The Dial Corp.

The Dial Corp.

Dial Tower
1850 North Central Avenue
Phoenix, Arizona 85077
U.S.A.
(602) 207-4000
Fax: (602) 207-5455

Public Company
Incorporated: 1926
Employees: 29,300
Sales: $3.4 billion
Stock Exchanges: New York Pacific Tokyo
SICs: 2841 Soap & Other Detergents; 3711 Motor Vehicles & Car Bodies; 4581 Airports, Flying Fields & Services; 5947 Gift, Novelty & Souvenir Shops

The Dial Corp. is a Fortune 500 company comprised of three business segments: consumer products, service companies, and transportation manufacturing and service parts. Dial soap is perhaps the most recognizable item the company produces, but Dial Corp. is involved in myriad areas of business. Products varying from Armour Star canned meats to Purex laundry detergent, the services of Premier Cruise Lines, and the manufacturing segment Motor Coach Industries, all attest to The Dial Corp.’s diverse portfolio of companies. Since the 1970s, the corporation has undergone several episodes of restructuring and name changes, and in 1993 management was considering the private sale of the transportation manufacturing and service parts segment in order to concentrate its resources on consumer products and services.

The Dial brand name was first given to a unique deodorant soap developed by researchers at the Chicago-based meat processing business of Armour & Company. Introduced in 1948, Dial featured a newly developed germicide, known as AT-7, that was believed to reduce up to 80 percent more of the bacteria found on the skin than other soaps. Said to provide “Round the Clock Protection,” Dial was first advertised in the Chicago Tribune, on paper printed with scented ink. The innovative advertisement attracted a great deal of attention, and the soap achieved high sales from the onset. One Chicago store reportedly sold more than 4,000 bars in one day.

Dial soon became the leading deodorant soap in the country. In 1953 the company adopted a slogan—“Aren’t you glad you use Dial? Don’t you wish everybody did?”—that would continue to be used into the 1990s. In 1966 Armour announced that it would begin marketing aerosol can and roll-on deodorant products as well as shaving creams under the Dial brand name. Over the next five years, the new Dial products achieved record sales, and a shampoo was added to the Dial line.

In 1970 Armour was acquired by the Greyhound Corporation. The country’s leader in the motorcoach industry since 1930, Greyhound, under chairperson and CEO Gerald H. Trautman, had begun to diversify its operations in the 1960s in response to declining bus ticket sales. As automobiles and airline tickets became less expensive and bus line profits dwindled, Greyhound acquired small companies in the fields of automobile leasing, money orders, insurance, and catering. Greyhound board members were approached by Armour in the late 1960s when General Host threatened Armour with a hostile takeover, and Greyhound was persuaded to add Armour-Dial to its subsidiaries. The 1970 $400 million purchase was Greyhound’s first major acquisition. To reduce its investment, Greyhound immediately sold $225 million of Armour assets, retaining only the meat-packing and consumer products subsidiaries. The meat-packing operation was renamed Armour Foods, while the consumer products operation was renamed Armour-Dial.

In 1971 construction was completed on a new plant for manufacturing Dial soap in Aurora, Illinois. However, while Armour-Dial was now better equipped to meet consumer demands for the soap, the company was also faced with the possibility of having to alter the soap’s ingredients. Although Dial had an excellent record of consumer satisfaction and the company had neither received any complaints during the soap’s 23-year history nor been given any reason to consider the product unsafe, the U.S. Food and Drug Administration found during this time that one of the soap’s germicidal ingredients, hexachlorophene, was dangerous if misused or ingested. When the FDA banned the use of the chemical in cosmetics and restricted its use in soaps, Armour management planned, in conjunction with the FDA, to continue to market Dial with a label on the packaging warning users that the soap was for external use only and should be thoroughly rinsed off the skin after each use. Eventually, however, researchers at the company were able to develop an alternative ingredient that proved to be as successful as hexachlorophene had been as a germicide. Although the formula of Dial changed, it continued to rank as one of the nation’s most popular soaps.

In 1971 Armour-Dial’s headquarters were moved to Phoenix, Arizona, where operations were reorganized under two primary headings: the Toiletries & Household Products Division and the Administrative Division.

Although Trautman had taken Greyhound from bus line to successful conglomerate, the company was still known on Wall Street as “the dog,” due to the unpredictable swings in profits and losses it incurred from year to year. Problems were attributed to the rapid expansion of Greyhound’s holdings to include such a vast and unrelated an array of products and services. Furthermore, while Armour Foods and Armour-Dial accounted for over 50 percent of the company’s revenues, their earnings proved extremely erratic, ranging from nine percent growth one year to 21 percent the next. The Armour Foods subsidiary in particular had also been troubled by frequent restructuring and changes in management. In general, analysts found that Greyhound was suffering from a lack of focus.

An overhaul of the company began in 1982 when John W. Teets was named chairperson and CEO. Teets began working for Greyhound in 1964 when he took a job managing the company’s restaurants at the New York World’s Fair. Recently devastated by a series of personal tragedies, including the deaths of both his wife and his brother as well as a fire that destroyed a restaurant of which he had been part owner, Teets threw himself into his new job at Greyhound, working long hours and exhibiting a determination and enthusiastic management style that was soon noticed by Greyhound executives. He was promoted to president of Post Houses, a Greyhound subsidiary that ran bus terminal restaurants, where he remained until 1968, when he accepted an offer from a Chicago-based restaurant chain. Teets returned to Greyhound in 1976 to head the company’s Food Service Group subsidiary. By this time he had become known for his ability to help struggling companies return to profitability, and he was soon credited with turning around the entire food service division. By 1980 Teets held the executive office of vice chairperson and was a contender for the presidency when Trautman retired.

Upon his appointment as president and CEO, Teets acted quickly to restructure the company, quickly establishing his reputation as a tough and demanding leader through his implementation of a new standard of 15 percent return on equity, a level of performance that he expected of each subsidiary. Reex-amining Greyhound’s holdings, he was quoted in Forbes as concluding that the company needed to “lean down, be tougher in the marketplace,” through a long term agenda that included selling off several subsidiaries and cutting costs. In 1983, in one of his first major decisions, Teets cut the wages of union food and commercial workers at Armour Foods. When the workers refused to accept the cut, Teets shut down the 29 plants and sold the operations to Conagra Inc., which offered Greyhound a 15-percent stake in its company, a deal equalling around $150 million.

Also that year the company was faced with a widely publicized Greyhound bus drivers strike. The bus line had experienced dramatic losses in ridership and nearly $35 million in operating losses in 1981 and 1982. Finding that Greyhound drivers were earning as much as 50 percent more than drivers at competing companies, Teets threatened to replace them with nonunion employees if they did not accept a cut in wages. A violent 47-day strike ensued, during which buses were kept running by nonunion labor. Eventually Teets prevailed, and union drivers returned to work at a lower wage. Although Teets was able to cut its operating costs, Greyhound never recovered financially, and early in 1987, he sold the Greyhound bus company to a group of investors from Dallas.

Having restructured the company’s interests, Teets began a plan of selective acquisitions that would better fit the company’s portfolio. Relying on the unmitigated success of the ArmourDial division to provide expert management in the field, Greyhound acquired Purex Industries Inc., makers of laundry soap, for $264 million in 1985. The purchase doubled Greyhound’s consumer product sales, and after a brief period of losses, the company recaptured its market share. Two years later, the company restructured the consumer products subsidiary along product lines, creating a personal care division that handled the marketing of bath and deodorant soaps, as well as the new and profitable Liquid Dial soap; a household and laundry division responsible for such items as detergents, air fresheners, and cleansers; and a food division that during this time introduced Lunch Bucket single-serving microwaveable meals.

By the late 1980s Greyhound had completed its plans for restructuring. With profits high from the sales of the popular Dial, Purex, and newly acquired Brillo steel wool soap pads, and stock prices low at around $27 per share, the streamlined company was ripe for a takeover, and rumors spread on Wall Street. In order to discourage raiders, Teets was faced with the challenge of raising the stock prices. By 1991, however, the company’s debts had shrunk, its earnings improved dramatically, and stock prices had risen to $44 per share.

To minimize confusion for its investors and consumers by distinguishing the company from the Greyhound bus line it had sold off three years before, the company changed its name to Greyhound Dial in March 1990. At the time Teets decided to retain “Greyhound” as part of the company’s new name in order to reflect the ten subsidiaries the company still owned that carried the Greyhound name, such as Greyhound Exhibitgroup. Within the year, however, when Greyhound Dial switchboard operators were still receiving numerous calls regarding bus routes and fares, management decided to make the message clearer still by renaming the company The Dial Corp.

In 1991 The Dial Corp. reported a loss of $57.6 million due to its restructuring and the costs involved in spinning off some of its subsidiaries. Revenues were up from $3.5 to $3.6 billion, however, and management estimated that without the one-time charges against earnings in 1991, The Dial Corp. would have reported a net income of $122.4 million.

Principal Subsidiaries

Aircraft Service International Group; Dial Consumer Products Group; Dobbs International Services, Inc.; Exhibitgroup Inc.; GES Exposition Services, Inc.; Greyhound Leisure Services, Inc.; Greyhound Lines of Canada Ltd.; Jetsave Inc.; Motor Coach Industries, Inc.; Premier Cruise Lines, Ltd.; Restaura, Inc.; Transportation Manufacturing Corporation; Travelers Express Company, Inc.; Universal Coach Parts, Inc.

Further Reading

Byrne, Harlan S., “Investment News & Views: Dial Corp.,” Barren’s, August 26, 1991, pp. 37–8.

The Dial Corp. Annual Reports, Phoenix: The Dial Corp., 1990-92.

“Dial Corp. Restructures Along Product Lines,” Arizona Business Gazette, January 5, 1987.

“Dial Enjoys Its Liquid Assets,” Packaging Digest, July 1989, pp. 74, 79.

Gillespie, Phyllis, “Turning the Dial,” Arizona Republic, December 22, 1991.

The Greyhound Corporation Annual Reports, Phoenix: The Greyhound Corporation, 1975-88.

Kiley, David, “Greyhound Dials Up a Name Change—More or Less,” Adweek’s Marketing Week, March 5, 1990, p. 5.

Stuart, Alexander, “Greyhound Gets Ready for a New Leader,” Fortune, December 15, 1980, pp. 58–64.

“Will More Soap Help Greyhound Shine?” Business Week, March 11, 1985.

—Tina Grant