The Sherwin-Williams Company

101 Prospect Avenue, NW
Cleveland, Ohio 44115-1075
U.S.A.
Telephone: (216) 566-2000
Fax: (216) 566-2947
Web site: http://www.sherwin-williams.com

Public Company
Incorporated: 1884
Employees: 30,767
Sales: $7.81 billion (2006)
Stock Exchanges: New York
Ticker Symbol: SHW
NAIC: 444120 Paint and Wallpaper Stores; 325131 Inorganic Dye and Pigment Manufacturing; 325192 Cyclic Crude and Intermediate Manufacturing; 325211 Plastics Material and Resin Manufacturing; 325510 Paint and Coating Manufacturing; 325520 Adhesive and Sealant Manufacturing

ORIGINS

DEVELOPMENT DURING AND FOLLOWING WORLD WAR II

JOHN G. BREEN TAKES THE HELM IN 1979

1999: CONNOR ASSUMES CONTROL

PRINCIPAL SUBSIDIARIES

PRINCIPAL DIVISIONS

PRINCIPAL COMPETITORS

FURTHER READING

The Sherwin-Williams Company is the second largest paint manufacturer in the world, trailing Dutch giant Akzo Nobel N.V., and the largest in the United States. Sherwin-Williams makes a wide variety of paints, coatings, finishes, applicators, and varnishes for the architectural, industrial, marine, and automotive markets, selling its products under the brand names Dutch Boy, Pratt & Lambert, Sherwin-Williams, Red Devil, Krylon, Martin-Senour, Thompson’s, and Miniwax. The products are sold at wholesale branches, home centers, independent retailers, mass merchandisers, and through a network of company-operated paint stores. Sherwin-Williams operates more than 3,000 stores in the United States, Canada, the Virgin Islands, and Puerto Rico. Distribution conducted through the company’s global group extends its reach into South America, Jamaica, the United Kingdom, Europe, and China. Approximately 70 percent of Sherwin-Williams’ revenue is derived from the architectural market.

ORIGINS

The story of The Sherwin-Williams Company began in 1866, when Henry Sherwin used his life savings of $2,000 to buy a partnership in the Truman Dunham Company of Ohio. The firm was a distributor of pigments, painting supplies, oils, and glass. In four years, this original partnership was dissolved, and Sherwin organized a paint business with new partners, Edward P.

Williams and A. T. Osborn. The new business was called Sherwin-Williams & Company. In 1873 the company purchased its first factory, on the Cuyahoga River in Cleveland, Ohio. The factory manufactured paste paints, oil colors, and putty. The company’s first manufactured product, Guaranteed Strictly Pure Raw Umber in Oil, came off the line that year.

In the paint industry in the 1870s, painters had to buy the ingredients and mix their own paint each day. At this time prepared paints, paints that were ready-mixed, were concocted and sold by individual dealers who mixed a few popular colors. These premixed paints were available only during the busy spring painting season. Moreover, in those days, oil and pigment had to be ground together into a paste. The paste was then thinned with more oil, thinners, and dryers. Customers brought their own containers to stores and filled them as needed. Paints had to be stirred continuously to prevent the pigment from sinking to the bottom of the container. In addition, the paint had to be used quickly or it dried out. For these reasons, paints were seldom shipped far from where they were made. The first patent for ready-mixed paint was taken out in 1867 by D. R. Averill of Newburg, Ohio, improving upon the existing mixing processes.

In 1877, Sherwin-Williams & Company developed the first patented reclosable paint can. This revolutionized the way paint could be used, and more importantly, reused over a period of time. During the 1880s the company continued to develop new products for the paint industry. At the beginning of the decade it improved its liquid paint formula. After two years of test marketing under the Osborn label, it introduced SWP, Sherwin-Williams Paint, the first mixed paint to receive considerable public acceptance.

In 1884 the partnership was dissolved and Sherwin and Williams incorporated as The Sherwin-Williams Company. In the same year, Inside Floor Paint was introduced. This new product encouraged the notion that specific paints should be used for specific purposes. During 1884, Percy Neyman was hired by Sherwin-Williams as the first paint chemist in the industry. Neyman contributed greatly to Sherwin-Williams research and development of new products for the paint industry.

Sherwin-Williams had always been committed to finding and developing new markets for paint products. In 1888, the company saw the possibility of marketing paints and coatings to the railroad industry. It opened a manufacturing facility in Chicago to serve the Pullman Company and to better serve the farm-implement and carriage industries. In those days, Pullman required as many as 20 coats of high-quality finishes for the elaborate interiors of the Pullman cars. Sherwin hired George A. Martin, an ambitious young man, to run the new facility. Martin later served as the third president of the company.

Marketing and advertising quickly became critical to the growing company. Seeing the need to make people aware of its products, in 1890 the company formed a department devoted exclusively to advertising and to publicizing Sherwin-Williams and its products. George Ford was hired to head the department. A year later, a sales agency was opened in Worcester, Massachusetts, which was the model for the company’s successful concept of the “company store.” In 1905, the “Cover the Earth” trademark was first introduced.

Walter H. Cottingham became the second president of the company in 1909. Sherwin then became chairman of the board of directors. Cottingham strove throughout his career to inspire his workers to attain their maximum potential. Cottingham was adept at launching successful sales campaigns. He was also known as a writer and orator and wrote a collection of “inspirational” editorials and papers on a variety of subjects.

In the early part of the 20th century Sherwin-Williams began acquiring other companies to meet the increasing demand for a variety of different paints and related products. In 1917, under Cottingham’s guidance, the company bought the Martin-Senour Company, of Chicago. Three years later, in 1920, the company went public, selling $15 million in preferred stock. Proceeds from the sale were used to purchase the Acme Quality Paint Company, of Detroit; a new plant in Oakland, California; and to expand various existing facilities.

COMPANY PERSPECTIVES

Since its founding by Henry Sherwin and Edward Williams in 1866, The Sherwin-Williams Company has not only grown to be the largest producer of paints and coatings in the United States, but is among the largest producers in the world. For more than 135 years, we have been determined to lead our industry, to manufacture and market innovative products of superior quality, to operate a safe, clean and friendly workplace, to observe the highest ethical standards in business conduct and to reward our investors. The pursuit of excellence is a commitment, not an achievement. This commitment is a vital part of the Sherwin-Williams culture. It is a pledge that joins every Sherwin-Williams employee together in service to our customers and shareholders.

When Cottingham retired in 1922, Martin, who had become vice-president and general manager in 1920, took over the leadership of the company. During Martin’s tenure as president, Sherwin-Williams developed nitro-cellulose lacquer and synthetic enamel. These products made possible the brilliant finishes that covered cars during the 1920s. Such products also reduced from 21 days to a few hours the drying time of newly painted cars.

George A. Martin, like Cottingham, believed in strong advertising for his company and its products. He sponsored the “Metropolitan Opera Auditions of the Air,” a successful radio program that ran for years. Also during Martin’s presidency, Sherwin-Williams bought several other high-quality, nationally known companies. Among them were The Lowe Brothers Company, of Dayton, Ohio, and The John Lucas Company, of Philadelphia. Both were innovative companies.

Martin’s vision focused on finding ways to expand the company and increase its profits. He believed that Latin Americans would respond favorably to high-quality paint products. In 1929 Sherwin-Williams bought the Bredell Paint Company of Havana and enlarged it. Martin expanded the company’s manufacturing facilities and established plants in Buenos Aires and São Paulo.

DEVELOPMENT DURING AND FOLLOWING WORLD WAR II

For Sherwin-Williams, the early 1940s brought an opportunity to participate heavily in the World War II effort. Sherwin-Williams, along with other paint companies, supplied camouflage paints for the armed forces, and it was said that the U.S. invasion of North Africa was delayed while waiting for the delivery of camouflage paints with which to provide proper field cover. The company also received a commission to load shells, antitank mines, and aerial bombs. To meet this demand, the company constructed and managed a plant in Carbondale, Illinois.

In 1940, Arthur W. Steudel, a Cleveland native, succeeded Martin. Steudel worked his way up in the company through the dye, chemical, and color division. He had many visionary ideas about paint retailing and merchandising, and the company’s profits increased under Steudel. He served as chief executive officer until 1961, at which time he added the title of chairman.

KEY DATES

1866:

Henry Sherwin invests $2,000 in the Truman Dunham Company, a stake that gives him the resources to form Sherwin-Williams & Company four years later.

1873:

The company acquires its first factory and makes its first product, “Guaranteed Strictly Pure Raw Umber in Oil.”

1877:

The company develops the first patented reclosable paint can.

1884:

The company is incorporated as The Sherwin-Williams Company.

1905:

The “Cover the Earth” trademark is introduced.

1920:

Sherwin-Williams completes an initial public offering of stock.

1929:

The acquisition of the Bredell Paint Company, a Havana, Cuba-based company, touches off international expansion.

1940:

Arthur W. Steudel begins a 20-year term as chief executive officer, presiding over a fourfold increase in sales during his tenure.

1977:

Revenues reach $1 billion.

1979:

John G. Breen is appointed president and chief executive officer, recording 22 consecutive years of earnings growth during his term.

1980:

Sherwin-Williams acquires Dutch Boy paint.

1985:

The company’s chemical business is divested.

1992:

The 2,000th retail outlet is opened and the consumer brands division is formed.

1995:

The company launches an acquisition campaign that includes 16 purchases within 21 months.

1999:

John Breen retires as chief executive officer and is replaced by Christopher Connor.

2002:

Sherwin-Williams opens its first factory in China.

2004:

Duron Inc., the third largest paint retailer in the United States, is acquired.

2006:

Sales climb to $7.8 billion.

Sherwin-Williams continued to introduce new products to the consumer during this time. Kem-Tone, the first emulsion-based, fast-drying paint for the do-it-yourself market was introduced in 1941 and met with remarkable success. Kem-Tone helped deal with the raw material shortage that the nation faced after the war. That same year, the company introduced the Roller-Koater, the first applicator that was not a brush and was later developed and refined into the paint roller commonly used today. Soon thereafter, the company introduced Kem-Glo, a porcelain-like enamel and Super Kem-Tone, a high-quality interior paint that had a synthetic rubber content. The prefix “Kem” indicated that the paints were “chemically involved materials.” Product development, crucial to the expansion and success of the company, continued into the 1960s, as the company gained a new president, E. Colin Baldwin, and was listed for the first time on the New York Stock Exchange in 1964. In 1971 Sherwin-Williams introduced POLANE, a coating designed to efficiently cover metal surfaces but found to work exceedingly well on plastics, too.

In the 1970s, however, the company began to experience substantial losses. In 1977, on revenues of $1 billion, Sherwin-Williams reported a loss of $8.2 million. Dividends were suspended, and the company’s borrowings increased dramatically during this time. In the period from 1967 through 1978, in fact, Sherwin-Williams’s long-term debt increased from zero to $242 million. In addition, by 1978 Gulf + Western Industries held 13.47 percent of Sherwin-Williams’ outstanding stock, and rumors of a takeover loomed.

JOHN G. BREEN TAKES THE HELM IN 1979

Shifts in management also occurred. Walter O. Spencer, CEO since 1971, resigned in 1978 and was replaced, on an interim basis, by William C. Fine. The company found a new permanent leader in January 1979, when John G. Breen, formerly an executive vice-president for Gould Inc., a Minneapolis battery manufacturer, became president and CEO. In a short time, Breen managed to bring the company back to financial stability and avert the threatened Gulf + Western takeover. Breen first persuaded Gulf + Western Chairman Charles Bludhorn to sell his company’s Sherwin-Williams shares, convincing Bludhorn that Gulf + Western’s holdings were a liability and that Sherwin-Williams would be unable to recover financially while the threat of takeover loomed. Bludhorn was likely swayed to a greater extent by the fact that his Sherwin-Williams shares were no longer a sound investment. Next, Breen reshuffled Sherwin-Williams management, replacing several vice-presidents, decentralizing responsibility, and discontinuing about 1,000 slow-selling products. Breen also cut the company’s long-term debt. In the first half of 1980, Breen’s policies yielded a 57 percent improvement in earnings over the same period the year before. In 1979, Sherwin-Williams sales were $1.19 billion, and by 1985 they had reached $2.17 billion. Moreover, net income rose from six cents to $1.60 per share between 1978 and 1985. Breen served as president until 1986, when he became chairman, retaining the office of CEO. Thomas A. Commes became president.

Acquisitions in the 1980s included the popular Dutch Boy line of paints and its manufacturing facilities, as well as Dupli-Color Products Company, which specialized in automotive paints. In 1984, to reach markets outside the continental United States, the company entered into a partnership known as BAPCO with C-I-L, Inc., of Canada, a subsidiary of England’s Imperial Chemical Industries PLC. The new concern was eventually acquired in its entirety by C-I-L, as Sherwin-Williams gradually divested its chemical operations.

During this time, sales of house paints decreased, due largely to the use of alternative surface finishes, such as prefinished aluminum and plastic surfaces, in the construction of homes. Sherwin-Williams responded to this trend by going after market share and substantially increasing its advertising budget from $4 million in 1989 to $125 million in 1990. This strategy was well-timed, as increasingly popular discount and home decorating chains that catered to the do-it-yourself market preferred to rely on one or two major suppliers that sold national brands and provided national distribution, rather than hundreds of smaller, local paint companies.

Moreover, in 1990 Sherwin-Williams added the well-known Krylon and Illinois Bronze lines of aerosol paints to its holdings. With the 1990 purchase of the architectural coatings business of DeSoto, Inc., Sherwin-Williams gained its biggest chunk of market share. It paid $67 million for the business, which traced its roots back to 1910 and eventually became one of the largest paint manufacturers in the country, supplying private label paints for such chains as Sears and Home Depot. The addition of DeSoto made Sherwin-Williams the world’s largest supplier of custom paints for the private-label market. The following year, the company purchased the Cuprinol brand name of premium stains, liquid sealers, and other coatings products from the Darworth Company of Connecticut, as well as two coatings business units from Cook Paint and Varnish Company.

The acquisitions paid off well for Sherwin-Williams. According to a 1992 article in Business Week, industry sales fell 0.2 percent in 1991, due to national economic recession, but revenues at Sherwin-Williams were up 2.9 percent, excluding acquisitions. For the first two quarters of 1991, in fact, the company’s profits climbed 23 percent to $68 million on sales of $1.37 billion. As Sherwin-Williams celebrated its 125th anniversary that year, it had become one of only a few companies to lead its chosen industry for more than a century.

By 1993, Sherwin-Williams was reporting earnings of $165 million on sales of $2.9 billion, and its balance sheet was almost debt-free. Indeed, in the 15 years since Breen took over, revenues more than doubled, while profits increased almost tenfold. In new product development, the company introduced Ever-Clean, a premium latex interior wall paint with superior stain resistance and washability characteristics. The new paint was launched in 1994 as part of a national advertising campaign which was the largest in the company’s history. Also that year, Sherwin-Williams acquired the assets of The Old Quaker Paint Company for an undisclosed amount. This purchase brought Sherwin-Williams into the residential construction market of southern California.

To support the company’s growth and keep its operations running at top performance, Sherwin-Williams had a software designer help develop an automated control system for its distribution centers. Known as the Automated Warehouse Control System (AWCS), the system became fully operational in all its distribution centers in 1994. Using bar-code technology and portable radio frequency, it significantly improved the efficiency and accuracy of processing orders. For example, workers received electronic orders via a hand-held machine incorporating a radio, a computer terminal, and a scanner. The computer sent orders ranking each task’s priority and recalculated the list each time a task was completed. When trucks were unloading at the warehouse, the computer determined where to put the goods based on what space was free at that moment, eliminating the need to hold a particular slot empty until a truck was unloaded.

The early and mid-1990s saw a decline in new housing starts and thus proved challenging to the construction and building materials industries. Sherwin-Williams, along with most companies competing in that business sector, felt the effects in the form of reduced stock prices. Nevertheless, Sherwin-Williams remained in a strong financial position. Having avoided long-term debt and gained market share, the company was able to respond effectively to the shifting economic environment and was still intent on serving as “America’s Paint Company.”

The strength of Sherwin-Williams’ finances was underscored when the company entered the second half of the 1990s and launched an aggressive acquisition campaign. In less than two years, the company completed 16 acquisitions, the most prominent of which was the purchase of the upscale brand Pratt & Lambert. At the end of 1996, the company added its 17th acquisition, the $830 million purchase of The Thompson Minimax Holding Corp. Based in New Jersey, Thompson sold stains and varnishes under the labels Minimax, Formby’s, and Red Devil, generating $375 million in annual sales. The purchase of the company also provided Sherwin-Williams with entry into the British market through Thompson-owned Ron-craft, a seller of interior and exterior stains.

1999: CONNOR ASSUMES CONTROL

Expansion would continue as Sherwin-Williams entered the 21st century, but under the direction of a new leader. Breen, who spearheaded tremendous financial growth during his leadership tenure, retired as chief executive officer in 1999, passing the reins of command to Christopher Connor, a 16-year Sherwin-Williams veteran who had headed the company’s retail operations for the previous two years. Not long after taking control of the company Connor exercised his authority, urging his management team and research-and-development staff to look for new ways to spur growth. “He saw the category getting commoditized,” a senior executive later explained in a November 9, 2004, interview with the Akron Beacon Journal. “It was increasingly difficult to compete on product quality.” A large component of the plan developed to buttress Sherwin-Williams for the 21st century centered not on what went inside a paint can but on the container itself. Throughout Sherwin-Williams’ history, packaging had played a vital role in the company’s development, beginning with the reclosable tin can patented by Henry Sherwin in 1877, and it would continue to underpin its progress in the new century. In 2002, a prime example of the new orientation mandated by Connor was introduced, the Twist & Pour paint container, which was regarded as the most significant design change in a century. A square container with a wide, molded handle, the Twist & Pour can featured a screw-off top and a drip-free pour spout, greatly increasing ease-of-use for do-it-yourself customers. In 2004, another innovative packing design was introduced by the company, the Dutch Boy Ready to Roll container, a plastic container with a built-in roller tray, providing another meaningful boost to the company’s consumer business.

Connor coupled his attention on design improvements with a focus on expansion by broadening Sherwin-Williams’ network of retail outlets and completing a series of acquisitions. After establishing its first factory in China in 2002, the company made several major acquisitions, including the purchase of Baltimore, Maryland-based Duron Inc. in May 2004. Duron, with annual sales of roughly $350 million, manufactured paints and industrial coatings, selling its products through a chain of 231 stores stretching from New Jersey to Florida. Sherwin-Williams paid $253 million for Duron, gaining the third largest paint retailer in the United States. Next, in the fall of 2004, the company reached an agreement to purchase Philadelphia, Pennsylvania-based Paint Sundry Brands, the manufacturer of Purdy paint brushes and rollers. The $295 million deal helped lift revenues to $7.1 billion and net income to $463 million in 2005, an 18 percent increase in each category from the totals recorded in 2004.

Sherwin-Williams’ retail operations expanded steadily during the first years of the 21st century, reaching another major milestone in 2006. Thanks to the Duron purchase, the chain’s size swelled in 2004, increasing by 297 units. In 2005, there were 95 stores opened, pushing the company tantalizingly close to the 3,000-unit mark. After opening 117 stores in 2006, Sherwin-Williams hit the target it had hoped to reach at the decade’s end, presiding over chain of 3,046 stores in North America, the Virgin Islands, and Puerto Rico.

Sherwin-Williams was expected to continue expanding via acquisitions in the years ahead. Although Connor refused to corroborate consensus among analysts, industry experts claimed the company was pursuing a goal of $10 billion in revenues by the end of the decade, by which time pundits expected a chain of 4,000 retail outlets. Looking ahead, Connor said he expected Sherwin-Williams to branch out in different directions in the years to come, but he was reticent about the specifics of his expansion plans. When asked in a May 16, 2005, interview with Crain’s Cleveland Business for his vision of what Sherwin-Williams would be like at its bicentennial, Connor spoke in broad terms. “I see us as American, independent, and in Cleveland,” he said.

Virginia L. Smiley
Updated, Beth Watson Highman
Jeffrey L. Covell

PRINCIPAL SUBSIDIARIES

Contract Transportation Systems Co. Omega Specialty Products & Services LLC; Sherwin-Williams Automotive Finishes Corp.; Sherwin-Williams Realty Holdings, Inc.; SWIMC, Inc.; The Sherwin-Williams Acceptance Corporation; Coatings S. R. L. (Peru); Compania Sherwin-Williams, S.A. de C.V. (Mexico); Eurofinish S.r.l. (Italy); Productos Quimicos Y Pinturas, S.A. de C.V. (Mexico); Quetzal Pinturas, S.A. de C.V. (Mexico); Ronseal (Ireland) Limited; Ronseal Limited (U.K.); Sherwin-Williams Argentina I.y C.S.A.; Sherwin-Williams Automotive Europe S.p.A. (Italy); Sherwin-Williams Automotive France S.r.l.; Sherwin-Williams Automotive Mexico S. de R.L. de C.V.; Sherwin-Williams do Brasil Industria e Comercio Ltda. (Brazil); Sherwin-Williams Canada Inc.; Sherwin-Williams (Caribbean) N.V. (Curacao); Sherwin-Williams Cayman Islands Limited; Sherwin-Williams Chile S.A.; Sherwin-Williams Japan Co., Ltd.; Sherwin-Williams Paints (Dongguan) Company Limited (China); Sherwin-Williams Paints Limited Liability Company (Russia); Sherwin-Williams Pinturas de Venezuela S.A.; Sherwin-Williams (Shanghai) Paints Company Limited (China); Sherwin-Williams Uruguay S.A.; Sherwin-Williams (West Indies) Limited (Jamaica); The Sherwin-Williams Company Resources Limited.

PRINCIPAL DIVISIONS

Paint Stores Group; Consumer Group; Global Group; Administrative Segment.

PRINCIPAL COMPETITORS

Akzo Nobel N.V.; ICI Paints in North America; PPG Industries, Inc.

FURTHER READING

Bennett, David, “Always Pouring a Fresh Mix,” Crain’s Cleveland Business, May 16, 2005, p. A18.

“Brightening Up at Sherwin-Williams?” Business Week, November 15, 1999, p. 297.

Dodosh, Mark, “Sherwin-Williams Seals Top Position,” Crain’s Cleveland Business, May 24, 2004, p. 19.

________, “They’re the Tops,” Crain’s Cleveland Business, May 27, 2002, p. S1.

Dyer, Davis, and Kathleen McDermott, America’s Paint Company: A History of Sherwin-Williams, Cambridge, Mass.: Winthrop Group, Inc., 1991, 109 p.

Feldman, Amy, “The House That Jack Rebuilt,” Forbes, April 25, 1994, pp. 91–93.

Harmon, Lute, Sr., “If You Got It, Flaunt It,” Inside Business, January 2006, p. 6.

Harrison, Kimberly P., “Sherwin-Williams to Stash $250M for Acquisitions,” Crain’s Cleveland Business, September 27, 1993, p. 1.

Lambert, Cheryl Ann, “Sherwin-Williams Acquires Thompson Miniwax,” Home Improvement Market, January 1997, p. 20. Lewis, Morgan, Jr., “Covering the Earth,” Inside Business, March 2005, p. 51.

Madigan, Kathleen, “Masters of the Game: CEOs Who Succeed in Business When Times Are Really Trying,” Business Week, October 12, 1992, pp. 110–16.

Patalon, William, “Paint Retailer Sherwin-Williams to Buy Maryland-Based Rival Duron,” Baltimore Sun, May 19, 2004.

Russell, John, “Sherwin-Williams Hopes New Paint Container Will Make Home Improvements Easier,” Akron Beacon Journal, November 9, 2004.

Schlenberg, Fred, “Cleveland, Part I: ‘Not Just Great, but the Greatest,’” American Paint & Coatings Journal, January 5, 1987.

________, “Cleveland, Part II: Sherwin, Williams and Fenn,” American Paint & Coatings Journal, January 19, 1987.

________, “Cleveland, Part III: Era of the Empire Builders,” American Paint & Coatings Journal, February 2, 1987.

“Sherwin-Williams Acquires Old Quaker Paint Co.,” American Paint & Coatings Journal, September 12, 1994, p. 17.

“Sherwin-Williams Buys Nitco Paints to Enter India,” Coatings World, May 2007, p. 10.

“Sherwin-Williams Buys Paint Sundry Brands,” UPI NewsTrack, August 10, 2004.

“Sherwin-Williams’ Longtime CEO, Breen, Steps Aside,” Business First-Columbus, October 29, 1999, p. 24.

Shingler, Dan, “Cash-Rich Sherwin Ripe for Deal-Making,” Crain’s Cleveland Business, May 29, 1995, p. 2.

Steiner, Christopher, “Chip Thrills,” Forbes, August 14, 2006, p. 108.

The Sherwin-Williams Company

101 Prospect Avenue, Northwest
Cleveland, Ohio 44115
U.S.A.
(216) 566-2000
Fax: (216) 566-3310

Public Company
Incorporated: 1884
Employees: 16,726
Sales: $2.12 billion
Stock Exchange: New York

The Sherwin-Williams Company is a producer and distributor of paints, coatings, paint sundries, various home decorative items, adhesives, labels, and color cards. It also produces motor vehicle finishes and refinish products, as well as industrial finishes for original equipment manufacturers of metal, plastic, and wood products. Its products are sold through 1,865 company-operated stores.

The story of The Sherwin-Williams Company began in 1866, when Henry Sherwin used his life savings of $2,000 to buy a partnership in the Truman Dunham Company of Ohio. The firm was a distributor of pigments, painting supplies, oils, and glass. In four years, this original partnership was dissolved, and Sherwin organized a paint business with new partners, Edward P. Williams and A. T. Osborn. The new business was called Sherwin-Williams & Company.

In 1873 the company purchased its first factory, on the Cuyahoga River, in Cleveland, Ohio. The factory manufactured paste paints, oil colors, and putty. The company’s first manufactured product, Guaranteed Strictly Pure Raw Umber in Oil, came off the line in that year.

The paint industry in the 1870s was radically different from what it is today. Painters had to buy the ingredients and mix their own paint each day. At this time prepared paints— paints that were ready-mixed—were concocted and sold by individual dealers who mixed a few popular colors. These premixed paints were available only during the busy spring painting season.

In those days, oil and pigment had to be ground together into a paste. The paste was then thinned with more oil, thinners, and driers. Customers brought their own containers to stores and filled them as needed. Paints had to be stirred continuously to prevent the pigment from sinking to the bottom of the container. In addition, the paint had to be used quickly or it dried out. For these reasons, paints were seldom shipped far from where they were made. The first patent for ready-mixed paint was taken out in 1867 by D.R. Averill of Newburg, Ohio; it made improvements to the existing mixing processes.

In 1877, the company developed the first patented reclosable paint can. This revolutionized the way paint could be used, and more importantly, used over a period of time.

During the 1880s the company continued to develop new products for the paint industry. At the beginning of the decade it improved its liquid paint formula. After two years of test marketing under the Osborn label, it introduced SWP— Sherwin-Williams Paint—the first mixed paint to receive considerable public acceptance.

In 1884 the partnership was dissolved and Sherwin and Williams incorporated as The Sherwin-Williams Company. In the same year, Inside Floor Paint was introduced. This new product encouraged the notion that specific paints should be used for specific purposes. During 1884, Percy Neyman was hired by Sherwin-Williams as the first paint chemist in the industry. Neyman contributed greatly to Sherwin-Williams research and development of new products for the paint industry.

Sherwin-Williams had always been committed to finding and developing new markets for paint products. In 1888, the company saw the possibility of marketing paints and coatings to the railroad industry. It opened a manufacturing facility in Chicago to serve the Pullman Company, and to better serve the farm-implement and carriage industries. In those days, Pullman required as many as 20 coats of high-quality finishes for the elaborate interiors of the Pullman cars. Sherwin hired George A. Martin, an ambitious young man to run the new facility. Martin later served as the third president of the company.

Marketing and advertising quickly became critical to the growing company. Seeing the need to make people aware of its products, in 1890 the company formed a department devoted exclusively to advertising and to publicizing Sherwin-Williams and its products. George Ford was hired to head the department. A year later, a sales agency was opened in Worcester, Massachusetts, which was the model for the company’s successful concept of the “company store.” In 1905, the “Cover the Earth” trademark was first introduced.

Walter H. Cottingham became the second president of the company in 1909. Sherwin then became chairman of the board of directors. Cottingham strove throughout his career to inspire his workers to attain their maximum potential. Cottingham was adept at launching successful sales campaigns. He was also known as a writer and orator and wrote a collection of “inspirational” editorials and papers on a variety of subjects.

In the early part of the 20th century Sherwin-Williams began acquiring other companies to meet the increasing demand for a variety of different paints and related products. In 1917, under Cottingham’s guidance, the company bought the Martin-Senour Company, of Chicago. Three years later, in 1920, the company went public, selling $15 million in preferred stock. Proceeds from the sale were used to purchase the Acme Quality Paint Company, of Detroit; a new plant in Oakland, California; and to expand various existing facilities.

When Cottingham retired in 1922, Martin—who had become vice president and general manager in 1920—took over the leadership of the company. During Martin’s tenure as president, Sherwin-Williams developed nitrocellulose lacquer and synthetic enamel. These products made possible the brilliant finishes that covered cars during the 1920s. Such products also reduced from 21 days to a few hours the drying time of newly painted cars.

George A. Martin, like Cottingham, believed in strong advertising for his company and its products. He sponsored the “Metropolitan Opera Auditions of the Air,” a successful radio program that ran for years.

Also during Martin’s presidency, Sherwin-Williams bought several other high-quality, nationally known companies. Among them were The Lowe Brothers Company, of Dayton, Ohio, and The John Lucas Company, of Philadelphia, Pennsylvania. Both were innovative companies.

Martin’s vision focused on finding ways to expand the company and increase its profits. He believed that Latin Americans would respond favorably to high-quality paint products. In 1929 Sherwin-Williams bought the Bredell Paint Company of Havana and enlarged it. Martin expanded the company’s manufacturing facilities and established plants in Buenos Aires and Sao Paulo.

For Sherwin-Williams, the early 1940s brought an opportunity to participate heavily in America’s World War II effort. Sherwin-Williams, along with other paint companies, supplied camouflage paints for the armed forces. It was said that the invasion of North Africa was delayed while waiting for the delivery of camouflage paints with which to provide proper field cover. The company also received a commission to load shells, anti-tank mines, and aerial bombs. To meet this demand, the company constructed and managed a plant in Carbondale, Illinois.

In 1940, Arthur W. Steudel, a Cleveland native, succeeded George A. Martin as president. Steudel worked his way up in the company through the dye, chemical, and color division. He had many visionary ideas about paint retailing and merchandising. The company’s profits increased under Steudel. He served as president until 1961, at which time he became chairman and chief executive officer.

During the 1940s, Sherwin-Williams introduced several new products to the consumer. Kem-Tone, the first emulsion-based, fast-drying paint for the do-it-yourself market was introduced in 1941 and met with remarkable success. Kem-Tone helped deal with the raw material shortage that the nation faced after the war. That same year, the company introduced the Roller-Koater, the first applicator that was not a brush. It was later developed and refined into the paint roller commonly used today.

Soon thereafter, the company introduced Kem-Glo, a porcelain-like enamel and Super Kem-Tone, a high-quality interior paint that had a synthetic rubber content. The prefix “Kern” indicated that the paints were “chemically involved materials.” The development of these products was crucial to the expansion and success of the company.

During the 1950s and 1960s the company continued to grow and prosper. E. Colin Baldwin served as president from 1961 to 1969. In 1964 the Sherwin-Williams Company was listed on the New York Stock Exchange. In 1966, Sprayon Products was acquired.

In the 1970s, the company suffered substantial losses. In 1977, on revenues of $1 billion, it had a loss of $8.2 million, and dividends were suspended. Sherwin-Williams’s borrowings increased dramatically. Without any debt in 1967, by 1977 Sherwin-Williams had long-term debt of $196.6 million. The following year the debt increased to $242 million. In addition, by 1978 Gulf + Western Industries held 13.47% of Sherwin-Williams’s outstanding stock. Walter O. Spencer, CEO since 1971, resigned in 1978. Spencer was replaced, on an interim basis, by William C. Fine. Sherwin-Williams found a new permanent leader in January 1979, when John G. Breen became president and CEO. Breen was a former executive vice president for Gould Inc., a Minneapolis, Minnesota battery manufacturer. In a short time, Breen managed to bring the company back to financial stability and avert the threatened Gulf + Western takeover. Breen first persuaded Gulf + Western Chairman Charles Bludhorn to sell Gulf + Western’s Sherwin-Williams shares. Breen convinced Bludhorn that Gulf + Western’s Sherwin-Williams holdings were a liability to Gulf + Western and that Sherwin-Williams would be unable to recover financially while the threat of takeover loomed. Bludhorn was, likely, swayed to a greater extent by the fact that his Sherwin-Williams shares were no longer a sound investment. Next, Breen reshuffled Sherwin-Williams management, replacing several vice presidents. He decentralized responsibility and discontinued about 1,000 slow-selling products. Breen also cut the company’s long-term debt. In the first half of 1980, Breen’s policies yielded a 57% improvement in earnings over the same period in 1979.

In 1979, sales were $1.19 billion and by 1985 were $2.17 billion. Net income rose from 6⊄ to $1.60 per share between 1978 and 1985. Breen served as president until 1986, when he became chairman, retaining the office of CEO. Thomas A. Commes became president.

In 1971 Sherwin-Williams introduced POLANE, a coating designed to efficiently cover metal surfaces but found to work exceedingly well on plastics as well. In 1980, Dutch Boy was acquired by the company, substantially increasing its sales. Sherwin-Williams bought the Gray Drug Stores chain in 1981, and then sold that group in 1987.

To reach markets outside the continental United States, the company formed in 1984, BAPCO, an equal partnership, with C-I-L, Inc. of Canada, a subsidiary of Imperial Chemical Industries PLC of England. That same year, Sher win-William acquired the assets of Dupil-Color, Inc. During 1985 Sherwin Williams chemical operations were sold to PMC Specialties Group. In 1987 the company acquired the Lyons Group. In 1986 Thomas A. Commes was elected president and John G. Breen became chairman. In 1988 the company sold its interest in the BAPCO partnership to C-I-L, Inc.

During the 1980s sales of house paints decreased, notably because of the use of alternative surface finishes such as pre-finished aluminum and plastic surfaces. Sherwin-Williams responded to this by substantially increasing its advertising budget from $4 million in 1989 to $15 million in 1990. Sherwin-Williams in 1990 had 20% of the home market. Time will tell if its quality products and quality service will allow it to maintain or even better that position.

Principal Subsidiaries

Sherwin-Williams Canada, Inc. (96.8%); Sherwin-Williams Automotive Finishes, Inc. (Canada); 147926 Canada Inc.; Lyon’s Technological Products Ltd. (U.K.); The Sherwin-Williams Co. Resources Limited (Jamaica); Sherwin-Williams (Caribbean) N.V. (Curaçao); Sherwin-Williams (West Indies) Ltd. (Jamaica); Sherwin-Williams Foreign Sales Corporation Limited (Virgin Islands); Sherwin-Williams Development Corp.; SWDC (Virginia), Inc.; Contract Transportation Systems Co.; Dupli-Color Products Company; Lyons Transportation Lines, Inc.; Certified Distribution Services, Inc.; Sherwin-Williams International Company.

Further Reading

Schlenberg, Fred, “Cleveland, Part I: ‘Not just great, but the greatest,’” American Paint & Coatings Journal, January 5, 1987; Schulenberg, Fred, “Cleveland, Part II: Sherwin, Williams... and Fenn,” American Paint & Coatings Journal, January 19, 1987; Schulenberg, Fred, “Cleveland, Part III: Era of the empire builders,” American Paint & Coatings Journal, February 2, 1987; The Sherwin-Williams Company 1988 Fact Book, Cleveland, Ohio, The Sherwin-Williams Company, 1988; “Sherwin-Williams History,” Sherwin-Williams corporate typescript, 1989.

—Virginia L. Smiley

The Sherwin-Williams Company

101 Prospect Avenue, Northwest
Cleveland, Ohio 44115-1075
U.S.A.
(216) 5662000
Fax: (216) 5663310

Public Company
Incorporated: 1884
Employees: 17,886
Sales: $3.1 billion
Stock Exchanges: New York
SICs: 2851 Paints & Allied Products; 5231 Paint, Glass & Wallpaper Stores

The Sherwin-Williams Company, “America’s Paint Company,” is the largest producer of paints, varnishes, and specialty coatings in the United States. It also produces related home improvement items, motor vehicle finishes, and refinish products, as well as industrial finishes for original equipment manufacturers of metal, plastic, and wood products. Its products are sold through 2,046 company-operated stores, as well as mass merchants, independent paint and hardware stores, and a direct sales staff.

The story of The Sherwin-Williams Company began in 1866, when Henry Sherwin used his life savings of $2,000 to buy a partnership in the Truman Dunham Company of Ohio. The firm was a distributor of pigments, painting supplies, oils, and glass. In four years, this original partnership was dissolved, and Sherwin organized a paint business with new partners, Edward P. Williams and A. T. Osborn. The new business was called Sherwin-Williams & Company. In 1873 the company purchased its first factory, on the Cuyahoga River in Cleveland, Ohio. The factory manufactured paste paints, oil colors, and putty. The company’s first manufactured product, Guaranteed Strictly Pure Raw Umber in Oil, came off the line in that year.

In the paint industry in the 1870s, painters had to buy the ingredients and mix their own paint each day. At this time prepared paints—paints that were ready-mixed—were concocted and sold by individual dealers who mixed a few popular colors. These premixed paints were available only during the busy spring painting season. Moreover, in those days, oil and pigment had to be ground together into a paste. The paste was then thinned with more oil, thinners, and dryers. Customers brought their own containers to stores and filled them as needed. Paints had to be stirred continuously to prevent the pigment from sinking to the bottom of the container. In addition, the paint had to be used quickly or it dried out. For these reasons, paints were seldom shipped far from where they were made. The first patent for ready-mixed paint was taken out in 1867 by D.R. Averill of Newburg, Ohio, improving upon the existing mixing processes.

In 1877, Sherwin-Williams & Company developed the first patented reclosable paint can. This revolutionized the way paint could be used, and more importantly, reused over a period of time. During the 1880s the company continued to develop new products for the paint industry. At the beginning of the decade it improved its liquid paint formula. After two years of test marketing under the Osborn label, it introduced SWP—Sherwin-Williams Paint—the first mixed paint to receive considerable public acceptance.

In 1884 the partnership was dissolved and Sherwin and Williams incorporated as The Sherwin-Williams Company. In the same year, Inside Floor Paint was introduced. This new product encouraged the notion that specific paints should be used for specific purposes. During 1884, Percy Neyman was hired by Sherwin-Williams as the first paint chemist in the industry. Neyman contributed greatly to Sherwin-Williams research and development of new products for the paint industry.

Sherwin-Williams had always been committed to finding and developing new markets for paint products. In 1888, the company saw the possibility of marketing paints and coatings to the railroad industry. It opened a manufacturing facility in Chicago to serve the Pullman Company, and to better serve the farm-implement and carriage industries. In those days, Pullman required as many as 20 coats of highquality finishes for the elaborate interiors of the Pullman cars. Sherwin hired George A. Martin, an ambitious young man, to run the new facility. Martin later served as the third president of the company.

Marketing and advertising quickly became critical to the growing company. Seeing the need to make people aware of its products, in 1890 the company formed a department devoted exclusively to advertising and to publicizing Sherwin-Williams and its products. George Ford was hired to head the department. A year later, a sales agency was opened in Worcester, Massachusetts, which was the model for the company’s successful concept of the “company store.” In 1905, the “Cover the Earth” trademark was first introduced.

Walter H. Cottingham became the second president of the company in 1909. Sherwin then became chairman of the board of directors. Cottingham strove throughout his career to inspire his workers to attain their maximum potential. Cottingham was adept at launching successful sales campaigns. He was also known as a writer and orator and wrote a collection of “inspirational” editorials and papers on a variety of subjects.

In the early part of the 20th century Sherwin-Williams began acquiring other companies to meet the increasing demand for a variety of different paints and related products. In 1917, under Cottingham’s guidance, the company bought the Martin-Senour Company, of Chicago. Three years later, in 1920, the company went public, selling $15 million in preferred stock. Proceeds from the sale were used to purchase the Acme Quality Paint Company, of Detroit; a new plant in Oakland, California; and to expand various existing facilities.

When Cottingham retired in 1922, Martin—who had become vice-president and general manager in 1920—took over the leadership of the company. During Martin’s tenure as president, Sherwin-Williams developed nitro-cellulose lacquer and synthetic enamel. These products made possible the brilliant finishes that covered cars during the 1920s. Such products also reduced from 21 days to a few hours the drying time of newly painted cars.

George A. Martin, like Cottingham, believed in strong advertising for his company and its products. He sponsored the “Metropolitan Opera Auditions of the Air,” a successful radio program that ran for years. Also during Martin’s presidency, Sherwin-Williams bought several other high-quality, nationally known companies. Among them were The Lowe Brothers Company, of Dayton, Ohio, and The John Lucas Company, of Philadelphia. Both were innovative companies.

Martin’s vision focused on finding ways to expand the company and increase its profits. He believed that Latin Americans would respond favorably to high-quality paint products. In 1929 Sherwin-Williams bought the Bredell Paint Company of Havana and enlarged it. Martin expanded the company’s manufacturing facilities and established plants in Buenos Aires and Sao Paulo.

For Sherwin-Williams, the early 1940s brought an opportunity to participate heavily in America’s World War II effort. Sherwin-Williams, along with other paint companies, supplied camouflage paints for the armed forces, and it was said that the U.S. invasion of North Africa was delayed while waiting for the delivery of camouflage paints with which to provide proper field cover. The company also received a commission to load shells, anti-tank mines, and aerial bombs. To meet this demand, the company constructed and managed a plant in Carbondale, Illinois.

In 1940, Arthur W. Steudel, a Cleveland native, succeeded Martin as president. Steudel worked his way up in the company through the dye, chemical, and color division. He had many visionary ideas about paint retailing and merchandising, and the company’s profits increased under Steudel. He served as president until 1961, at which time he became chairman and chief executive officer.

Sherwin-Williams continued to introduce new products to the consumer during this time. Kern-Tone, the first emulsion-based, fast-drying paint for the do-it-yourself market was introduced in 1941 and met with remarkable success. Kern-Tone helped deal with the raw material shortage that the nation faced after the war. That same year, the company introduced the Roller-Koater, the first applicator that was not a brush and was later developed and refined into the paint roller commonly used today. Soon thereafter, the company introduced Kem-Glo, a porcelain-like enamel and Super Kern-Tone, a high-quality interior paint that had a synthetic rubber content. The prefix “Kem” indicated that the paints were “chemically involved materials.” Product development, crucial to the expansion and success of the company, continued into the 1960s, as the company gained a new president, E. Colin Baldwin, and was listed for the first time on the New York Stock Exchange in 1964. In 1971 Sherwin-Williams introduced POLANE, a coating designed to efficiently cover metal surfaces but found to work exceedingly well on plastics as well.

In the 1970s, however, the company began to experience substantial losses. In 1977, on revenues of $1 billion, Sherwin-Williams reported a loss of $8.2 million. Dividends were suspended, and the company’s borrowings increased dramatically during this time. In the period from 1967 through 1978, in fact, Sherwin-Williams’s long-term debt increased from zero to $242 million. In addition, by 1978 Gulf & Western Industries held 13.47 percent of Sherwin-Williams’ outstanding stock, and rumors of a takeover loomed.

Shifts in management also occurred. Walter O. Spencer, CEO since 1971, resigned in 1978 and was replaced, on an interim basis, by William C. Fine. The company found a new permanent leader in January 1979, when John G. Breen, formerly an executive vice-president for Gould Inc., a Minneapolis battery manufacturer, became president and CEO. In a short time, Breen managed to bring the company back to financial stability and avert the threatened Gulf & Western takeover. Breen first persuaded Gulf & Western Chairman Charles Bludhorn to sell his company’s Sherwin-Williams shares, convincing Bludhorn that Gulf & Western’s holdings were a liability and that Sherwin-Williams would be unable to recover financially while the threat of takeover loomed. Bludhorn was likely swayed to a greater extent by the fact that his Sherwin-Williams shares were no longer a sound investment. Next, Breen reshuffled Sherwin-Williams management, replacing several vice-presidents, decentralizing responsibility, and discontinuing about 1,000 slow-selling products. Breen also cut the company’s long-term debt. In the first half of 1980, Breen’s policies yielded a 57 percent improvement in earnings over the same period the year before. In 1979, Sherwin-Williams sales were $1.19 billion, and by 1985 they had reached $2.17 billion. Moreover, net income rose from six cents to $1.60 per share between 1978 and 1985. Breen served as president until 1986, when he became chairman, retaining the office of CEO. Thomas A. Commes became president.

Acquisitions in the 1980s included the popular Dutch Boy line of paints and its manufacturing facilities, as well as Dupli-Color Products Company, which specialized in automotive paints. In 1984, to reach markets outside the continental United States, the company entered into a partnership known as BAPCO with C-I-L, Inc. of Canada, a subsidiary of England’s Imperial Chemical Industries PLC. The new concern was eventually acquired in its entirety by C-I-L, as Sherwin-Williams gradually divested its chemical operations.

During this time, sales of house paints decreased, due largely to the use of alternative surface finishes, such as pre-finished aluminum and plastic surfaces, in the construction of homes. Sherwin-Williams responded to this trend by going after market share and substantially increasing its advertising budget from $4 million in 1989 to $125 million in 1990. This strategy was well-timed, as increasingly popular discount and home decorating chains that catered to the do-it-yourself market preferred to rely on one or two major suppliers that sold national brands and provided national distribution, rather than hundreds of smaller, local paint companies.

Moreover, in 1990 Sherwin-Williams added the well-known Krylon and Illinois Bronze lines of aerosol paints to its holdings. And with the 1990 purchase of the architectural coatings business of DeSoto, Inc., Sherwin-Williams gained its biggest chunk of market share. It paid $67 million for the business, which traced its roots back to 1910 and eventually became as one of the largest paint manufacturers in the country, supplying private label paints for such chains as Sears and Home Depot. The addition of DeSoto made Sherwin-Williams the world’s largest supplier of custom paints for the private-label market. The following year, the company purchased the Cuprinol brand name of premium stains, liquid sealers, and other coatings products from the Darworth Company of Connecticut, as well as two coatings business units from Cook Paint and Varnish Company.

The acquisitions paid off well for Sherwin-Williams. According to a 1992 article in Business Week, industry sales fell 0.2 percent in 1991, due to national economic recession, but revenues at Sherwin-Williams were up 2.9 percent, excluding acquisitions. For the first two quarters of 1991, in fact, the company’s profits climbed 23 percent to $68 million on sales of $1.37 billion. As Sherwin-Williams celebrated its 125th anniversary that year, it had become one of only a few companies to lead its chosen industry for more than a century.

By 1993, Sherwin-Williams was reporting earnings of $165 million on sales of $2.9 billion, and its balance sheet was almost debt-free. Indeed, in the 15 years since Breen took over, revenues more than doubled, while profits increased almost tenfold. In new product development, the company introduced Ever-Clean, a premium latex interior wall paint with superior stain resistance and washability characteristics. The new paint was launched in 1994 as part of a national advertising campaign which was the largest in the company’s history. Also that year, Sherwin-Williams acquired the assets of The Old Quaker Paint Company for an undisclosed amount. This purchase brought Sherwin-Williams into the residential construction market of southern California.

To support the company’s growth and keep its operations running at top performance, Sherwin-Williams had a software designer help develop an automated control system for its distribution centers. Known as the Automated Warehouse Control System (AWCS), the system became fully operational in all its distribution centers in 1994. Using bar-code technology and portable radio frequency, it significantly improved the efficiency and accuracy of processing orders. For example, workers received electronic orders via a hand-held machine incorporating a radio, a computer terminal, and a scanner. The computer sent orders ranking each tasks priority and recalculated the list each time a task was completed. When trucks were unloading at the warehouse, the computer determined where to put the goods based on what space was free at that moment, eliminating the need to hold a particular slot empty until a truck was unloaded.

The early and mid-1990s saw a decline in new housing starts and thus proved challenging to the construction and building materials industries. Sherwin-Williams, along with most companies competing in that business sector, felt the effects in the form of reduced stock prices. Nevertheless, Sherwin-Williams remained in a strong financial position; having avoided long-term debt and gained market share, the company was able to respond effectively to the shifting economic environment and was still intent on serving as “America’s Paint Company.”

Principal Subsidiaries

Contract Transportation Systems Co.; Dupli-Color Products Company; Sherwin-Williams International Company; DIMC, Inc.; Interiors Guild, Inc.; MTM Development Corporation; Sherwin-Williams Acceptance Corporation; SWIMC, Inc.; Sherwin-Williams Canada, Inc.; 147926 Canada Inc.; The Sherwin-Williams Co. Resources Limited (Jamaica); Sherwin-Williams (Caribbean) N.V. (Curacao); Sherwin-Williams (West Indies) Ltd. (Jamaica); Sherwin-Williams Foreign Sales Corporation Limited (Virgin Islands); Sherwin-Williams do Brasil Industria e Comercio Ltda. (Brazil); Compañia Sherwin-Williams, S.A. de C.V. (Mexico); Sherwin-Williams Cayman Islands Ltd. (Grand Cayman).

Further Reading

Dyer, Davis and Kathleen McDermott, America’s Paint Company: A History of Sherwin-Williams, Cambridge, Mass.: Winthrop Group, Inc., 1991, 109 p.

Feldman, Amy, “The House that Jack Rebuilt,” Forbes, April 25, 1994, pp. 91-93.

Harrison, Kimberly P., “Sherwin-Williams to Stash $250MM for Acquisitions,” Grain’s Cleveland Business, September 27, 1993, p. 1.

Madigan, Kathleen, “Masters of the Game: CEOs Who Succeed in Business When Times are Really Trying,” Business Week, October 12, 1992, pp. 110-16.

Schlenberg, Fred, “Cleveland, Part I: ‘Not Just Great, But the Greatest’,” American Paint & Coatings Journal, January 5, 1987.

_____, “Cleveland, Part II: Sherwin, Williams ... and Fenn,” American Paint & Coatings Journal, January 19, 1987.

_____, “Cleveland, Part III: Era of the Empire Builders,” American Paint & Coatings Journal, February 2, 1987.

“Sherwin-Williams Acquires Old Quaker Paint Co.,” American Paint & Coatings Journal, September 12, 1994, p. 17.

Shingler, Dan, “Cash-Rich Sherwin Ripe for Deal-Making,” Crain’s Cleveland Business, May 29, 1995, p. 2.

—Virginia L. Smiley

updated by Beth Watson Highman

The Sherwin-Williams Company

founded: 1870

Contact Information:

headquarters: 101 prospect ave. nw
cleveland, oh 44115 phone: (216)566-2000 fax: (216)566-3266 url: http://www.sherwin-williams.com

OVERVIEW

Sherwin-Williams makes and markets paints and a variety of other coverings, such as varnishes, as well as equipment for applying paint. It is the largest such business in the United States and a pioneer in the paint industry from the time of its founding in the 1800s.

Dominant in the industry for decades, Sherwin-Williams lost market share in the 1970s due to a series of major capital expenditures. This forced the company to borrow heavily, stop paying dividends to stockholders, and concentrate on financial matters instead of innovation and marketing. With outsider John Breen tapped as CEO in 1979, the company focused on its products, slashed debt, and recovered its image. Since then the stock has risen and dividends also rise every year.

Sherwin-Williams was an innovator from the very beginning. In the 1880s only professionals painted, as the paint had to be hand mixed, frequently stirred, and used before it dried. By developing a technique for pre-mixing, the company was able to sell cans of paint directly to consumers.

The company created markets where none existed—developing different paints for different surfaces, for the inside and outside of buildings, and for different climates. Sherwin-Williams depends heavily on advertising for product introduction, emphasizing customer service.

Although the company has been hit with lawsuits over lead-based paint and environmental problems, it has money set aside for judgments, if it comes to that. Sherwin-Williams has a practice of vigorously defending itself against such actions, although it will settle suits if defending them is too costly.

COMPANY FINANCES

Both segments of the company, Paint Stores and Coatings, reported a 1997 sales gain of 8.1 percent and 32.5 percent, respectively. These figures reflect the acquisitions of Thompson Minwax and other smaller domestic and foreign companies. Excluding these assets, sales in the Paint Stores division rose 6.6 percent, and those for Coatings decreased 0.5 percent.

For 1997, Sherwin-Williams reported sales of $4.9 billion, up from $4.1 billion in 1996, a gain of 18.1 percent. Net income also rose, to $261 million from $229 million in 1996, or 13.7 percent. During a 52-week period the company's stock ranged from a high of 37 to a low of 25; the price-to-earnings ratio was 22.06. The annual dividend was $.40 per share, a 21.2 percent increase over the previous year. In 1997, the company reported its nineteenth consecutive year of increased earnings and dividend growth.

HISTORY

In 1866, the year after the end of the Civil War, Henry Sherwin put $2,000 into a partnership in the Truman Dunham Company, an Ohio paint manufacturer. Four years later, after the end of that partnership, Sherwin took on two other partners, Edward P. Williams and A.T. Osborn. Sherwin-Williams & Company of Cleveland, Ohio was born.

The company literally transformed the paint industry, making a series of technological innovations that changed paint from being an extremely messy, difficult-to-use product to one that any homeowner could use. The innovations included mixing processes, packaging, and development of a variety of paint products to meet different needs.

During World War II, Sherwin-Williams supplied camouflage paint to the armed services, and it introduced a number of well-known paint lines, such as Kem-Tone, in the postwar period. But after decades of prosperity, the company entered a slump in the 1970s. John G. Breen became the chairman in 1979, and instituted a program of cuts and restructuring that soon made the company profitable again.

In 1980, the company purchased the well-known Dutch Boy brand. In the early 1990s, Sherwin-Williams faced changes in the paint industry, and began supplying paint for Home Depot and Sears, the latter one of its rivals. It also moved into custom paints, such as the DeSoto and Cuprinol brands, which it purchased in the 1990s. In early 1997 the company, whose revenues had more than doubled since Breen became chairman 18 years earlier, announced a stock split.

STRATEGY

A number of winning strategies have made Sherwin-Williams the leader in its field. First, with innovative technology, Sherwin-Williams changed paint from an item difficult even for professionals to handle correctly, requiring users to grind together the oil and pigment themselves, to a relatively user-friendly product. In 1877, the company created the first reclosable paint can, a step that made painting much easier. The company pioneered the notion of different paints for different surfaces. For example, wood takes paint fairly easily, metal does not, and brick tends to soak it up. Also, a surface that will be exposed to the elements needs a different type of paint than one that is indoors.

Sherwin-Williams was a heavy advertiser from its earliest days. In 1890, long before competitors fully comprehended the value of advertising, it established an advertising department. Fifteen years later, in 1905, the department created the "Cover the Earth" trademark, depicting paint being poured over the globe. Edward Williams and the advertising director, George Ford, thought it was a wonderful symbol, but Henry Sherwin considered it a bit facetious because the company did not have much of an overseas market at the time. Williams and Ford won out, and the logo ultimately became one of the best-known trademarks in the world.

In 1998, the Paint Stores group implemented a satellite network among the stores. All products went on a perpetual inventory system. This allowed for better purchasing decisions, inventory control, and shared inventory information. In launching a new product line in 1998, Sherwin-Williams also rolled out a new advertising slogan: "When Only the Best Will Do, Ask Sherwin-Williams." Ads introduced new products and focused attention on the company's service.

With the company's purchase of Thompson Minwax in 1997, Sherwin-Williams entered a new market, due to Thompson having introduced a line of fence care products just prior to the sale. This transaction fits with the Sherwin-Williams' strategy of growth and entering new markets through acquisitions.

While the Coatings division looks to produce high quality products at a low price, Sherwin-Williams does not always compete on price. While reporting lower Coatings sales in 1997, it would not agree to match lower prices offered by the competition to certain customers. The company expected that the expansion of its product line, as well as acquisitions of other companies, would make up for the lost business in 1998.

INFLUENCES

To stay ahead of competition, the company created a variety of markets by establishing the need for different paints for different surfaces, and it prospered by moving into the automobile-painting segment as well. Until the introduction of nitro-cellulose lacquer and synthetic enamel by Sherwin-Williams chemists, automobile paint took 21 days to dry. With the advent of the new product, drying time was reduced to a few hours.

Sherwin-Williams went from success to success in the decades after World War II, when wartime scarcity had forced it to develop new products such as the paint roller. In the mid-1970s, management decided to switch from a single brand name to a variety of names to increase buyer recognition of various specialty products, a move that cost money in the short term but by the next decade had proven highly effective.

In 1977, however, the company entered a dark period due to a heavy debt load incurred while expanding and modernizing its stores. The corporation seemed to have gotten away from its roots, symbolized by the fact that from 1974 until 1979, it dropped its famous Cover the Earth logo. Costs spiraled upward, evidenced by a loss of $8.2 million on sales of $1 billion in 1977. The company borrowed heavily, increasing long-term debt from none in 1967 to $242 million in 1977. Dividends to stockholders were suspended during this time.

When John G. Breen took over as president and CEO in 1979, he restored the logo and instituted a series of dramatic cost-cutting measures which helped bring stability to the company. As an outsider, Breen was able to make changes. Among them were replacing management, stopping production of some 1,000 products that weren't selling well, and reducing long-term debt.

FAST FACTS: About The Sherwin-Williams Company

Ownership: Sherwin-Williams is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: SHW

Officers: John G. Breen, Chmn. & CEO, 1997 salary $891,020, bonus $740,000; Thomas A. Commes, Pres. & COO, 1997 salary $578,158, bonus $490,000; C.M. Connor, Pres., Paint Stores Group, 1997 salary $274,085, bonus $250,000; J.M. Scaminace, Pres., Coatings Division, 1997 salary $299,480, bonus $235,000

Employees: 25,000 (1997)

Chief Competitors: Sherwin-Williams not only manufactures, retails, and distributes paints and other wall coverings, but warehouses and transports products. Some primary competitors include: Benjamin Moore; Dupont; Glidden; Kelly-Moore; Sears; and 3M.

CURRENT TRENDS

During the 1990s, Sherwin-Williams began to focus on increasing its market share, primarily by purchasing smaller companies. It bought five paint manufacturers in 1995 and 1996, and in November 1996, the New York Times reported that Forstmann Little & Co., a buyout firm, had offered Thompson Minwax to Sherwin-Williams for $830 million. That deal was concluded in January 1997. Environmental regulations, not to mention the increased cost of doing business, have created a difficult situation for smaller paint companies, and Sherwin-Williams is expanding by purchasing these troubled entities.

PRODUCTS

Sherwin-Williams manufactures and sells paints, wallpaper, floor coverings, painting accessories, and a variety of products for decorating. It owns and operates more than 2,100 stores in the United States, Canada, and Puerto Rico. Among the brands it markets, aside from the Sherwin-Williams line itself, are Cuprinol, Ever-Clean, Kem-Tone, Krylon, Martin-Senour, and a significant acquisition of the 1980s, Dutch Boy.

In the early 1990s, Kid's Room Paint, produced under the Dutch Boy label, became highly successful as a paint for children's rooms. According to an article in Advertising Age, which highlighted the brand as a marketing success in its July 5, 1993 issue, the product owed its success in part to focus groups, which revealed that parents were looking for strong, durable paint to cover the walls of their small children's bedrooms.

In the mid-1990s, the company continued its plan for growth through new products and product lines. In 1997, the Paint segment introduced new primers under the Prep-Rite brand, a new high-gloss latex paint under the SuperPaint brand, which has a quick drying time, and new, low volatile, compliant (VOC) products for industrial use. In 1998, Sherwin-Williams offered industrial users a new line of VOC compliant interior stains, sealers, and varnishes, all under the Wood Classics brand. The Consumer Brands division showcased 256 colors of new paints in the Martha Stewart Everyday Colors line. Also in 1998, the division introduced a line of exterior paints, called Climate Guard. These paints have five different formulas to meet the challenges of regional weather conditions. A one-coat interior paint was marketed under the Classic One name.

CORPORATE CITIZENSHIP

In 1997, Sherwin-Williams settled lawsuits brought by the U.S. Department of Justice and the Environmental Protection Agency (EPA). The suits, filed in 1993, charged that the company's Chicago manufacturing plant unlawfully discharged organic solvents and toxic metals into the local sewer system, failed to control unstable organic compound emissions, and failed to identify and properly handle hazardous wastes. Under the settlement, the company will clean up the plant at a cost of several million dollars, and an abandoned industrial site for another $1.1 million, and return nearby wetlands to their original state. Sherwin-Williams wants to sell the site and is examining its other manufacturing facilities to gauge potential problems.

CHRONOLOGY: Key Dates for The Sherwin-Williams Company

1870:

Henry Sherwin forms a partnership with Edward Williams and A.T. Osborn called Sherwin-Williams & Company

1873:

Purchases its first factory

1877:

Develops and patents the first reclosable paint can

1884:

The partnership is dissolved and Sherwin-Williams incorporates

1905:

Sherwin-Williams introduces its "Cover the Earth" trademark, still used today

1920:

The company goes public

1929:

Purchases the Bredell Paint Company of Havana

1941:

Introduces the first emulsion-based, fast-drying paint for the do-it-yourself market

1964:

Listed for the first time on the New York Stock Exchange

1980:

Sherman-Williams purchases the Dutch Boy line of paint

1990:

Purchases DeSoto Inc., making Sherwin-Williams the largest supplier of custom paints for the private-label market

1997:

Purchases Thompson Miniwax and ventures out of the paint market for the first time

GLOBAL PRESENCE

The Coatings division continues to generate sales through licensing technology and forming joint ventures and wholly-owned subsidiaries around the world. Sherwin-Williams considers South America its most important foreign market, and has most of its subsidiaries there. In 1997, the company signed a new licensing agreement in Thailand, and expects to continue exploring options internationally. Sherwin-Williams pursues acquisitions of foreign companies as well. In 1997, the company bought Sumare Industria Quimica, S.A. in Brazil, and Pinturas Andina, S.A. in Chile, both coatings manufacturers.

The purchase of Thompson Minwax in 1997 helped the Consumer Brands division enter the international market. Thompson has a product line called Ronseal which is marketed in Great Britain and Ireland.

The Automotive division has a Jamaican subsidiary that manufactures, distributes, and sells Sherwin-Williams products. It has also acquired companies in Mexico, Brazil, and Chile, where it plans to continue seeking market share. In addition, the division licenses its technology to 14 companies in 14 countries.

SOURCES OF INFORMATION

Bibliography

"cold-weather coat." today's homeowner, december 1996/january 1997.

"an expensive paint that stands up to stains." consumer reports, 17 april 1995.

feldman, amy. "the house that jack rebuilt." forbes, 25 april 1994.

figura, susannah zak. "two chicago firms agree to clean air settlements." occupational hazards, march 1997.

fitzgerald, kate. "advertising age marketing 100: kid's room paint." advertising age, 5 july 1993.

"forstmann little is selling minwax to sherwin-williams." the new york times, 23 november 1996.

gittler, harvey, "a tale of two men." industry week, 17 april 1995.

"the sherwin-williams company." hoover's online, april 1998. available at http://www.hoovers.com.

sherwin-williams co. home page, april 1998. available at http://www.sherwin-williams.com.

"sherwin-williams company." wall street journal interactive. available at http://www.wsj.com.

"stain-defying paint." home mechanix, december 1995.

For an annual report:

on the internet at: http://www.sherwin-williams.comor write: investor relations, 101 prospect ave. nw, cleveland, oh 44115

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. sherwin-williams's primary sics are:

2851 paints and allied products

5231 paint, glass and wallpaper stores