(FORTUNE Magazine) – Anthony J.F. O'Reilly, known almost universally as Tony, was managing for the new economy before there was a new economy. The voluble, hyperkinetic president of H.J. Heinz, the Pittsburgh-based food company, is a leading apostle of cost cutting. Since becoming chief executive in 1979, the Dublin-born O'Reilly, 50, has squeezed out per-share earnings gains averaging more than 15% annually while revenues were growing at just 8% a year -- to $4.3 billion in the fiscal year ended last April. O'Reilly is also a marketing visionary who has greatly expanded Heinz's line of successful products with minimal resort to acquisitions. In two wide-ranging interviews with FORTUNE, O'Reilly discussed the changed economy and the opportunities and pitfalls it presents to corporate managers and to food company executives in particular. Excerpts: On inflation: The inflation party -- the great underwriter of industry in the 1970s -- is over. When inflation was roaring away, there was a ready acceptance in the mind of the consumer for almost unlimited price increases. We passed on our increases and then some. I love the euphemism ''rounding up.'' I've never heard of any price decision taken on the basis of ''rounding down.'' If you can't get your profit out of volume and out of price, you've got to get it out of cost. On cutting costs: We're in a tough nickel-and-dime business, an industry that takes no prisoners. It's an industry that people often dismiss by saying, ''People have to eat.'' But they certainly don't have to eat your product and your brand, and they certainly don't have to eat at your price marker. You can consolidate your plants, which we have done. We've shut down 16 major plants in the last eight years. We have about 80 manufacturing facilities left worldwide. The mentality we're encouraging is: shall we make or buy? Are we the low-cost producer? The make-or-buy issue is something that should be an additional check on your own cost efficiencies. On developing new products: We are spending a substantial amount on new product development -- last year in excess of $50 million out of a total marketing budget of $300 million. But we've been insisting that if anyone wants to launch a new product they'd better tell us about two products that they want to de-launch. It's always a danger in a large business that a product will be kept in the line simply because it contributes to overhead. We shot the god of volume in this company many years ago. On making acquisitions: We tend to be pretty stingy about what we buy. We've spent $371 million over the last ten years to buy businesses. We've bought them all for cash and didn't give one share away. In the fiscal year that just ended, those companies produced after-tax income of about $65 million. If you apply to that the multiple that Philip Morris paid for General Mills and Reynolds paid for Nabisco, you get a billion dollars. So what we've effectively done is we've bought a billion dollars worth of companies for $371 million. On tax reform: We are very pro the Senate tax act. We've been full taxpayers, and have watched with somewhat controlled admiration how other companies pay a substantially lower tax rate. We think that the framework of the Senate bill is logical. Our first thoughts are: how can we invest more in America? And I think that's exactly what the framers of that tax package wish us to do. We're obviously now not going to invest in a country with a 50% tax rate if we can invest here in the U.S. On consumer trends: Convenience is going to be paramount, and even more paramount is taste. Taste is what the consumer is after. That's why generics failed, that's why no-salt foods have not really caught on with the consumer, and that's why a lot of these fad products have died. What we want to concentrate on is good taste and convenience, particularly microwavable convenience. On managing: I meet with my 25 top line officers between once a month and every six weeks, and there is a pretty formal agenda. I won't say it's impossible for things to go wrong with this system, but it certainly minimizes the time during which things can go wrong. The art of concealment is difficult to practice at Heinz. You don't get very much for just coming to work here. We lag behind 27 peer companies -- we are the lowest -- in base compensation. We pay a large short- term management incentive package and we pay a very large long-term incentive package.