The New York Times
November 30, 2004

Bush Nominates Kellogg Executive for Commerce Secretary

By RICHARD W. STEVENSON
 
WASHINGTON, Nov. 29 - President Bush on Monday nominated Carlos M. Gutierrez, among the most prominent Hispanic business executives in the United States, to be his commerce secretary, as the president continued with what Republicans said would be a broad overhaul of his cabinet.

Mr. Gutierrez, 51, has been chief executive of the Kellogg Company, the cereal maker, for more than five years, and has built a reputation as an innovative and forceful business leader with broad international experience. But he has little background in public policy, leaving him largely unknown in political circles and untested by the demands of a high-profile job in Washington.

"He understands the world of business, from the first rung on the ladder to the very top," Mr. Bush said, with Mr. Gutierrez at his side in the Roosevelt Room at the White House. "He knows exactly what it takes to help American businesses grow and to create jobs."

In announcing his choice, Mr. Bush continued a comprehensive reshaping of his team as he prepared for his second term. Six cabinet secretaries have already resigned, and one person with close ties to the White House said Republicans had been told to expect as many as half a dozen additional departures.

Tom Ridge, the homeland security secretary, is very likely to step aside, but not until the White House lines up a successor, associates of Mr. Ridge said. At a time when the administration is preparing big pushes on Mr. Bush's plans to remake Social Security and the tax code, there has been growing talk in Republican circles that the senior member of the economic team, Treasury Secretary John W. Snow, might leave in the first half of next year, if not sooner. White House officials have made no effort to discourage speculation that Norman Y. Mineta, the transportation secretary and the cabinet's only Democrat, will resign soon.

Mr. Gutierrez, whose nomination is subject to Senate confirmation, would replace Donald L. Evans, a close friend and political counselor to Mr. Bush. Mr. Evans announced this month that he was leaving Washington to return home to Texas.

Assuming he is confirmed, taking his new job will entail a significant pay cut for Mr. Gutierrez. Last year he was paid $7.4 million by Kellogg in total compensation, including salary, bonus and incentive payments. He owns or has option rights to two million shares of company stock. Cabinet secretaries earned an annual salary of $175,700 this year.

The change at the Commerce Department is just one of many among the president's economic team. N. Gregory Mankiw, the chairman of the White House's Council of Economic Advisers, is expected to leave within months to return to his professorship at Harvard. Stephen Friedman, the former Wall Street executive who has been director of the National Economic Council for two years, announced last week that he would resign.

Mr. Gutierrez represents a break with what had become the traditional mold for commerce secretaries: close friends and advisers to the president who are as much political animals as economic policy makers. Mr. Gutierrez first met Mr. Bush four years ago at a Hispanic conference in Washington, a spokeswoman for Kellogg said, and he also attended an economic conference held by Mr. Bush in Texas just before the president took office in early 2001. According to records maintained by the Center for Responsive Politics, a group that tracks campaign donations, Mr. Gutierrez did not contribute to Mr. Bush's campaigns in either 2000 or 2004, though he did give money to some Republican House candidates.

Mr. Bush, eager to name a commerce secretary who had run a large corporation, met privately with Mr. Gutierrez two weeks ago at the White House for what amounted to a job interview, a senior administration official said, and came away impressed.

People who know Mr. Gutierrez said that his views on economic issues closely tracked those of Mr. Bush, and that he was especially knowledgeable on trade, currency issues and the problems facing American manufacturers in a competitive global economy.

"He's probably the most internationally oriented and experienced commerce secretary we've ever had," said John Engler, the former Republican governor of Michigan who is now president of the National Association of Manufacturers.

In addition, Mr. Gutierrez, who was born in Cuba, also has an undeniable political appeal for the White House, which has worked hard to keep the support of Cuban-Americans in Florida and cultivate greater support from the fast-growing Hispanic population nationwide. And he has a compelling personal story, having been forced to leave Cuba in 1960 at the age of 7 after his father was threatened by Fidel Castro. He never completed college and got his start with Kellogg in the 1970's in Mexico City driving a cereal delivery truck.

"It says a great deal about the president's commitment to the Hispanic community and to the Cuban exile community in particular," said Representative Ileana Ros-Lehtinen, Republican of Florida, who was also born in Cuba and promoted Mr. Gutierrez to the White House. "We're ecstatic because he's a symbol of the Cuban success stories, coming here without a penny to his name and rising up the corporate ladder to become a C.E.O. of a major company."

In Cuba before the communist takeover in 1959, Mr. Gutierrez's father was a successful exporter of pineapples. In an article written about his experiences for The New York Times in 2001, Mr. Gutierrez wrote that his family "was part of Cuba's high society, but the Cuban Revolution changed all that."

He recounted his father's being taken away and detained for a day or two by Mr. Castro's forces in 1960, and then fleeing immediately afterward to the United States. The family of four was allowed to take $8,000 with them, plus 31 bags of clothing.

Mr. Gutierrez became an American citizen in 1966, after the family moved to New York. In the 1970's, his father moved the family to Mexico, and in 1975, Mr. Gutierrez began his career with Kellogg there. He rose rapidly, eventually running the company's operations in Mexico and Canada before taking on top corporate jobs at Kellogg's headquarters in Battle Creek, Mich. He became Kellogg's president in 1998 and chief executive a year later.

In the company's hometown, Mr. Gutierrez achieved a degree of notoriety for closing the company's flagship factory in Battle Creek in 2000, eliminating 500 jobs. But he won high marks from Wall Street for turning what had been a lackluster company into a top performer in the food business.

During his tenure, Kellogg's stock outperformed the market, rising 60 percent. Kellogg's net sales rose to $8.8 billion last year from $6.2 billion in 1999. Earnings per share increased 130 percent.

Melanie Warner contributed reporting from New York for this article.