Escalade, Incorporated

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Escalade, Incorporated

817 Maxwell Avenue
Evansville, Indiana 47717
U.S.A.
(812) 467-1200
Fax: (812) 425-1425
Web site: http://www.escaladesports.com

Public Company
Incorporated: 1922 as The Williams Manufacturing Company
Employees: 700 (est.)
Sales: $93.2 million (1996)
Stock Exchanges: NASDAQ
SICs: 3949 Sporting & Athletic Goods, Not Elsewhere Classified; 3579 Office Machines, Not Elsewhere Classified

The largest manufacturer of table-tennis tables and pool tables in the world, Escalade, Incorporated manufactures and sells a variety of recreational merchandise, as well as office and graphic arts products through its subsidiary, Martin-Yale Indus-tries, Inc. Along with table-tennis equipment and billiards equipment, Escalade’s chief products during the late 1990s included basketball backboards, goals, and telescopic poles, darts and dart cabinets, and home fitness machines, weight benches, cast iron weight sets, steppers, and other home fitness accessories. The company’s involvement in the sporting goods industry began in 1927 with the founding of Indian Archery and Toy Corp., a manufacturer of archery equipment, badminton sets, and darts. Diversification decades later brought Escalade into new business lines. The company began producing table-tennis tables in the 1960s, pool tables in the 1970s, and basket-ball equipment in the 1980s. In 1989, Escalade entered the home fitness market through the acquisition of Marcy Fitness Products, Inc., a California manufacturer of home fitness and exercise equipment. During the late 1990s, the company derived roughly 80 percent of its total sales from sporting goods. The balance was realized through its Martin-Yale subsidiary, which manufactured paper trimmers, paper folding machines, paper drills, collators, letter openers, paper shredders, and other related products. Manufacturing facilities for the company’s products were located in Evansville, Indiana, Wabash, Indiana, Compton, California, and Tijuana, Mexico.

Early History

Escalade’s corporate roots trace the development of several different companies, the oldest of which was The Williams Manufacturing Company, an Ohio-based manufacturer and retailer of footwear and hobby and craft products founded in 1922. Although the Williams business began operating first, the driving force behind the creation of Escalade was another company, a sporting goods manufacturer situated in Evansville, Indiana. Founded in 1927, Indian Archery and Toy Corp. operated as a small but thriving enterprise for nearly four decades before coming under the control of management that steered it toward diversification and more prolific growth. It was the influence of this new management team–led by Robert Griffin, Escalade’s chief executive officer during the 1990s–that shaped Escalade into a global leader.

During the decades bridging Indian Archery and Toy’s inception and the beginning of the company’s transformation into Escalade, a legacy of modest success was established in Evansville. The company was founded by a former Ohio resident named H. M. Brading, who enlisted the financial support of three Evansville car dealers to start his small business. Initially, Indian Archery and Toy sold “bat-minton” sets, darts, dart games, and stilts through catalogs, with Brading and one other employee, who occupied a small upstairs room in an Evansville building, composing the company’s payroll. By Indian Archery and Toy’s second year of business, remarkable progress had been made. In 1928, there were 22 employees assembling bow and arrow sets by hand and shipping them as far away as Switzerland, Denmark, Australia, New Zealand, and China. Still in its infancy, Indian Archery and Toy appeared on the verge of explosive growth, but forces outside the company’s control conspired to stifle such growth as quickly as it had developed.

The stock market crash of 1929 signalled the beginning of a decade-long economic depression that stunted Indian Archery and Toy’s growth. The company struggled throughout much of the 1930s, its business severely crimped by the reluctance of many consumers to spend their dwindling dollars on recreational products. By the end of the decade, however, the economic climate began to improve and Indian Archery and Toy could once again look toward expansion. Larger offices were occupied by 1937, when fiberglass bows were introduced and the company began manufacturing its own targets, as the Evansville enterprise regained some of the luster lost during the Great Depression.

Post-World War II Transformation

Once back on track, Indian Archery and Toy experienced years of steady growth, with annual sales eclipsing half a million dollars by the end of the 1950s. After more than a quarter century of business, the company was a modestly-sized but well-recognized competitor in the sporting goods industry and about to enter a decade of definitive change. The 1960s would prove to be a signal decade in Indian Archery and Toy’s development, a decade during which the company began to assume the characteristics that would define it during the 1990s. Some of the changes were superficial, such as the two name changes effected during the 1960s, but other events represented milestones in the company’s history, marking Indian Archery and Toy’s development into a diversified sporting goods manufacturer.

The decade began with a name change, effected in 1961 when Indian Archery and Toy Corp. shortened its name to Indian Archery Corp., one year before the company’s 35th year of business. During the company’s anniversary year, when sales reached $800,000, new management took the helm, led by Robert Griffin who would spearhead Indian Archery’s transformation into Escalade. Griffin had arrived in Indiana two years earlier, deciding after completing his college education that he would work with an Evansville native named Robert Orr in the metal fabrication business. Orr, who would later be elected governor of Indiana, Griffin, and two other partners, Jim McNeely and Joseph Derr, acquired Indian Archery in the fall of 1962 and immediately began experimenting with new products that would extend the company’s presence into new markets. As Griffin later related about the mindset of the new leadership, “We felt that the opportunity was there, and our vision was to build on it,” but determination did not translate into instant success for the new owners. Their early efforts– manufacturing skateboards and plastic skis–failed, as did their venture into the production of hand-pulled golf carts, entered into by the 1966 acquisition of Chicago-based Kunkel Indus-tries, a golf-cart manufacturer. Griffin and his associates were forced out of the golf-cart market because of stiff competition, but the manufacturing operations gained through the Kunkel acquisition steered the company toward a lucrative path. De-spite the dubious start, Griffin, Orr, McNeely and Derr were headed in the right direction

The same year the Kunkel acquisition was completed, Indian Archery Corp. changed its name to Indian Industries, Inc. to better reflect the company’s involvement in different business lines. One of these different business lines, and the chief benefit of the Kunkel acquisition, was Indian Industries involvement in the table-tennis market. While Indian Industries was attempting to make a name for itself in the golf-cart business, Sears, Roebuck & Co. approached the Evansville manufacturer about making table-tennis tables. With his golf-cart business floundering but with the metal-working operations still under his ownership, Griffin confided later, “We decided to go for it [the Sears offer] because we were already set up for tubular metal working and stamping. So we started from scratch and that worked for us.” The deal marked the beginning of a lasting relationship with Sears and the first significant achievement realized by Indian Industries’ new owners.

Once the company entered the table-tennis manufacturing business, it quickly sought to increase its presence in the market, as it embarked on a development program that would eventually make it the largest table-tennis manufacturer in the world. Toward this end, Indian Industries entered a joint venture project called Cal-Dana to manufacture table-tennis tables in California and Indiana, which was merged into the company in 1970, and acquired the trademark “Ping Pong” from Parker Bros. Shortly after these deals were completed, the paths of Indian Industries and The Williams Manufacturing Company joined together. The result was Escalade, Incorporated.

1970s Birth of Escalade

The flurry of corporate transactions that engendered Escalade began in 1972 when Williams, the footwear manufacturer based in Ohio, merged with Illinois-based Martin-Yale Industries, Inc., a manufacturer of office and graphic arts products, and crafts and toys. The following year, Williams acquired Indian Industries and Harvard Table Tennis, Inc., a Massachusetts-based manufacturer of table-tennis accessories, creating a diversified manufacturer involved in the production of foot-wear, recreational products, office products, graphic arts products, and hobby and craft items. At roughly the same time that this multifaceted manufacturer was created through merger and acquisition, Williams executives resolved to rename the new enterprise and hired a New York consultant to do the job. The consultant suggested “Escalade,” which was subsequently adopted as the new corporate title for the combined entities of Williams, Indian Industries, Martin-Yale, and Harvard Table Tennis.

Company Perspectives:

“For 70 years, our company philosophy has been based on providing our customer with quality, value-added sporting goods equipment. Our customer has been the single most important component of our business, and as we move into our next 70 years, we will continue to provide products and services that reflect that commitment.”

Although Williams had orchestrated the deals that brought Escalade together, the heart of the new company was Indian Industries, from which Escalade’s management and mainstay business was drawn. Griffin and his partners took control of Escalade, intent on building the company into a sporting goods powerhouse. To make room for a broader presence in the sporting goods industry, Griffin and his associates stripped Escalade of assets deemed unrelated to the company’s future. Along these lines, Griffin discontinued Williams’s footwear operations in 1976 and sold Martin-Yale’s product line of crafts and hobby merchandise in 1979, retaining only one of MartinYale’s original products, a paper trimmer. Around the paper trimmer, Griffin rebuilt Martin-Yale into an office and graphic arts operator, while efforts elsewhere were aimed toward in-creasing Escalade’s involvement in the sporting goods market.

A new product line was added to Escalade’s business in 1977 when the company began manufacturing pool tables. It was a significant addition, representing the first step toward becoming the largest pool-table manufacturer in the world. As Escalade’s pool-table manufacturing activities quickly accelerated, the company completed an acquisition that strengthened its table-tennis business, its burgeoning pool-table business, and extended the geographic reach of its manufacturing operations. In 1980, Escalade acquired the Crown Recreation (West) division of Ideal Toy Company, which manufactured table-tennis tables and pool tables in Compton, California. Three years later, when billiards accessories were added to Escalade’s merchandise mix, the acquired company was consolidated with Harvard Table Tennis, Inc., creating Harvard Sports, Inc.

As the Harvard Sports subsidiary was being reorganized, Escalade added another product line to its business when it began manufacturing basketball backboards, goals, and poles in 1982. Next on the acquisitive front, the company strengthened the graphic arts business of Martin-Yale by acquiring the graphic arts assets belonging to Geiss America, Inc. in 1986. Following this acquisition, Escalade purchased the business machine division of Swingline, Inc. in 1988, thereby bolstering the revenue-generating capability of Martin-Yale. As the 1980s drew to a close, Escalade made one other addition to its sporting goods business by acquiring a 55 percent interest in Marcy Fitness Products, Inc., a California manufacturer of such home exercise equipment as home gyms, barbells, weight benches, and recum-bent bicycles.

While the company added to its magnitude through acquisitions during the 1980s, it also struck an important licensing deal that added a well-recognized brand name to the company-owned “Indian” and “Harvard” brands. In 1985, Escalade reached an agreement with Evenflo Companies, Inc. for the exclusive right to use the “Spalding” trademark on sporting goods products manufactured and distributed in the United States. From 1985 forward, Escalade used the Spalding name on its line of basketball backboards, goals, and poles, indoor darts, table tennis sets, and pool accessories. As the 1990s began another important licensing agreement was reached when Escalade gained the exclusive right to manufacture and distribute table-tennis equipment in the United States and Canada under the brand name “STIGA.”

Propelled by the strength of the Indian, Harvard, Spalding, and STIGA brand names, sales eclipsed $80 million by the beginning of the 1990s. Early in the decade, the remaining 45 percent interest in Marcy Fitness Products was acquired, adding a new wholly owned subsidiary to Escalade’s collection of companies. As the 1990s progressed, Escalade increased its manufacturing capabilities and endeavored to increase its business overseas, where the company had been operating since the late 1920s. In 1990, a new manufacturing and office facility was built in Wabash, Indiana, one year after production had begun in Tijuana, Mexico. In 1992, as part of the effort to expand business abroad, the company established Escalade International Limited, which comprised a sales office and warehouse in Swansea, Wales.

By the mid-1990s, Escalade’s annual sales had eclipsed $90 million. Although the company ranked as the largest table-tennis and pool table manufacturer in the world, its preeminence did not make the company immune to the affects of the stiff competition mounted by its smaller competitors and the cyclical nature of the sporting goods business. Profits dipped and rose during the first half of the decade, prompting management to dedicate its efforts during the second half of the 1990s toward shoring up the company’s position. In pursuit of this goal, Escalade executives were placing a premium on removing un-necessary costs, improving the quality of products, and introducing new products as the 21st century approached.

Principal Subsidiaries

Martin-Yale Industries, Inc.; Indian Industries, Inc.; Harvard Sports, Inc.; Escalade International Ltd. (United Kingdom); Sweden Table Tennis AB (37.5%)