The Fall Of A Timber Baron

Harry A. Merlo never thought it would end like this. Late one Friday in July, the 70-year-old chief executive of Louisiana-Pacific Corp. was summoned to a meeting of the Portland (Ore.) lumber company's board. Assembled was a somber-looking collection of close friends, including famed test pilot Chuck Yeager and loyal business associates dating back 20 years. The meeting was brief: Directors asked Merlo and his top two lieutenants to resign immediately. "It was a complete surprise to him," says one Merlo associate present. "Harry was devastated."

The boardroom coup marks a stunning reversal for Merlo. As recently as this spring, the still-vigorous CEO was basking in the glow of a seemingly flawless rise from son of poor Italian immigrants to fabulously successful lumber tycoon. In 22 years at the helm, Merlo had made over LP: By relentlessly pushing subordinates to boost production and making risky bets to develop new products, the hard-charging former Marine had built once-modest LP into a $3 billion empire. And thanks to a new process for making wood substitutes that Merlo had pioneered, 1994 income hit a record $347 million.