Square D

views updated

Square D

1415 South Roselle Drive
Palatine, Illinois 60067
U.S.A.
Telephone: (847) 397-2600
Toll Free: (888) 778-2733
Fax: (847) 925-7599
Web site: http://www.squared.com

Division of Schneider Electric S.A.
Incorporated: 1903 as McBride Manufacturing Company
Employees: 17,000
Sales: $3.7 billion (2006 est.)
NAIC: 333353 Electrical Equipment Manufacturing; 333359 Other Electrical Equipment and Component Manufacturing; 335311 Power, Distribution, and Specialty Transformer Manufacturing

Square D, a division and flagship brand of Schneider Electric of Paris, France, is a leading manufacturer of products and systems designed to distribute and control electricity in commercial, industrial, and residential settings. Square D is particularly well known for its line of QO circuit breakers, which became the industry standard in commercial and residential construction throughout North America soon after their introduction in 1955.

HUMBLE BEGINNINGS

Once Thomas Edison demonstrated the ability to harness electricity to power an incandescent lightbulb in 1879, the race was on to find ways to safely generate, distribute, and control electricity. To make electrical wiring useful, there had to be a way to keep overcurrent and short circuits from starting fires. The earliest solution was to connect wiring with some kind of fusible material inside a block of porcelain. This was called a fusible cut-out. When too much current overheated the wiring, the material, which was called the fuse, would melt, and "cut" the electrical current to that circuit. Repairing these "fuse-blocks" was difficult. More easily replaceable plug fuses first became available in the 1890s. On December 15, 1902, Bryson D. Horton and James B. McCarthy formed a company in Detroit, Michigan, to supply cartridge-type fuses to a growing market. A staff of two women assembled the first order of 1,000 electrical fuses. The company was incorporated the next year as the McBride Manufacturing Co. An electrical engineer, Horton would lead the company until 1928.

The young company enjoyed rapid growth and financial success, which allowed for the development of other products, as well. During its first decade, a series of management changes also resulted in several name changes. By 1908, the company had become the Detroit Fuse and Manufacturing Company. The next year it introduced the first cast iron enclosed safety switches to protect industrial workers from accidental electrocution. The company soon adopted a new logo, a capital "D" (for Detroit) enclosed in a square. In 1915 this logo was embossed on a new generation of safety switches made from sheet metal, which enjoyed wide popularity and became the industry standard for safety switches in industrial applications. Soon customers were requesting "those square D switches," based on the memorable monogram. The company registered the Square D trademark for its products, and, in 1917, the name Square D Company was officially adopted for the firm. Company historians note that this is one of the few companies ever named by its customers. In 1919, Square D's sales totaled $1 million.

YEARS OF GROWTH: 1920–40

When the company adopted the Square D name, it sold its fuse business and began to focus on safety switches and other products designed to increase electrical safety. In 1920 the company produced a memorable magazine ad known as "Jones is Dead!" which focused public attention on the hazards of exposed electrical switches in factories. In this way, the company hoped to make the Square D name represent safety and reliability to business owners and industrial managers concerned about worker safety. In 2003, one of these enclosed safety switches manufactured in 1922 would be donated to the Smithsonian National Museum of American History; retired from use at a former fruit processing plant in California, it was still in working condition.

During the 1920s the company grew by acquiring small companies that produced other electrical products, including industrial controllers and porcelain insulating components. In 1926 the first power distribution panel-board was built. Three years later, Square D entered the market for industrial controls, producing circuit breakers licensed by Westinghouse. Square D operations were established in Houston, Los Angeles, Milwaukee, Peru (Indiana), and San Francisco. In 1935, Square D began manufacturing its own brand of circuit breakers and introduced the first circuit breaker designed for use in private homes.

Growth remained strong throughout the 1930s because commercial demand for electricity, and the components needed to distribute and control it, was high. In 1935 the Rural Electrification Administration (REA) was created to make electricity more widely available in rural areas. At the time, only 10 percent of American farms had access to electricity. As rural communities gained access to reliable sources of electricity, farmers purchased goods powered by electricity. Square D's products contributed to this growth and expansion of goods and services that occurred even in the midst of the Great Depression.

MID-CENTURY CHANGES: 1941–60

With the advent of World War II, Square D, like many other American manufacturing firms, retooled its business to serve the defense industry. By the end of 1941 more than 90 percent of the company's manufacturing was directed toward the war effort. In addition to producing its traditional product lines, Square D also manufactured items specifically for military use during these years, such as binoculars and aircraft instruments, including 50 percent of all circuit breakers used for military aviation. In 1948 the company had ten factories, 43 regional offices, and a workforce of 7,000.

In the next decade Square D's peacetime production increased rapidly, as both the commercial and residential building industries were booming. This was a period of rapid technical and product innovation, as well. Until this time, virtually all in-home and industrial electrical wiring had been controlled through a central fuse box with removable, screw-type fuses. Two developments would change this. In 1951 the first circuit breaker panelboard was introduced, and 1955 Square D introduced what turned out to be one of the most influential developments in the control of electricity. The unique Square D "QO" three-quarter-inch circuit breaker eliminated the need for removable fuses and introduced a new level of convenience and electrical safety. By 1960 circuit breakers and panelboards became the industry standard for all new construction; by the end of the 20th century, they were in use in the majority of homes and businesses, old and new. In 2006, the company was still manufacturing its QO circuit breakers at plants in Lincoln, Nebraska, and Tijuana, Mexico, assembling tens of thousands of the devices every day. Bob Vavra, writing in Plant Engineering in December 2006, described it as "one of those inventions that stood the test of time. … Over the years it's been tweaked and cloned and expanded, but the basic function hasn't changed."

COMPANY PERSPECTIVES

Square D is a market leading, global brand of Schneider Electric for NEMA type industrial controls, electrical distribution, circuit protection, related power equipment, systems and services. Square D products are widely accepted in residential, commercial, industrial and OEM markets.

Throughout the 1950s, Square D established or acquired manufacturing operations all over the country, including locations in Iowa, Kentucky, Nebraska, North Carolina, Ohio, South Carolina, and Wisconsin. This was a period of international growth as well, with subsidiaries launched in England, Germany, France, and Italy. There were 72 sales offices worldwide. The company's advertising slogan of the era touted Square D as being "Wherever Electricity is Distributed and Controlled."

AN INDUSTRY LEADER: 1960–89

In 1960 the company's corporate headquarters was moved from Detroit to Park Ridge, Illinois, a suburb of Chicago. By the end of 1964 the company was operating 22 plants with 10,000 employees. Products introduced between 1966 and 1967 included I-Line panelboards, Visi Trip circuit breakers, and Type S motor starters. Although residential electricity had been commonplace for decades, safety was still a public health concern; as of 1970 more than 1,100 accidental electrocutions were occurring annually in the United States, many due to the use or misuse of electrical equipment outdoors, or in the vicinity of water, or in other places where users were not well protected from accidental electrical shock. In the late 1960s, the National Electrical Code first required the use of ground fault circuit interrupter (GFCI) technology for underwater lighting in swimming pools. By 1971, receptacles (electrical outlets) near swimming pools had to have GFCI capability, and throughout the 1970s, the code was updated to require GFCI wiring or receptacles for all outdoor uses, as well as for bathroom and garage use. In 1971, Square D used electronic technology to create its first GFCIs for home use. The decade would see the introduction of more safety-related devices from the company, including a GFCI receptacle and a smoke detector.

While the 1970s were a decade of technological innovation at Square D, the company was growing in size as well. In 1972 subsidiaries were established in Ireland and South Africa. The company had three international plants, employing 3,000 workers, and the international sales network spanned 75 countries with 400 distributors. By 1977 sales passed the $500 million mark, twice the total sales recorded in 1971. Offices opened in Bangkok, Manila, and Singapore, expanding the Square D reach into Asia. The company's "Watchdog" energy management system (a programmable control system) was introduced in 1978, in response to growing demand for more control over the cost of energy use.

KEY DATES

1902:: Detroiters Bryson D. Horton and James B. McCarthy found a company to make cartridge-type electrical fuses.
1903:: The company is incorporated as the McBride Manufacturing Company.
1908:: Name is changed to Detroit Fuse and Manufacturing Company.
1909:: The firm introduces the first enclosed safety switch.
1917:: The name Square D Company is formally adopted.
1929:: Square D is licensed by Westinghouse to produce circuit breakers.
1935:: The company introduces its own circuit breaker technology, including the first such device for home use.
1941:: More than 90 percent of Square D's output is devoted to defense-related manufacturing.
1948:: The company has grown to ten plants, 43 regional offices, and 7,000 employees.
1951:: The first "plug-in" type circuit breaker distribution panelboard is introduced.
1955:: Square D introduces the line of QO circuit breakers that will revolutionize residential electrical wiring; overseas operations open in Europe.
1960:: Square D moves its headquarters from Detroit to Park Ridge, Illinois.
1977:: Offices are opened in Asia; sales exceed $500 million.
1979:: A new corporate headquarters is opened in Palatine, Illinois.
1983:: Square D expands its data acquisition, robotics, and other advanced technology applications.
1991:: With 18,500 employees and sales of $1.65 billion, the company is acquired by Paris-based Groupe Schneider.
2002:: Square D celebrates its 100th anniversary.
2003:: Square D and Schneider donate an original 1922 enclosed safety switch to the Smithsonian; the switch is still functional.

Starting early in the 1980s, the company targeted growth through acquisitions focused on electronics to build expertise in robotics, data acquisition, and the design and manufacture of vacuum circuit breakers and variable speed drives. Square D's reliability rate was exceptionally high, but not all products functioned as intended. In 1988, Square D and the U.S. Consumer Product Safety Commission announced the company's voluntary recall and free replacement of a particular line of two-pole GFCI devices most commonly used on 240-volt circuits powering water-related equipment such as hot tubs, pool equipment, and large fountain pumps. Around 80,000 of the units had been installed throughout the United States since 1982. This replacement offer remained open as of 2006.

A NEW ERA: 1990–2001

On January 22, 1991, Square D announced that it had enjoyed a record-breaking year in 1990 with sales of $1.65 billion, up 3.4 percent from 1989's $1.60 billion sales year. The company had 18,500 employees and operations in 23 countries. Given the financial strength of the company, Square D's board of directors voted to increase dividends from 55 to 58 cents a share. At the same time, an economic downturn had hurt some divisions of the company. Nonetheless, president and CEO Jerre L. Stead noted, in a company statement dated January 1991, "We were pleased with our results in a year when most of our markets were moving into a significant recession."

Less than six weeks later, on March 1, the Square D Company rejected an initial buyout offer of $1.92 billion ($78 per share) from French electronics manufacturer Groupe Schneider S.A. In response, the price of Square D stock on the New York Stock Exchange (NYSE) fell from $78.25 per share to $76.62. A few days later Schneider renewed its bid for the American company. In April, the stock price rose to $81.25 as stockholders hoped for a higher bid from Schneider. Early in May the French company announced that it had acquired 71.3 percent of Square D's outstanding common shares, and by May 30, its ownership reached just over 98 percent. Schneider's offer had been increased to $88 per share, for a total price of $2.5 billion, and in exchange, Square D Company agreed not to contest the acquisition.

When Square D became part of Groupe Schneider, the NYSE naturally suspended trading of Square D stock. Prior to its delisting, the company had earned NYSE recognition for two significant accomplishments: during the 55 years it was listed on the NYSE, the company never reported a quarterly financial loss, and during this same period, it paid dividends to shareholders over 220 consecutive quarters. With the acquisition/merger complete, Square D Company became a wholly owned subsidiary of Groupe Schneider S.A. More than ten years later, Stead, who had opposed the action at the time, acknowledged that the result had been positive for Square D. In the Arlington Heights (Ill.) Daily Herald in October 2003, Stead noted that the acquisition had "changed the way the game was played. Instead of being the leader in North America, it became part of a global leader."

In April 1992 Groupe Schneider announced a reorganization of its global business into three geographic areas: Schneider International (Asia, Africa, Australia, South America, and the Middle East); Schneider Europe (all European operations except France, including Eastern Europe and former Soviet Union countries); and Schneider North America (Canada, Mexico, and the United States). Square D Company formed the core of the North American operations; Charles W. Denny was named president and CEO of Schneider North America and president and COO of Square D Company.

During the next years Square D maintained steady growth, as well as a high level of visibility at the community level throughout North America. When Hurricane Andrew ravaged parts of southern Florida, Louisiana, and the Bahamas in September 1992, Square D sent extra technical service crews to the affected areas and increased production of components such as temporary power outlet panels, metering equipment, transformers, switchgear, and power line connectors to help rebuild quickly. The company's "We Respond" philosophy was front and center again in March 1993, following February's bomb blast at the World Trade Center. The company worked with the Port Authority of New York and New Jersey to restore the Trade Center to full operation within weeks, rather than the months that such a massive undertaking would normally require. In 1995 the company donated and installed equipment to repair and preserve the Edison National Historic Site in West Orange, New Jersey, where Thomas Alva Edison had conducted much of his work. Said President Charles W. Denny in a company statement on March 9, 1995: "Edison invented our industry. … We feel as though we have a real responsibility to contribute to this renovation and to encourage others to do the same."

The 1990s offered both opportunity and challenge for Square D and the Schneider North American organization, which numbered 16,500 employees in 1996. In 1995, Schneider North American sales reached $2.3 billion, a 15 percent increase over 1994 sales. During 1994, Square D began field testing prototypes of arc fault circuit interrupting (AFCI) devices. These detect overloads, short circuits, and current or voltage changes caused by arc faults, which can cause electrical fires in either visible electrical devices or in wiring hidden inside walls. Less than a decade later, the National Electrical Code was updated to require AFCI protection in residential construction. In 1998 the U.S. new construction market was surging to its highest activity level since 1989, and as a leading supplier to this industry, Square D was flourishing. However, the company was also in the midst of an extensive redesign of its internal and supply management operations, in order to protect itself from inevitable future downturns in the industry. Explained Square D's Vice-President of Operations Joellyn Willis in the May 7, 1998, issue of Purchasing Magazine: "Traditionally in this industry, we would flow with whatever the economic cycle happened to be. One of the things we've worked on in the past several years is to develop a strategy to continually grow the company in spite of economic cycles."

INTO THE NEW CENTURY

In December 2002 Square D celebrated its 100th anniversary. By this time it had become a leading brand of Schneider Electric, which was then a $9 billion company with sales in more than 130 countries. With a 2,000-member network of independent electrical distributors, Square D's business contributed an estimated 80 percent of the $2.7 billion in sales reported by the Schneider North American Division in 2001. Square D had evolved into a global supplier of advanced power management technologies designed to increase efficiency, lower costs, and provide safety and reliability for every possible electrical distribution application. Despite the technological advances, however, the company continued to serve the same types of customers (residential, commercial, and industrial) with equipment designed to distribute and control electricity. Noted Schneider North American Division President and CEO Chris C. Richardson in a company statement on December 12, 2002: "Very few brands that have been around for 100 years can claim that they meet the same essential needs of society as when they began. Electrical safety has always been a major priority for us, and new technologies we're introducing to improve electrical energy conservation and to support the distribution and control of alternative electrical energy production make this business more critical than ever."

Because user safety was the core of Square D's success, it took prompt measures whenever the safety of one of its components was compromised. In addition to the ongoing recall of GFCIs that was announced in 1988, the company periodically took voluntary action to recall and replace other components as needed. During the second half of the 1990s, product recalls included surge arresters (1995), in-wall and baseboard heaters (1996), and electric meter boxes (1999). In the next decade, recalls involved circuit breakers (2002), AFCI devices (2004), and safety switches (2006).

Also in 2006, the Scott Electric Company of Pennsylvania announced a recall of counterfeit circuit breakers bearing the Square D logo. Counterfeiting had become a major concern for Square D and Schneider North America. As of July 31, 2007, Square D had filed nine lawsuits naming 19 defendants in the company's ongoing attempt to stop the importation, sale, or distribution of counterfeit Square D products, particularly their industry-standard circuit breakers. Terms of the lawsuits required involved distributors to recall all counterfeit products they had sold. In some cases, they were also denied future status as authorized Square D dealers. In a June 22, 2007, company statement, Bill Snyder, vice-president of channel development for the Schneider North American Operating Division, explained: "Square D has every intention of pursuing counterfeiters up and down the distribution chain. We'll stop at nothing to preserve the integrity of our products and protect innocent customers from the serious health and safety hazards associated with counterfeit products."

Pamela Willwerth Aue