painter.

Wachovia wanted us all to have contracts, so at the beginning of December I signed the first written employment contract that I ever had with Lowe’s, a one-year contract for a salary of $20,000. The rest of the team got the same deal — very good money at the time. Wachovia would have liked to make it a multiyear contract so that they wouldn’t have to worry about our walking away from the company no matter what they did; but no way was that going to happen.

Not that our relationship with Wachovia was adversarial, because it wasn’t. When I went down to Winston-Salem to see Leon Rice at his law office, he listened with interest to my explanation of what Carl Buchan had wanted for Lowe’s — which was that the employees would own the company when he was gone. I explained how the profit-sharing plan, of which I was the sole trustee, would have bought Carl’s stock in increments over several years. I explained about the life insurance policies and how the payout was supposed to finance the purchase of the rest of Carl’s stock at his death, enabling his estate to pay the estate taxes. I told him about the meeting Carl had with the five of us, where he informed us of his plan and we all shook hands with him and thanked him. I also told him that the written agreement providing for all this had been drafted but never signed and was on Bill McElwee’s desk when Carl died. Leon Rice asked one of his partners to join us. Pen Sandridge came in and sat on the floor, leaning against the wall with his knees up. I thought it was oddly casual for a lawyer, but that’s just the way he was. The three of us talked for some time, and before I left they agreed that Womble Carlyle Sandridge & Rice would represent us.

Leon Rice advised us to make a pitch to Wachovia on behalf of the profit-sharing plan, so Bob Strickland drove to Winston-Salem with a flip chart and laid out our position. I can’t remember how Bob was chosen for the job, but he was the right choice. Neither Pete nor Joe could have done it, and Johnny would have overdone it. I could have gotten through it, but Bob was naturally better at that kind of thing. After all, it was like marketing: He was pitching us to Wachovia as the rightful successors to Carl Buchan’s business.

I never worked more closely with Bill McElwee than during this period. He would come to my office just about every morning so we could update each other about various legal and financial developments. It was Bill who carried the load on Carl Buchan’s life insurance claims: Beginning with the day of Carl’s funeral, when we went to Sparta to find the doctor, Bill orchestrated the filing of claims and the negotiations with the insurance companies. One of the first things he did was to hire the pre-eminent insurance lawyer in our region, who was based in Greensboro. Bill said he wanted to hire him before the other side did! Bill also advised us to file the claim forms just before Christmas, on the theory that the holidays would throw everyone off schedule and perhaps put a little more perceptual distance between the issuance of the policies and Carl’s sudden death. Rose and I missed the company Christmas party that year because Bill and I were filing insurance claims.

We knew that the insurance companies would investigate the case and look for reasons not to honor the policies. Although I acknowledged the reason for the investigations, they weren’t pleasant.

It was sometime in the spring of 1961 that a private investigator hired by one of the companies interviewed me in my office. After a while, you get used to the obvious suspicion that these people feel toward you, and you don’t let their leading questions rile you. This particular fellow, however, was unusually obnoxious. He questioned me about the day of Carl’s funeral, implying that we had gone to see the doctor to “clean up” the story about how Carl died. I didn’t give him any satisfaction, but as he was leaving my office at the end of the interview, the investigator paused in my doorway and said, “I’ll bet you boys threw all his drugs out of the car on the way back down the mountain that day.” I stood up and said, “Get the hell out of here.” He did.

According to the stock pricing formula that Carl Buchan and his estate planner had devised (10 times the average of Lowe’s earnings per share for the preceding three years), the Lowe’s stock that Carl owned at his death was worth about $5.3 million. The profit-sharing plan had about half a million dollars, less than a 10th of what we needed to buy the company. Obviously, we were going to have to find a source of funding.

We were assuming that the estate would recognize our unsigned agreement with Carl Buchan and honor his plan for the stock. But that recognition did not come right away. Wachovia felt that it had to investigate other options, and there were some complications.

One complication was Ruth Buchan herself. Sometime early in 1961, she came to see me on her brother’s behalf, wanting to know if Pete, Joe, Bob, Johnny and I would consider working for Jim Lowe. It was pretty obvious that Jim put her up to it: Ruth hadn’t been involved with the running of Lowe’s since back in World War II, and she didn’t pretend to have any understanding of the business. She was just trying to do her brother a favor: If she held onto Carl’s stock, maybe Jim could run Lowe’s and keep the company in the family. It was a romantic idea that had no prospect of validation in reality.

After my session in the car with Jim Lowe on the day of Carl’s funeral, our team had foreseen that this visit would come and had forearmed me with their unanimous response, which was basically: “Sorry, Ruth. If Jim comes in, we go out.” Fortunately, she accepted that answer and didn’t press Jim’s candidacy any further. Apart from this one episode, she didn’t work either for us or against us in the settlement of Carl’s estate.

Our team’s decision to stand united served us well, and the response “if X comes, we go” also worked when Wachovia was beating the bushes for potential buyers for Lowe’s. Wickes Lumber was one interested party. Like Lowe’s, Wickes had its roots in a family operation that grew like crazy during the postwar housing boom. It was based in Michigan but had been expanding around the Midwest and into the South and Northeast as well. In addition to basic lumber, Wickes sold roof trusses, prehung doors and window assemblies to builders and remodeling contractors. It was easy to see how Lowe’s 15 stores might fit into Wickes’ expansion plans.

If Wickes would pay more than the profit-sharing plan could, Wachovia would sell Carl’s stock to them. But the only way Carl’s stock was worth more than $5.3 million was if all Lowe’s assets were intact. The executive management team was a significant asset, but Wachovia couldn’t promise Wickes that we would stay on and work for them. In fact, when asked, we stated flatly that we wouldn’t. After the autonomy and vision for Lowe’s future that Carl Buchan had given us, why would we want to work for a chain of lumberyards based in Michigan? Then Wachovia considered putting Lowe’s up for auction, but we told them that if they didn’t honor the oral agreement that we had with Carl Buchan, we would sue the estate for breach of contract. That would add yet another layer of complication and would delay settlement of the estate.

Wachovia concluded that their best course was to negotiate with us. They maintained that $5.3 million was not enough to pay for Carl’s stock — that it was a sweetheart deal, in effect, struck between Carl and his own company’s profit-sharing plan. We understood their position, and through negotiation we agreed on a price of $4.3 million in cash plus $1 million in notes payable over time, plus half of whatever the life insurance companies paid us. We settled with the insurance companies for something like $1.4 million, so we paid Wachovia half of that.

Accountant Ed Beach and I went looking for $4.3 million. The financing world did not beat a path to our door. I don’t know what would have been considered a sexy investment for venture capital in 1961, but a motley chain of 15 hardware stores based in North Wilkesboro was definitely not it. We visited Rush Dixon, the founder of a brokerage firm based in Charlotte. He said he would want about 30% of the company in exchange for financing. That was out of the question. We kept looking, but again and again we ran into the same kind of response. In exchange for funding, financiers wanted a big chunk of Lowe’s.

The best proposal I got was from Alex. Brown & Sons — the oldest investment bank in America and an interesting company. It was founded in 1800 by an auctioneer named Alexander Brown who came to the U.S. from Ireland. Like the patriarch of the Rothschild banking dynasty, Brown had several sons who followed him into the business and fanned out to establish a sort of family banking network. The sons went to Philadelphia, New York and England, but the original office was in Baltimore, and that’s where I made contact. Alex. Brown agreed to finance the purchase of Carl’s stock in exchange for 10% or 15% ownership of Lowe’s. We weren’t thrilled, but we didn’t reject the proposal out of hand because we thought it might be the best we could get.

Ed Duncan made some calls on our behalf, but nothing came of them. He did help me keep things in perspective, though. One day I was feeling disheartened, and I told him, “These sure are trying times.” Ed corrected me: “No, these aren’t even close. Trying times were after the Civil War, when you could get hung from a tree for just minding your own business.” He was right, of course, and not just about Reconstruction. My forebears had survived wars, isolation, epidemics and the Great Depression. I would survive the financing of Lowe’s.

(Continued next month: Lowe’s goes public.)

Every market, be it bear or bull, seems to generate a catchphrase that eventually comes to encapsulate the mojo of the moment. In late 1996, for example, after Federal Reserve Board Chairman Alan Greenspan wondered if “irrational exuberance” hadn’t artificially inflated asset values, that expression became the stand-in reference to the tech-driven stock bubble that dominated the decade — as well as the title of a book, orchestral symphony and series of paintings. Going further back, we had “greed is good” and “brother, can you spare a dime,” referring to the up and down markets of the 1980s and 1930s, respectively.

It’s early yet, but I have a catchphrase nominee for the historic downturn through which we’re all now suffering and will surely continue to do so until the slapdash tinkerings with the economic machinery somehow pay off: “secular headwinds.”

It’s a peculiar idiom, in that “secular” is typically used to identify something as nonreligious — and God knows (cue rimshot) there’s nothing particularly spiritual about a headwind in the first place. But if you read far enough into the dictionary’s assemblage of definitions for the word, you realize it also refers to anything that spans the ages. Thus “secular” is simply a fancy way of saying “essentially permanent,” meaning that when a chief executive officer invokes the phrase — as my old boss McClatchy Newspapers CEO Gary Pruitt is prone to do — it’s not a lament so much as a confession: “We failed to see the world has changed.”

A quick (and admittedly cursory) online search of the phrase shows it apparently was first uttered in 2002 on CNN’s Moneyline. But that same search showed a mushrooming use of it in 2008, as the economy headed south and corporate leaders and business reporters sought to explain plunging earnings. Everyone was facing headwinds, and the only question was whether they were cyclical or secular. That distinction is debated with Talmudic precision. It just so happens that a couple of companies in my neighborhood demonstrate the crucial difference between the two, which can be summarized this way: Battling a cyclical headwind means you’ll live to sell another day, while a secular headwind means you’re a corpse — albeit one probably still warm.

Chapel Hill-based Investors Title Co., which sells real-estate title insurance, was trading at $50 a share this time last year. These days, it hovers in the low $20s, has reduced its staff and seen a 2007 profit of more than $8.4 million turn into a 2008 loss of nearly $1.2 million. But for a company whose fortunes are tied to the sad-sack real-estate industry, that performance is normal and understandable. When home sales pick up, Investors Title’s results will pick up. That’s a cyclical headwind. It’ll eventually change directions and become a favorable breeze.

Then there’s R.H. Donnelley Corp., the Cary-based publisher of Yellow Pages directories. A generation ago, having the contract to print directories for a monopoly phone company was a license to print money. In its day, the phone book was the equivalent to the Internet — which is to say, an amazing repository of information, tips, lists, maps and, of course, the telephone numbers and addresses of virtually every person and business in the vicinity. All homes and offices had a well-thumbed phone book, an item as indispensable to daily life as your Web browser is today. But Donnelley — which operates online and can’t be accused of not understanding what the digital age would do to its core business — nonetheless doubled down on the print business in 2006 when it bought Dex Media, another phone book publisher, for $4.2 billion.

The problem is that phone books are more annoyance than useful tool these days. The last person to celebrate the arrival of a phone book was Steve Martin’s movie character, Navin Johnson, in 1979’s The Jerk. (“The new phone book’s here!”) Finding a new directory at your front door only means it’s time to go through the annual disposal anguish over the old one. Phone books are a cumbersome relic left over from the previous century and whose usefulness is only a faint memory to anyone over 20 years old. That, ladies and gentleman, is a secular headwind. Making a $4 billion bet on a fading industry explains why R.H. Donnelley’s debt rating is nosediving and its share price so low it was delisted from the New York Stock Exchange.

Other industries have learned the hard way about secular headwinds. Travel agents are an endangered species, for instance, and all but the most obtuse real-estate agent wakes up in the morning wondering if this is the day when technology seamlessly matches up buyers and sellers without the middle man’s help. What’s true at the poker table — if you look around and don’t see the sucker, it’s you — has a similar corollary in business: By the time you figure out a headwind is secular, you’re already on the ground with the other deadwood.

Comment on this article

For those who frequent that strange piece of architecture known as the North Carolina Legislative Building, it would be easy enough to conclude that the $789 billion federal stimulus package is all about saving state government. Recent talk there has revolved around what North Carolina’s share of the stimulus money will do to help close a budget gap believed to be approaching $3 billion. Not including the tax breaks going to individuals and businesses, North Carolina will receive $6 billion during the next three years. About half will end up in the state’s operating budget.

But this money was to boost the economy, right? Does funneling billions into government programs accomplish that? Ask 10 people, and you may get 10 different answers. Ask 10 economists, and you could face the same predicament.

Most economists believe the plan will help stabilize the economy, even if it doesn’t prompt a recovery. Mark Zandi, chief economist for Moody’s Economy.com, wrote recently that he believes the jobless rate nationally will be 2 percentage points lower at the end of 2010 than it would be without the stimulus plan. Closer to home, N.C. State University economist Mike Walden agrees that the federal infusion of money into the state should mitigate the effects of the recession. “It doesn’t take us back to growth, and it doesn’t turn the economy around,” but he expects it will create some much-needed jobs, at least in some sectors. The White House estimates 105,000 jobs will be created in North Carolina by the federal legislation. Walden thinks that number is probably high but says even 70,000 would be significant.

A good chunk of them will be in construction. The state will be pulling down $775 million in highway-construction money. An additional $131 million will go to other transportation projects. Town and city governments in North Carolina will receive $138 million for sewer and water projects. There’s also $136 million for public housing and housing assistance. All ultimately will flow to private contractors.

You can look at those numbers in different ways. North Carolina already is spending almost $3 billion a year to build and maintain roads. That $900 million in new transportation money comes to less than 25% when thrown into the pot, so the stimulus plan hardly will be rebuilding America’s infrastructure, as some supporters claimed early on. But the Federal Highway Administration estimates that every $1 billion in road infrastructure projects creates 35,000 jobs. If one of those jobs is yours or that boost in construction keeps your business running, the effort hardly seems inconsequential.

Some economists, including key Obama adviser Christina Romer, see tax cuts as more effective than government spending at spurring growth. Tax breaks make up more than 30% of the plan and include a range of cuts for individuals and businesses. The signature tax break — the “Making Work Pay” credit — is forecast to put an average of $13 a week in workers’ pockets beginning in June. With North Carolina’s 4.1 million employed, that pumps an additional $53 million a week into the Tar Heel economy. Over the course of a year, that comes to $2.8 billion.

As for the stimulus money moving into existing state-government programs, it too will percolate through the economy. The biggest piece will be $2.35 billion for Medicaid, the health-care program for the poor. Most eventually will make its way into the hands of health-care providers, who buy groceries, cars and homes and reinvest in businesses. Then there’s $722 million for public-school and early education programs, $67.5 million for child-care subsidies and $112.9 million for home weatherization.

Of course, none of this money is free. The federal government, increasing the deficit and national debt, is borrowing it. Some economists, Walden points out, believe government spending accomplishes little because it crowds out consumption and private-sector investment as people put their money into higher-paying treasury bonds the government uses to finance its debt. A few economists think that “crowding out” is complete: Without the stimulus plan, the same amount of private economic activity would have occurred utilizing the same amount of money used to pay for the government plan. Others reject that theory.

Most economists, though, believe the infusion of federal money will help in North Carolina and elsewhere. Government needed to take action even if there was plenty of disagreement about the particulars. “This isn’t your father’s or your grandfather’s recession,” Walden says. But Zandi, the Moody’s economist, wrote that the success or failure of the plan will be determined by what it does to people’s psyches, not their pocketbooks. His words reflect what many people already understand: “Unless the plan helps dissipate the current dark mood of pessimism, it will not stem the economic downturn.”

Scott Mooneyham is the editor of The Insider, www.ncinsider.com.

Business people, if they were honest with themselves, would have to admit to being the biggest self-help junkies around. You need look no further than book publishing for proof. The surest road to riches in the publishing world is to create a gimmicky book built around leadership secrets of some faintly obscure and decidedly nonbusinesslike figure from history — Attila the Hun, for instance, or Sun Tzu. Once the author has teased out various business applications from the old Hun’s or Chinese warlord’s utterances, the path to the bestseller list is open, and high-paying consulting and speaking gigs will stretch ahead for years — all because business people have an endless appetite for self-improvement.

Call me old-school, but I prefer to absorb my lessons in success via observation and study rather than paying $24.95 to the likes of Donald Trump, who has 14 books detailing his secrets of success, secrets of recovery (after his success proved fleeting), secrets other people have shared with him, etc. Want to understand the key to success in business? It’s as simple as spending time in a well-run operation watching how it’s done. I do that at my local Waffle House in the quaintly named town of Fuquay-Varina. (Informal civic motto: Don’t pronounce it like that, you pervert.)

Go ahead and laugh. I don’t mind. I’m a Waffle House partisan, accustomed to people rolling their eyes when I say, in all sincerity, that it’s my favorite place to eat. My fondness for breakfast eateries probably has a hereditary component, considering that my late mother’s photograph still hangs on the wall of her hometown greasy spoon, Huddle House #92 in Clarkesville, Ga. But seven months ago, I received some reinforcement in my Waffle House crush when the tony food magazine Saveur published a paean from a fellow cult member, a well-traveled soul who declares in the article that “I’ve never found a breakfast joint to replace the Waffle House.”

Preach it, brother. He admires Waffle House for the food, and so do I, but my business writer’s eye can’t help but notice the operation itself. And therein are found four lessons ever so important in these trying times. To wit:

1) It’s better to do a few things well than many things inconsistently. The menu, a laminated sheet covered front and back with various offerings, may look extensive, but it’s mostly different combinations of a few simple things: eggs, toast, potatoes, grits, batter and meat. Don’t expect anything else. For more than a half-century, Waffle House employees have focused on the art of getting a plateful of those few ingredients, in whatever array you’ve ordered, in front of you within minutes. It’s what they do and all they do. Countless food fads have come and gone, but the House has stayed true to its mission. Contrast that with, say, Sears, which at one time had ambitions of selling everything you’d ever need, including a house and a motorcycle. Today it’s happy just to sell you jeans.

2) Every customer is uniquely valuable. Bad or indifferent service is a common aspect of too many businesses these days. Some — banks, for instance — discourage face-to-face encounters with customers, pushing them toward digital transactions. Others herd them into that special hell of automated phone lines, where the endless pushing of buttons leaves you sputtering with rage after you’re asked for the umpteenth time to enter your number followed by the pound sign. I’ve long remembered the reaction years ago when I complained to my mutual-fund company that my statement had been mailed to somebody else (who had the good grace to forward it to me). The fund’s president, as soon as he heard, called from an airport to apologize. That inspired years of loyalty. I don’t expect to see Waffle House’s CEO at my local restaurant, but Roger the host is an exemplary stand-in. He’s my guarantor of good service, and if the wait for a table is too long and I leave, the coffee’s on him. But you know what? I’ve never seen anybody leave without eating.

3) Make everything the same, but different. I’ll turn this over to Esquire magazine for explanation: “The great gift of Waffle House is not that the food at every single one of its units tastes the same, though, in fact, it does; the great gift is that every single one of its units is different and owes something to the vagaries of its location.” Every company, no matter how big, ought to have the feel of a mom-and-pop outfit.

4) Transparency is good business. There are no secrets at Waffle House. Everything happens right in front of you, especially when you sit at the counter. Imagine if you could watch your car being repaired or listen in as your congressman talks to a lobbyist. Because we can’t do either, doubts about the process always linger. People trust what they can see. That’ll be $24.95, please.

Comment on this article

A few decades ago, more than 1,000 workers toiled at Alcoa Inc.’s smelting plant at the south end of Badin Lake. The Pittsburgh-based aluminum maker was the largest taxpayer and largest employer in two counties. In ways small and big, Alcoa shaped the tiny town of Badin and the rolling hills for miles around.

But global competition proved tough. By 2003, Badin Works had closed, its jobs gone. Alcoa, though, didn’t disappear from the Yadkin River Valley. It still owned four dams on the river, dams built decades ago to generate electricity to power its smelters, dams that created the reservoirs that formed Badin, High Rock and Tuckertown lakes. Alcoa in North Carolina morphed from aluminum manufacturer to electricity wholesaler.

These days, many residents of Stanly, Montgomery and Davidson counties question how a private company that employs fewer than three dozen people locally has the right to control the flow of one of the largest rivers in the state. They’ve raised their questions as Alcoa seeks to renew a federal license to operate the dams for another 50 years.

The fight over relicensing gets more interesting by the day. Not long ago, Gov. Beverly Perdue told The Charlotte Observer, “It’s hard for me to understand how a company could own water rights to an entire river basin.” She, like predecessor Mike Easley, urged the Federal Energy Regulatory Commission to delay the licensing and, in early April, filed a motion to intervene. The state also has withheld a water-quality permit. State legislators, led by two Republicans, have filed bills aimed squarely at the company. One would force Alcoa to pay a local tax on its power generation. The other would create a trust that could buy the dams or vie with Alcoa for their future control.

The company doesn’t want to sell. It says the legislation could lead to a “government taking” of its property. Chuck Neely, a Raleigh lawyer and lobbyist who represents Alcoa, says the bills set the stage for any legislator with an ax to grind to attack any company. “Singling out a particular industry or a single business is a terrible precedent,” Neely says. The issues being raised are bigger than one company or a few dams on a single river. The fight is part of a larger, fundamental question that legislators have been struggling with lately, as droughts and population growth have caused increasing conflict over water: Just whose water is it?

If I buy a piece of land, dig a well and hoist a bucket of water, it’s mine, right? Well, what if I dig a well and pump so much water from the aquifer that my neighbor has none? Is it still mine? Actually, even that bucket of water might not belong to me. Water use in North Carolina and other Eastern states is generally guided by something called riparian rights. The common-law principle entitles you to the reasonable use of water under, on or adjacent to your land. But what’s reasonable use? Generally, it has been interpreted to mean anything that doesn’t significantly diminish or affect the quality of the water for other landowners who happen to be upstream, downstream or otherwise have rights to it.

Like most common law, riparian rights have evolved with court decisions and regulation. In North Carolina, they may soon become a lot more regulated and a lot more limited. Lawmakers are considering a bill that would require large commercial users to obtain permits that could, in times of drought, limit withdrawals. The bill also makes plain that the bucket of water I thought was mine doesn’t really belong to me. The bill begins: “The waters of the State are a natural resource owned by the State in trust for the public and subject to the sovereign power of the State to plan, regulate, and control … .”

That statement might not sit too well with Alcoa. State Sen. Fletcher Hartsell, a Catawba County Republican, doesn’t care. He’s the sponsor of the legislation to create a publicly held trust to take control of the dams. He notes that Alcoa, as a part of federal relicensing of the dams in 1958, had to state why it was in the public interest. One of the major reasons cited: jobs. “Clearly, circumstances have changed in the last 50 years,” Hartsell says. “They’ll change in the next 50 years.”

In fact, they’re changing under our feet. Whether it’s a struggle against a company’s control of a river or a battle over shifting water from one basin to another, water has become an emotional issue in North Carolina. What makes this issue so emotionally charged is that the flow of people into the state keeps increasing. But not its water.

Scott Mooneyham is the editor of The Insider, www.ncinsider.com.