Durametallic

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Durametallic

2100 Factory Street
Kalamazoo, Michigan 49001
U.S.A.
(616) 381-2650
Fax: (616) 381-8368

Division of The Duriron Company
Incorporated: 1917 as New Era Manufacturing Company
Employees: 1,550
Sales: $120 million (1993)
SICs: 3053 Gaskets, Packing & Sealing Devices

Durametallic is a leading name in mechanical seals used on industrial pumps to prevent fluids from damaging the pumps’ motors. Such pumps are used in the businesses of chemical processing, paper and pulp production, and in petroleum refineries and power plants. Durametallic manufacturing is based in Kalamazoo, Michigan, with approximately 20 other facilities spread throughout the world. Until 1996, Durametallic was a privately-held company, at which time it was acquired by and became a part of the Fluid Sealing Group of Duriron Company.

The Early Years

Durametallic was formed as the New Era Manufacturing Company in 1917, but the company actually traces its roots back to the year 1900. At that time, the switch from coal to super-heated steam as a power source for engines brought about a need to find a material to seal the steam around moving parts of the machinery. After many materials were tried—including cloth, rubber, and asbestos mixed with cotton—a man by the name of Henry P. White began experimenting with a material that he had invented, called metallic phosphoro. In 1900, he had formed a small company in Kalamazoo, Michigan, to manufacture the material, which was a flux and deoxidizer for use in brass and bronze castings. Six years later, in 1906, White coated thin metallic sheets with lubricant, layered them on top of one another, cut and molded them into shape, and attempted to pack the material around the moving parts of a giant steam engine in the Kalamazoo Paper Company mill.

Five years later, White’s packing material was still intact on the paper mill machinery, and was performing well as a fluid seal. Thus, he sought out and was granted a patent for his metallic foil packing material by the U.S. Patent Office. Until 1917, White and his son, Glenn, continued manufacturing the invention from an out-of-date production plant that had a dirt floor. At that time, another Kalamazoo businessman by the name of Charles C. Hall approached White with a partnership offer. Hall was a local newspaper owner, but had been looking to get out of the newspaper business. He had actually come to visit White one afternoon because White’s younger son was one of Hall’s newspaper carriers and was having problems with his route. The two men began talking about White’s company and eventually decided to go into business together.

Hall possessed a solid business sense, while White was truly an inventor by nature and had accrued a debt of approximately $2,000 during his time in business alone. Hall took over the administrative end of the operation, with one of his first actions being to issue 30,000 shares of stock at $10 per share in order to pay off debt and fund renovations and expansion. The company was incorporated that year as the New Era Manufacturing Company, with a substantial chunk of stock being issued to the two men and their families.

Almost immediately after the company began operating as New Era, the Kalamazoo Chamber of Commerce hired an agent to ensure that local businesses got their share of the war contracts. Hall was able to interest this agent in New Era’s raw metallic phosphoro and the material was soon approved for use in government bronze as a replacement for tin, which was in short supply at the time. Unfortunately for their business, however, the war ended the following November and the market for raw metallic phosphoro virtually disappeared. White began attempting to market New Era’s product internationally, but was trying to sell to countries with no money and no need for his product. The rest of New Era’s board disagreed with White’s business plan, and in 1919 he resigned from the company. Another local man, Samuel A. Schaeffer, bought most of White’s stock in New Era, and was appointed company president the following year. He served in that position until his death in 1950.

Rapid Growth in the 1920s and 1930s

In order to bolster its customers’ recognition of its product, New Era named its layered-foil packing material “Durametallic” in 1920, a name which signified the material’s durable long-life. The company then entered a contract agreement with Philadelphia-based Endura Manufacturing Company, who agreed to handle New Era’s sales in the eastern United States. Almost immediately, an affiliate of Endura—John J. McQuillen of the Pittsburgh Fibre Packing Company—made one of New Era’s first major sales, to the Pittsburgh and Lake Erie Railroad Company. It was the first time that the company’s product was used as a packing seal on railroad equipment.

In 1921, the company changed its name to New Era Metal Products Company, to better reflect its major products: metallic phosphoro and Durametallic. Two years later, Durametallic was the company’s main product offering and was becoming a household name to those in the market for machinery packing and sealant material. Thus, the company once again changed its name to Durametallic Corporation, enabling people in the industry to link the company with its flagship product.

Meanwhile, Hall had been building some important relationships with other businessmen throughout the country. Through his network of contacts, Hall created the equivalent to regional salesmen for Durametallic. F.G. Robb of Los Angeles, California, began handling Durametallic’s business throughout the state of California, while one of John McQuillen’s contacts earned Durametallic a contract as the standard packing material for the Pennsylvania Railroad’s central and western regions. The Standard Oil Company also became such a steady and important customer that when it issued orders for replacement packing at its plant in Whiting, Indiana, someone from Durametallic drove there that day to deliver.

During the early 1930s, the Great Depression hit the Michigan economy especially hard. In 1933, Michigan banks actually ran out of money, and closed down due to unavailable funds. Durametallic was unable to pay its payroll, and so its management contacted its sales affiliate Universal Packing in Pennsylvania and arranged a loan to carry the company through the Michigan banking crisis. Meanwhile, Universal Packing continued to increase its sales of Durametallic, and thus moved its headquarters to Newark, New Jersey, and changed its name to Durametallic Corporation of New Jersey.

The following year, Hall met two men—A.R. Tuck and J.H. Kohler—who were producing seals for pumps handling sulfuric acid and petroleum. Hall purchased rights for Durametallic to produce and market those seals, which were renamed DuraSeals, and within a dozen years they were the company’s main product offering. As sales for these seals increased, however, so did problems related to the product. First and foremost, DuraSeals often acted as a replacement for the company’s Durametallic packing product, thereby reducing sales of that item. In basic terms, the company found that it was not actually increasing overall sales through the addition of DuraSeal to its line, but rather was simply replacing Durametallic sales with DuraSeal sales. By the end of the decade, in New Jersey, the former Universal Packing Company did not want to sell the new seals, which caused a problem between that branch of the company and the Kalamazoo headquarters. Unfortunately, their relationship could not be terminated due to a clause in the contract from 1933.

World War II and the Postwar Years

Durametallic suffered two large blows in 1938 and 1939. First, Hall suffered a serious heart attack and had to leave his position at the company. He was replaced as president by Samuel Schaeffer. Although he was no longer involved in the company’s day-to-day operations, Hall maintained his stake in the company and aided the management in a directional capacity until his death in December 1945. The second strike against Durametallic came the following year, 1939, when a tornado completely demolished the production plant on Factory Street. Surprisingly, the company offices that were attached to the factory were untouched by the storm. Also in the company’s favor was the fact that Hall had purchased “wind insurance” on the facility when it was built, and so the insurance money was used to rebuild and expand the factory.

Entering the 1940s, U.S. relations with Japan were continuing to deteriorate, which led to a shortage of rubber in the United States given that Singapore had previously supplied 98 percent of the world’s rubber supply. The U.S. Government created the Rubber Reserve Corporation to build synthetic rubber plants throughout the country, each of which used machinery that needed pump seals. Thus, the onset of World War II led to a dramatic increase in sales of DuraSeals for Durametallic. The company also increased its business with oil refineries and chemical processing plants during the war years. Also, after being recommended as a contributor by the Duriron Company of Dayton, Ohio, Durametallic began supplying the United States with pump seals to be used in the Manhattan Project, a top-secret government operation. It was not until the atomic bomb was dropped on Hiroshima in August of 1945 that Durametallic knew what it had been contributing to.

Following the war, sales of DuraSeals finally surpassed those of the Durametallic packing material, and by 1949 DuraSeal sales were twice that of Durametallic. The following year, the company achieved its first-ever $1 million sales year, when it earned $1.02 million in revenue for 1950. Samuel Schaeffer died that year, after over 30 years working with Durametallic—almost a decade of which was spent as the company’s president.

With the company achieving record sales and the economy in general doing well, the 1950s were largely devoted to making the company a good place to work and to bettering the Kalamazoo community. The yearly tradition of holding a company picnic was continued, while new intercompany activities were started as well. One example was company-wide poker parties held at the Kalamazoo headquarters, to which Durametallic employees throughout the United States were invited. The company also donated time and money to the Kalamazoo community. In 1953, Durametallic created a scholarship in the Industrial Technology Department at Western Michigan College. The school soon became Western Michigan University, and the department evolved into the Industrial Engineering College.

Midway through the decade, the company also expanded its facilities in Kalamazoo through the purchase of additional space in nearby buildings. The Packing Department left the original factory location and moved into the new space. The company also expanded nationally, through the construction of regional branch offices. Los Angeles was the first branch location and was soon followed by offices in Baton Rouge, Louisiana, and Ontario, Canada.

1960s-1980s: Geographic Expansion and Growth

The 1960s saw the company expanding to include more regional service center offices throughout the United States and abroad. The decade also marked the company’s entrance into the computer age, as the company purchased and began using Friden Flexowriters and Computypers. The machines were electric typewriters that also perforated a paper tape in a coded pattern that could then be fed back into the machines and read to prepare more invoices without retyping them. Durametallic began widespread use of the machines in 1962.

The following year, Samuel Schaeffer’s grandson, James Ware, joined the Durametallic sales force. Ware soon rose up through the management ranks and would one day become the company’s chairman of the board, president, and CEO. He was with the company as it celebrated its 50th Anniversary in 1967. That same year, the Durametallic of New Jersey offices in Newark were moved and consolidated in Patterson, New Jersey. Three years later, Jack McQuillen suffered a heart attack and stepped down from the day-to-day management of the Patterson sales force. Unfortunately, the location’s sales dropped after his departure. Thus, the troubled company was acquired by its Kalamazoo-based cousin in 1970, and it became a Durametallic regional branch office.

In 1970, sales had increased to the point that a central Order Processing Department was created in Kalamazoo. The Friden computer machines came in extremely handy in keeping track of orders and processing them quickly. Also in the 1970s, Durametallic opened numerous additional branch offices. Locations were constructed and opened in Morris Plains, New Jersey, in 1971; in Charlotte, North Carolina, in 1974; and in Houston, Texas, in 1976. Agreements were also signed with representatives in other countries, and offices began appearing throughout the world. Operations in Mexico, India, and South America were added in the 1970s.

The 1980s ushered in tough times for Durametallic. A worldwide recession hit the company hard in 1983, forcing it to reduce employee working hours for the first time in company history. The company was also beginning to realize that its products were not in as much demand as they had been in the past. Computerized technologies were taking the place of many formerly mechanical operations, and thereby reducing the need for the products Durametallic was manufacturing and marketing. One bright spot in the early 1980s came in 1981, when Durametallic was recognized by the Michigan Senate for winning the Phillips Award in management-employee relations, in honor of its strong human resource standards.

Despite the recession, the company continued opening new branch offices throughout the 1980s. A Cincinnati location opened in 1981 and a Chicago counterpart in 1988. Durametallic also started an employee stock-ownership plan, and instituted a participatory management process called “action circles,” in which managers and employees met on a regular basis to discuss objectives. The company also upgraded its research and development operations through the addition of computer-aided drafting technology. This significantly increased the company’s production efficiency, and by 1989 approximately 30 percent of Durametallic’s sales were coming from products that it had not been offering five years before.

The 1990s and Beyond

Entering the last decade of the century, Durametallic had grown to include eight U.S. branch offices and 12 other international operations facilities. Branch offices were located in Los Angeles, California; Baton Rouge, Louisiana; Morris Plains, New Jersey; Charlotte, North Carolina; Houston, Texas; Chicago, Illinois; Cincinnati, Ohio; and Vancouver, Washington (Portland, Oregon). Other internationally-based operations facilities were located in Canada, the United Kingdom, Italy, Germany, Belgium, New Zealand, Australia, Brazil, Mexico, India, Singapore, and Korea. Over 1,500 people were employed at those 20 locations.

After completing a $3 million expansion of its Kalamazoo headquarters location, Durametallic celebrated its 75th Anniversary in 1992. Shortly thereafter, the company began talks with the Duriron Company (the same company which had recommended Durametallic for the Manhattan Project in World War II), alluding to a possible acquisition of Durametallic by Duriron. As a privately-held company, Durametallic felt that it had grown as much as possible and that further expansion would have to be fueled by a larger company with more ready resources. Although Durametallic had achieved a record $120 million in sales in 1993, a merger with Duriron would provide the company with more options and more support, both managerial and financial.

In late 1995, the two companies finished negotiating and agreed to the acquisition plan. Durametallic was officially acquired by Duriron in January 1996. Durametallic joined Duriron’s Fluid Sealing Group, and immediately began contributing to Duriron’s sales in that area. Operationally, however, both companies remained relatively autonomous and continued their businesses separately, for the most part. The acquisition was the largest in Duriron’s history to that point in time.

As the end of the century approached, Durametallic had positioned itself well for continued future growth. The Duriron merger had afforded Durametallic the luxury of increased available capital to work with and a greater support network. Subsequently,, Durametallic helped Duriron increase the strength of its balance sheet, as well, making the merger a mutually-beneficial arrangement. In 1997, rumors began to surface that Duriron was considering selling Durametallic to a third party. It seemed that the support provided by Durametallic’s parent company, whether Duriron or some other company, would be the determining factor in the future success of the company.