simply went silent. “I do remember Charles Koch at one point, at the end of the meeting, kind of just sitting there and thinking . . . you know, processing if he was going to allow us to go on,” Franklin recalled. “He was essentially weighing what was he willing to invest, based on his confidence.”
During the weeks of the crisis, others who worked with Charles Koch saw him behave in the same way. He seemed calm and analytical. He wasn’t shaken, as he had been after the collapse of Purina Mills. He wasn’t despondent, as he was back in the early 1970s, when he worried that the OPEC embargo might sink his company. He was steady now, during the greatest economic crisis since the Great Depression. Charles Koch seemed to view the unfolding calamity as if it were a massive trade. He was weighing what he was willing to invest, weighing what he needed to cut.
A senior employee named Jeremy Jones came into frequent contact with Charles Koch during this period. Jones was an engineer and financier from Boston who was running a venture capital group inside Koch Industries, called Koch Genesis. The small venture was the kind of thing that was near and dear to Charles Koch’s heart. Jones and his team found new technologies for Koch Industries to invest in, such as biofuels and nanomaterials, that could provide the company with years of growth. Now that the horizon was on fire, it was time to retrench rather than expand. Charles Koch seemed to make that shift effortlessly.
“He goes back to his core thinking of: What’s our point of view around what’s going to happen? How long is this downturn going to take? How is that going to affect people’s buying patterns?” Jones recalled. “And how long is it going to take—given this housing crisis—to get through this deleveraging?”
If Charles Koch was more confident in his company’s future, he had reason to be. The company he oversaw in 2008 was larger, more diverse, and more adaptable than it had ever been before. It was built to withstand market shocks. Some divisions were hit hard, such as Koch’s building products divisions and its carpet fiber factories. But other divisions fared much better, such as its oil refineries and trading desks. The financial pain was very real, but there never seemed to be any doubt that Koch Industries would come out the other side as a healthy and profitable enterprise.
The company’s survival, of course, did not ensure the survival of any given job at Koch Industries. The employees in Wichita felt this fact in their bones. Dread permeated the hallways at Koch Industries, and in offices across the country, fed by the knowledge that every job was now considered expendable. It was not a happy occasion, then, when employees were told that there would be a companywide meeting held in a large auditorium in Koch headquarters just before Christmas.
Such annual meetings were usually a time to celebrate the upcoming holidays and reflect on the good fortune of the year that had passed. They were a time for Charles Koch to wear a goofy Christmas sweater or perform a skit involving Georgia-Pacific products. This year, as Jeremy Jones and his coworkers filed into the auditorium, they knew that they might be hearing the worst.
Charles Koch took the stage, and his mood was somber. As he stood in front of the crowd, he described the severity of the economic downturn. He didn’t try to varnish the ugly truth or avoid stating directly what many of them knew was coming. Charles Koch walked through each division of the company and explained the damage that was being done. There was less demand for construction materials at Georgia-Pacific. There was less demand for carpeting and clothing at Invista. There was less demand for fertilizer, less demand for gasoline from the refineries. Not everyone at the company would come back from the holidays to a job.
“He was standing up there in front of probably two thousand people, saying, ‘Look, we’re obviously going to get through this. But I’m going to be very honest with you folks. We’re going to have to make some very serious adjustments to get through it,” Jones recalled.
One of the adjustments hit Jones. His venture fund, Koch Genesis, was shut down. Other adjustments had already begun to ripple quickly through Koch’s operations across the country. In early October, Koch closed a Georgia-Pacific plywood mill in Whiteville, North Carolina, eliminating 400 jobs. Two