Barry-Wehmiller Companies, Inc.

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Barry-Wehmiller Companies, Inc.

8020 Forsyth Boulevard
St. Louis, Missouri 63105-1707
U.S.A.
Telephone: (314) 862-8000
Fax: (314) 862-8858
Web site: http://www.barrywehmiller.com

Private Company
Incorporated: 1899 as Barry-Wehmiller Machinery Company
Employees: 4,000
Sales: $800 million (2006 est.)
NAIC: 333993 Packaging Machinery Manufacturing; 333291 Paper Industry Machinery Manufacturing; 333922 Conveyor and Conveying Equipment Manufacturing

Majority-owned by the family of its chairman and chief executive officer, Robert H. Chapman, Barry-Wehmiller Companies, Inc., is a St. Louis-based diversified manufacturing and service company involved in the global packaging industry. Business is divided among four primary groups. The Packaging Automation Equipment platform is comprised of eight subsidiaries offering automatic labeling systems; bottle washers and pasteurizers; conveyance technology and material handling equipment; form, fill, and seal technologies; can seaming and capping equipment; and cartooning, case packing, bagging, and palletizing equipment.

The Corrugated, Sheeting and Finishing Equipment unit produces high-speed corrugating and sheeting equipment through the MarquiWardUnited subsidiary. Green Bay, Wisconsin-based Paper Converting Machine Company is the primary subsidiary for the Converting Equipment platform, producing paper converting equipment, with additional operations in Brazil, the United Kingdom, and Italy. In addition, Barry-Wehmiller maintains a Consulting Services unit that provides the food, beverage, household, personal care, pharmaceutical, medical, and biotech industries with engineering, consulting, and information technology services for the development of packaging system. In addition to five U.S. offices, the group maintains an operation in India.

19TH-CENTURY ROOTS

Barry-Wehmiller got its start in south St. Louis in 1885 when a millwright named Thomas J. Barry opened a machine shop to serve the local beer industry with conveying and transportation equipment. His brother-in-law, draftsman Alfred Wehmiller, joined him 14 years later to create the Barry-Wehmiller Machinery Company. They were able to further serve brewers by developing a machine that could quickly wash refillable beer bottles. In 1901 the company sold its first pasteurizer to the Anheuser-Busch brewery. It was the bottle washer and pasteurizers sold to the beverage industry that became the focal point in the 20th century as the Wehmiller family eventually took ownership of the business.

Barry-Wehmiller reached a turning point after World War II. Due to some financial difficulties, the company hired the accounting firm of Arthur Andersen in 1949 to conduct an external audit. Assigned to the task was William A. Chapman. Born on a small Iowa farm, he became a bookkeeper after graduating from high school but determined to make something more of his life. He worked his way through the University of Iowa, graduating with a degree in accounting in 1941, and then he went to work for Arthur Andersen in Chicago. Four years he became a manager and was dispatched to help open a new office in St. Louis. Barry-Wehmiller's president, Fred Wehmiller, was so impressed by Chapman that he offered him a position as assistant to the president and treasurer. To the surprise of many at Arthur Andersen, Chapman accepted, giving up the security, as well as the travel and long hours, of his accounting career to cast his lot with a company whose fortunes were far from certain.

CHAPMAN BUYS COMPANY: 1963

Chapman went to work for Barry-Wehmiller in 1950. Three years later, Fred Wehmiller died unexpectedly, and his family asked Chapman to assume the presidency while a buyer for the company was sought. None came forward, for good reason. Aside from the Barry-Wehmiller's poor financial situation, it appeared that trends in the beverage industry were against the company. Nonreturnable glass bottles were in vogue, eliminating the need for bottle washers, and most U.S. brewers no longer pasteurized their beer, leaving only foreign sales opportunities. Thus, Chapman remained in charge, and while making modest attempts to enter other markets he began buying stock in the company. In 1963 he was able to secure financing from a Chicago firm and gained majority ownership of the business.

The next dozen years were a struggle for Chapman and Barry-Wehmiller. He expanded the company's international business and in the mid-1960s forged a relationship with Owens-Illinois to develop machinery for use with a new glass container. Chapman offered to sell Barry-Wehmiller to Owens-Illinois to ensure the completion of the project but was turned down. According to the Owens-Illinois mergers and acquisitions people, Barry-Wehmiller was likely to go out of business in a month. Nevertheless, Chapman carried on, his persistence paying off when a crucial order for bottle washers was received from Pabst Brewing Company, which fortunately placed a large down payment.

Barry-Wehmiller was able to hang on, and even gain ground in the 1970s, with the emergence of lite beer, a new category that sparked intense competition between Miller Brewing and Anheuser-Busch. Both companies built up their capacity while a number of old-guard brewers fell by the wayside. Because of its longtime relationship with Anheuser-Busch, Barry-Wehmiller did a robust business providing bottle washers to the new Anheuser-Busch operations as well as to Miller.

A second generation of the Chapman family became involved with Barry-Wehmiller during this time, as Bill Chapman's son, Bob, joined the company after earning a master of business administration and a stint at the Price Waterhouse accounting firm. Father and son would work together until 1975 when the elder Chapman died, leaving 29-year-old Bob Chapman in charge. By this point, the increased business from Anheuser-Busch and Miller had improved Barry-Wehmiller's annual revenues to $18.6 million, although the company also posted a loss of nearly $500,000. The company turned profitable as sales continued to grew, so that in 1981 Barry-Wehmiller earned more than $4 million on sales of $71.4 million. In the meantime, Barry-Wehmiller also tried its hand at diversification, establishing a Florida unit to produce bottle and can filters.

The good times were eclipsed, however, when President Ronald Reagan's administration eased some industry restrictions. Formerly prohibited by antitrust laws from purchasing competitors' facilities, brewers were able to do just that; Anheuser-Busch and Miller bought existing plants rather then build new ones, thereby curtailing the need for new bottle washing equipment and pasteurizers. Barry-Wehmiller's sales plummeted. In 1983 the company recorded a $5.5 million loss while debt soared to almost $17 million. To make matters worse, the company's banker of 20 years, Boatman's Bank of St. Louis, called in the company's $13.3 million loan.

COMPANY PERSPECTIVES

By measuring our success by the way we touch the lives of people, we promise to exceed our customers' expectations and earn their trust.

Chapman was able to secure funding in the summer of 1984 from Citicorp Industrial Credit, albeit under onerous terms. The company's cash problems persisted, relieved somewhat by an all-stock acquisition by the Dawson packaging division of the U.K.-based Vickers plc, a deal that brought much-needed cash flow to maintain the Citicorp loan. Nevertheless, Barry-Wehmiller's struggling pasteurizer business continued to drag down the company. The company went back to Citibank for another $5 million, more than half of which was used to gain some diversity by acquiring Denver-based INEX Inc., a manufacturer of equipment used to detect glass bottle imperfections, which was actually losing money itself. In the meantime, the new British management team was becoming increasingly disgruntled because, they felt, their successful business was being used to cover the losses of the American parent.

INTERNATIONAL OPERATIONS SPUN OFF: 1982

Matters came to a head in the first half of 1986 when Barry-Wehmiller's losses increased further, and Citicorp was ready to call in its loans. In need of alternative funding, the company decided to spin off the European operations as Barry-Wehmiller International, in a 1987 public offering of stock. The $31 million raised through the offering erased the parent's company debt. It also reduced the company in size by two-thirds but provided the necessary breathing room to develop a new strategy. By this time the Barry-Wehmiller Design Group had been formed to take advantage of the emergence of a demand for integrated packaging solutions. This venture offered engineering and consulting services and laid the foundation for Barry-Wehmiller's transformation into a wide-ranging packaging equipment company with a more diversified group of customers.

To achieve the company's new goal, Chapman began engineering a slate of strategic acquisitions. In 1989 Boston-based Pneumatic Scale was purchased for $15.7 million. Founded in 1895, the new subsidiary manufactured fillers, cappers, can seamers and labelers, centrifuges, and change parts for the pharmaceutical, household, cosmetic, food, and beverage industries. Next, ABC Conveyor Company, maker of high-speed air handling systems was acquired, joined in 1991 by Denver-based Meyer Conveyair and San Francisco-based Jetstream Systems Inc. The three companies were combined to form new Denver-based Jetstream Systems, Inc.

Barry-Wehmiller completed several more key acquisitions in the first half of the 1990s. Tampco Inc. of Tampa, Florida, maker of shrink-wrap packaging, was purchased in 1992. In 1995 four companies were brought into the fold. Thiele Engineering, which produced reciprocating placers, was acquired, and it in turn acquired Frontier Equipment. The Figgie Packaging Systems unit located in Akron, Ohio, was added to Pneumatic Scale, and Zepf Technologies, maker of shrink-wrapping and case packing equipment, was also purchased. As a result of the contribution of these subsidiaries, Barry-Wehmiller's revenues increased to more than $160 million, a significant improvement over the $63 million recorded in 1987 when the new strategy was put in place.

Barry-Wehmiller completed its most ambitious transaction in 1997 when it bought three major packaging companies from Bemis Company, Inc. These included Accraply, established in 1970 to produce pressure-sensitive labels; Bemis Packaging Machinery Company, which had been started in 1931 to manufacture equipment for filling and sealing flour bags; and Hayssen Manufacturing company, maker of the first automated bread wrapping machine, founded in 1910. With the contributions of these new units, Barry-Wehmiller's annual revenues reached $260 million.

In the late 1990s Barry-Wehmiller consolidated some of its operations to improve efficiencies. Most notably, in 1998 Thiele Engineering was combined with Bemis to create a hybrid called Thiele Technologies, Inc. The following year Fleetwood Systems was acquired and merged with Jetstream, resulting in Fleetwood, Inc. Later in 1999 the unit grew further with the addition of I & H Systems, which served the food and beverage industries with warming and cooling equipment.

KEY DATES

1885:: Thomas J. Barry founds company in St. Louis.
1899:: Alfred Wehmiller becomes partner, resulting in Barry-Wehmiller Machinery Company.
1953:: Fred Wehmiller dies, and is succeeded as president by William Chapman.
1963:: Chapman family acquires company.
1975:: Bob Chapman succeeds father, following his death.
1987:: European operations spun off.
1989:: Pneumatic Scale acquired.
1997:: Three packaging companies purchased from Bemis Company, Inc.
2000:: Marquip, Inc., acquired.
2005:: Paper Converting Machine Company is acquired.

Acquisitions continued in the new century, funded in large measure by a $120 million line of credit secured in September 2000 by a syndicate of banks. The available money helped to fund several additions that year. Barry-Wehmiller entered a new field by paying $45 million for Marquip Inc., a Wisconsin manufacturer of high-speed corrugating, sheeting, and finishing equipment for the folding carton and paperboard industries. Ward Machinery Company (a manufacturer of advanced die cutting, printing, and folding equipment) and United Container Machinery (maker of finishing products) were also acquired, then merged with Marquip to form a powerhouse in corrugated equipment.

At the end of the year, Barry-Wehmiller added Marquip Worldwide Systems, a technology consulting company that was renamed Barry-Wehmiller International Resources, and spent another $4.6 million to acquire the well known Avery Dennison pressure-sensitive labeling equipment product line from CCL Industries. Barry-Wehmiller also sought to grow internally. Its most significant effort was the 2000 launch of a business-to-business web site to sell the company's products as well as act as a shopping exchange for new or used packing equipment of all brands, materials, and services.

In 2001 Virginia-based Wright Machinery was purchased and its line of flexible packaging machinery was added to Hayssen Manufacturing, which was able to bolster its position in the snack food and coffee packaging markets. The following year auger filer and labeler manufacturer Mateer Burt was acquired and parts of it merged with Pneumatic Scale and Accraply. The change parts division of Perplas Inc. was acquired in 2003, its assets added to Zepf, which was then merged with Pneumatic Scale. Acquisitions continued in 2004 with the purchase of Trine Labeling Systems, which merged with Accraply; the Carr & Centritech lines of continuous flow centrifuges were added to Pneumatic Scale; and New Hampshire-based Stahlman Group, Inc., supplemented the offerings of the Design Group.

Annual sales reached $538 million in 2004. External growth continued the following year with the acquisition of the palletizer and depalletizer products lines of Wyard Industries and the purchase of Goldco International, both of which joined forces with Fleet-wood to create FleetwoodGoldcoWyard, and become the leading company in the conveyance and equipment field. In 2005, Barry-Wehmiller added to the unit by acquiring Ambec, Inc., a major provider of stainless steel conveyance systems to the food and beverage, consumer goods, container manufacturing, and pharmaceutical industries. Another 2005 acquisition was the Packaging Machinery Division of the United Kingdom's Central Bottling International Ltd. The October 2005 addition of Paper Converting Machine Company, the largest acquisition in Barry-Wehmiller's history. It laid the foundation for the company's fourth platform, paper converting equipment. Finally, in 2005 Barry-Wehmiller beefed up Thiele with the acquisition of package equipment manufacturer Edmeyer, Inc.

More acquisitions followed in 2006 and 2007. Thiele bought Slidell, Inc., and Streamfeeder LLC in 2006, adding to the capabilities it could offer to the chemical, feed, seed, and other bulk material handling markets, as well as bolstering its position in commercial printing, packaging, and mail fulfillment. Flexible packaging company Sandiacre Rose Forgrove was acquired in November 2006 and combined with Hayssen to create HayssenSandiacre. Thiele made another acquisition in February 2007, adding the assets of SWF Companies to make Thiele one of the largest system manufacturers of primary, secondary, and robotic packaging solutions for a wide variety of industries, including food and beverage, pharmaceutical, health and beauty, pet food, and feed and seed.

Ed Dinger

PRINCIPAL SUBSIDIARIES

Accraply; Barry-Wehmiller Company; Barry-Wehmiller International Resources; CBI Ltd.; Design Group, Inc.; FleetwoodGoldcoWyard; HayssenSandiacre; Marquip-WardUnited; Paper Machine Converting Company; Pneumatic Scale; Thiele Technologies.