The Island Packet, a newspaper serving the Beaufort and Hilton Head region of South Carolina, has reported that NetJets will close a regional office in Okatie, South Carolina and move most of the operation’s eighty jobs to the company’s headquarters in Columbus, Ohio. NetJets is a subsidiary of Berkshire Hathaway and has been in the process of restructuring the business following massive losses that were incurred during the recession.
After posting a $711 million loss in 2009, NetJets managed to post a profit of $50 million for the first quarter of 2010. Warren Buffett has credited David Sokol with the turnaround. Mr. Sokol took over as Chairman and CEO of NetJets on August 5, 2009 and quickly moved to rationalize a cost structure that was inappropriate given the steep drop in demand experienced during the recession.
In addition to cost cuts, Mr. Sokol put in place many changes designed to change the corporate culture at NetJets. Warren Buffett has publicly praised Mr. Sokol’s leadership in the turnaround.
According to the article in The Island Packet, Mr. Sokol had the following to say about the relocation of jobs to Columbus:
“We will be relocating most of the NJI business functions from South Carolina and Georgia to our corporate and operational headquarters in Columbus,” NetJets chairman and CEO David Sokol told Aviation International News earlier this month. “The decision was made after detailed analysis and careful deliberation and is the result of NetJets’ ongoing, long-term business planning process that began in the fall.”
David Sokol is also Chairman of MidAmerican Energy, another major subsidiary of Berkshire Hathaway. There has been growing speculation that Mr. Sokol may be the leading candidate to succeed Warren Buffett as CEO in the future. Mr. Sokol is one of the few executives at Berkshire Hathaway who takes a broader role representing the company in the media and in Washington. For example, he was the main face of Berkshire during the recent debate over whether existing derivatives contracts should be modified to include collateral requirements. Click on this link to view a video of Mr. Sokol speaking on the subject.
Disclosure: The author of this article owns shares of Berkshire Hathaway and is the author of The Rational Walk’s Berkshire Hathaway 2010 Briefing Book which provides a detailed analysis of the company along with estimates of intrinsic value. The Briefing Book includes coverage of NetJets.