Gleason Corporation

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Gleason Corporation

1000 University Avenue
P.O. Box 22970
Rochester, New York 14692-2970
U.S.A.
(716)473-1000
Fax:(716) 461-4092
Web site:http://www.gleasoncorp.com

Public Company
Incorporated: 1903 as The Gleason Works
Employees: 1,543
Sales: $248.1 million (1996)
Stock Exchanges: New York
Ticker Symbol: GLE

SICs: 3541 Machine Tools, Metal Cutting Types; 3829 Measuring & Controlling Devices, Not Elsewhere Classified

With a history stretching over 130 years, Gleason Corporation is the world’s most comprehensive resource for the development and manufacture of technologically advanced gear production machinery and tooling. The company is also an acknowledged leader in the theory of gear design and in the application, testing, and analysis of prototype and production gears, with a worldwide reputation for high-quality products.

The Early Years of The Gleason Works, 1836 to 1900

Born on April 4, 1836, William Gleason traveled to the United States from Borrisokane, County Tipperary Ireland, with his mother and brother when he was 15 years old. After receiving training as a mechanic through a series of apprenticeships at the Rochester, New York machine shops of Asa R. Swift and I. Angell & Sons, Gleason worked during the Civil War at Colt’s Armory located in Hartford, Connecticut. Gleason’s wife claimed Susan B. Anthony as a friend.

In 1865, Gleason returned to Rochester and began working in his own machine shop located on Brown’s Race (now known as the High Falls Historical District), which overlooked the Genesee River. Gleason’s tiny shop began manufacturing a general line of metalworking tools and machines, with special emphasis on engine lathes and planers. The company eventually evolved into The Gleason Works, a name by which it is sometimes still referred. Almost a decade later, in 1874, Gleason invented the first bevel gear planer, which proved to be the start of a brand-new industry, the bevel gear industry, and created incredible new opportunities for the transmission of motive power.

All four of Gleason’s children worked with him in the early days of the company. Gleason’s son, Tom, worked as his personal assistant, but died in 1877.

Tom’s half-sister, Kate Gleason, after overhearing her father bemoaning the loss and wondering what to do, came to the rescue and began working at the age of 11, helping her father with the company’s bookkeeping tasks. In a time when women were not normally engaged in industrial jobs, and the suffragette movement was still 40 years away, this was the start of a career which would propel Gleason Works to the top rung in its industry and would take Kate to a position where she would be hailed by some as The First Lady of the gear industry.

In 1884, Kate became the first woman to ever study engineering at Cornell University but, before she could graduate and take her degree, Gleason called her back to Rochester to help run the company. Although expressing disappointment at the time, Kate was later to remark that it had been a blessing in disguise, since it allowed her the opportunity to learn the machine tool business from top to bottom. By 1884, Kate, at 22, was traveling to Ohio on business trips. Three years later, she was the company’s chief salesperson. In 1890, she became the company’s Secretary-Treasurer, a position in which she served until 1913. In 1914, she was the first woman to be elected to full membership in the American Society of Mechanical Engineers and, two years later, was one of the first women elected to the Rochester Chamber of Commerce.

In 1893, at the age of 27, Kate traveled to Europe alone and, in one of the first moves by an American company to establish overseas markets, secured orders for Gleason machines from prestigious companies in England, Scotland, France, and Germany, a move which would help the company soar to the top, as even in 1997, two-thirds or more of the company’s sales came from outside of the United States. She had a letter of introduction from Henry Sharpe of Brown & Sharpe, which helped her immeasurably. In an attempt to thank him, Kate allegedly sent Sharpe half of the money she earned from the trip, but he gallantly returned it to her. In 1913, she resigned from the company amidst tensions between her and her two brothers, partly because she was so visible, gregarious, and well-liked by everyone, including Henry Ford.

In 1914, Kate went on to reorganize Ingle Machine Company, located in East Rochester, New York. In just under two years, she managed to turn Ingle from a company having $140,000 in debt into a company worth over a million dollars. When the president of First National Bank of East Rochester went away to fight in World War I, Kate was named acting president, the first woman in the United States to hold such a position. Following the war, Kate founded eight new businesses in the East Rochester area, including the Concrest community, a subdivision of 100 low-cost, poured-concrete, six-room houses, with a country club, golf course, and park. Her second career in real estate made her millions and she moved to Berkeley, California in 1924 and became an advisor to the city following a disastrous fire. She went on to build homes in Sausalito, California, and some of the land she owned is where the northern end of the Golden Gate Bridge is now located. She also owned land in Beaufort, South Carolina, and Septmonts, France. She died in 1933 while building an artists and writers colony on her South Carolina property.

James E. and Andrew C. Gleason followed their sister to Cornell University and into the company. Andrew, whose primary interest lay in the gear design and manufacturing phase of the business, served as vice-president of the company until his retirement in 1934. James focused his energies upon machine design and production and later became president, improving types of bevel gear machines, manufacturing techniques, and industrial relations, which were, in large part, responsible for the company’s preeminent position in the industry in the 1990s. Truly devoted to his father’s company, James died in his office, while working, at the age of 94.

The Gleason Works was incorporated in New York in 1903. The following year, The Gleason Works acquired a second site, the new one located on University Avenue, where the company headquarters remained. The first building was constructed there in 1905. By 1911, the activities of the company had outgrown the facilities at Brown’s Race, and all the operations were moved to the site on University Avenue.

Going Public, 1984-Date

Little information, unfortunately, is available regarding the years leading up to the company’s eventual reincorporation in Delaware in 1984 as the Gleason Corporation.

Since that time, the company has spawned an extensive product line under The Gleason Works, Pfauter, Pfauter-Maag Cutting Tools, and Gleason-Hurth names, including machinery for the production, finishing, and testing of bevel gears, used to transmit mechanical power at right angles, such as from a drive shaft to the rear axle of a vehicle; and of cylindrical gears, used to transmit power in a straight line. The company’s ever-developing generations of advanced computer-numerically controlled (CNC) Phoenix-brand gear machinery have been recognized as being among the most flexible and productive manufacturing equipment on the market. The company also manufactures a complete line of tooling and software products for cutting, grinding, lapping, and inspection of bevel gears; and for hobbing (dry or wet), shaping, saving, honing, grinding, chamfering/deburring, and inspection of cylindrical gears. Gleason also produces workholding equipment, as well as spare parts, field service, and gear design software.

In 1997, the company owned or leased manufacturing facilities located in Rochester, New York; Loves Park, Illinois; Plymouth, England; Ludwigsburg and Munich, Germany; Bologna and Porretta, Italy; Biel, Switzerland; and Bangalore, India; and had sales and service offices in Indiana, Michigan, New York, South Carolina, and Wisconsin in the United States, as well as in England, France, Germany, Italy, Spain, Sweden, Australia, India, and The People’s Republic of China.

With approximately a 75 percent share of the bevel gear equipment market in 1996, at that time estimated to be worth nearly $175 million, and an expanding share of the larger cylindrical gear equipment market, the company served customers in over 50 countries worldwide. Two-thirds of the company’s sales typically came from outside the United States. Major customers have included leading companies in the aerospace, aircraft, recreational vehicle, power tool production, contract gear producing, construction, farm, and marine industries, with approximately 65 percent of the company’s sales coming from the passenger car, light truck, and heavy truck industries, to companies such as BMW, Chrysler, Daimler-Benz, Dana, Ford, General Motors, and Toyota, as well as The Black & Decker Corporation in the non-automotive segment. The company also offered complete support, from design to inspection, to gear manufacturers throughout the world, including application development services, PC-based gear processing software, training programs, engineering support, machine rebuild and upgrade services, and weekly hob pickup and express delivery service.

Company Perspectives

For more than 130 years, Gleason Corporation has focused all of its efforts on serving the precision gear industry and optimizing both bevel and cylindrical (spur and helical) gear-making processes.

In 1989, the company put its Components Group, made up of four subsidiaries that manufactured industrial products, including powder metal parts, metal stampings, and precision plastic parts, up for sale. In December of that same year, the company introduced the Phoenix 250HC, the first gear production machine in its new Phoenix product line, which incorporated state-of-the-art, full CNC design for the production of bevel and hypoid gears. Some of the features of the Phoenix line included the elimination of manual setups, which permitted a significant reduction in the overall cost of manufacturing spiral bevel and hypoid gears; superior operating flexibility, including the ability to change over jobs in seconds; the ability to perform closed-loop inspection; and to achieve precise degrees of accuracy and repeatability. With an estimated worldwide installed base of more than 15,000 Gleason Corporation bevel gear machines having an average age in excess of 25 years, many of the company’s longtime customers, by 1997, had indicated their intention to make the transition to the more productive and modern Phoenix line of machines.

The 1990s

In the 1990s, corporate management, led by Chairman of the Board and President James S. Gleason, grandson of Andrew, aggressively focused the company on its core business and on improving its long-term profitability by introducing a record number of new products, modernizing and consolidating manufacturing capacity, reducing operating costs, and pursuing strategic acquisitions.

In December 1991, the company sold all of the stock of Pennsylvania Pressed Metals, Inc., the largest of its four Components Group companies, to a group of investors. The following year, the company sold its Alliance Precision Plastics and Alliance Carolina Tool and Mold subsidiaries, two more of the Components Group companies, for a total of $6.1 million in cash and another $2.2 million in notes receivable. Revenues for 1992 reached $147.3 million, with a net loss of $61.2 million.

In 1993, the company began shipping its first Phoenix 125GH gear hobbing machines for the parallel axis market, targeted at automotive applications, the largest single segment of the precision cylindrical gear market. Another product introduced in 1993 was the Phoenix 175 bevel gear cutting machine. The company also entered into a joint agreement to build the Gleason TAG 400 spur and helical gear grinder, the first product that would come out of a joint venture with Okamoto Machine Tool Works Ltd. of Japan. The company also entered into a joint agreement with the China National Automobile Industry Corporation, an agency that works with vehicle producers in China, providing service and training to companies associated with China’s transportation industries.

Late in 1993, the company sold its Belgian manufacturing operation for $2.3 million. Revenues for 1993 dropped to $103.9 million, with a net loss of $2.9 million.

In 1994, the company acquired a 20 percent interest in OGA Corporation, its exclusive sales and service representative in Japan and Taiwan, in order to strengthen the company’s presence and enhance growth in that region of the world. The company also ceased operations that year at the fourth and final company in the Components Group, Alliance Metal Stamping and Fabricating, selling the machinery and equipment for approximately $3.6 million.

As the American automotive industry had higher sales and improved profitability, revenues for the company in 1994 reached $128.5 million, with a net income of $7.3 million. In July 1995, the company acquired the operations of Munich, Germany-based Hurth Maschinen und Werkzeuge GmbH, a leading manufacturer of precision shaving and honing equipment used in cylindrical gear production and finishing. With Gleason’s annual sales reaching between $60 million to $70 million, the acquisition of Hurth’s products complemented the company’s existing offerings and gave the company another step toward sustained growth in that market.

Late in 1995, the company formed a wholly owned subsidiary in India which began limited production of bevel gear cutting tools the following year. The company’s presence in the emerging market there was estimated to result in near-term gains for its cutting tooling sales in that market, and a better position for long-term growth for the company’s machine products in that region. That year, the company also released the Phoenix 400 gear hobber, which produced gears ranging from 200 to 400 millimeters in diameter. The company’s revenues for 1995 were $197.1 million, with a net income of $30.8 million.

In 1996, the company introduced the Phoenix 450HC, a machine which extended the capabilities of the 250HC, the original Phoenix machine introduced in 1989. Revenues for the year reached a record high of $248.1 million, a 26 percent jump over 1995 revenues, and net income was $19.7 million.

In July 1997, the company acquired all the operations of The Hermann Pfauter Group, headquartered in Ludwigsburg, Germany, and with additional facilities located in Italy and the United States, for approximately $34.8 million. A leader in cylindrical gear production equipment, with 1996 sales of about $178 million, the acquisition of Pfauter also brought the company a machine-manufacturing subsidiary, called American Pfauter, a cutting tool-manufacturing subsidiary called Pfauter-Maag Cutting Tools, both located in Loves Park, Illinois; Hermann Pfauter GmbH & Co., and 1,050 new employees. The combined acquisition of Pfauter and Hurth moved the company into the number one worldwide position in overall gear production equipment and related technology, and significantly expanded the company’s volume and breadth in cylindrical gear machinery and tooling, jumping sales to approximately 66 percent of total sales in 1997, compared to less than 10 percent of sales in 1993. The following month, the company’s common stock split two-for-one, increasing the number of common shares outstanding to approximately 10 million.

In September, the company ranked 41st on Fortune magazine’s top 100 list of fastest-growing companies in the United States, with an earnings per share annual growth rate of 95 percent. The following month, the company signed an OEM contract with Saikuni Manufacturing Co., Ltd. in Japan in which Gleason would maintain and sell Saikuni’s Spiral Cutter Sharpener machines throughout the world. Also in October, the British-American Chamber of Commerce, at a transatlantic awards dinner, honored James Gleason, among others, for strengthening trade ties, his entrepreneurial spirit, and for his company’s achievements in furthering the growth of business between the United Kingdom and the United States.

Looking Ahead

Described in a Fortune magazine article as “an outfit in overdrive,” the company has steadily been increasing sales to the Asian and European marketplaces. In late 1997, the company turned its corporate eye toward South America and potential expansion in that market. Riding a crest of increasing sales and income, the company remained in a position to continue being a leader in the industry it served.