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CLARCOR Inc.

CLARCOR Inc.

2323 S. 6th Street
Rockford, Illinois 61104-7117
U.S.A.
Telephone: (815) 962-8867
Fax: (815) 962-0417
Web site: http://www.clarcor.com

Public Company
Incorporated: 1904 as J.L. Clark Manufacturing Company
Employees: 4,594
Sales: $715.6 million (2002)
Stock Exchanges: New York
Ticker Symbol: CLC
NAIC: 333411 Air Purification Equipment Manufacturing; 333999 All Other Miscellaneous General Purpose Machinery Manufacturing; 336399 All Other Motor Vehicle Parts Manufacturing; 332431 Metal Can Manufacturing; 326199 All Other Plastics Product Manufacturing

CLARCOR Inc. is a leading manufacturer of engine, industrial, and environmental filtration products and a major producer of specialty packaging products. Despite CLARCOR's long history and strong reputation as a maker of top-quality packaging for such consumer goods as battery shells, razor blade containers, and bandage boxes, filtration products account for the largest portion of the company's sales. CLARCOR's filtration operations, which include a number of operating subsidiaries in North America, Western Europe, and Asia, contributed more than 90 percent of the company's 2002 sales and 94 percent of its operating profit for that year. Altogether, the firm's filtration subsidiaries produce thousands of filtration products, including aftermarket and OEM mobile heavy-duty filters, locomotive engine filters, gas turbine filters, and environmental and industrial filtration systems, giving CLARCOR the broadest product line in that market.

J.L. Clark, Inc., the operating subsidiary responsible for CLARCOR's consumer division, based at the company's original-headquarters in Rockford, Illinois, commands a strong position in such niche markets as metal spice packaging, specialty plastic closures, decorative promotional metal packaging, and film canisters. Although metalworking has traditionally formed the core of CLARCOR's consumer division, since the mid-1980s the company has expanded into plastic and combination metal/plastic packaging. Consumer products formed almost 10 percent of CLARCOR's $715.6 million in 2002 sales. Given the relatively mature domestic markets for both the company's filtration and consumer products, CLARCOR has moved to expand its international presence; its main overseas subsidiaries can be found in Australia, Belgium, Canada, China, France, Germany, Italy, Malaysia, Mexico, The Netherlands, Singapore, South Africa, Spain, Venezuela, and the United Kingdom. In 2002, 16 percent of the company's revenues originated outside the United States.

An Early 20th-Century Flue Stopper

John Lewis Clark was born in Vermont in 1845, but moved with his family to Rockford, Illinois, in 1857. After graduating from high school, Clark joined the Union Navy, serving under Farragut during the Civil War. When that war ended, Clark, then 20 years old, returned to Rockford and obtained an apprenticeship as a tinsmith with a local hardware store. Throughout his apprenticeship, Clark dreamed of opening his own hardware store, which he accomplished in 1874 when he and a friend opened the Robinson & Clark Hardware store in Rockford. This partnership lasted for ten years. The partners eventually sold the store; Clark planned to move west and become a cattle rancher. The day before he intended to leave, however, the new owners begged Clark to buy back the store. Clark did.

The store, especially its tinsmith shop, prospered. In 1889 Clark formed a new partnership and opened a larger store. This partnership, the Clark & McKenney Hardware Co., also lasted ten years, until Clark bought out his partner and brought in his son, Lewis Harold Clark, as a partner. The store was renamed the J.L. Clark Hardware Company in 1899. With the elder Clark's tinsmithing expertise and the younger Clark's Cornell University education, the pair set out to develop a product and move into manufacturing.

One year later, Clark received a patent for an improved flue stopper. These round disks were needed to plug the holes left in walls when oil and coal stoves were dismantled for the summer. Clark sold 271 gross of his Gem Flue Stoppers that first year, primarily to local hardware dealers. It cost the store $70 for the dies and punch press needed to start large-scale production of the flue stopper. Originally a flat blank disk, the Gem Flue Stopper was soon available in three styles, with raised and embossed blanks featuring attractive lithographed designs. In 1901, sales of the stoppers grew to 500 gross. Through a small network of hardware sidemen, jobbers, advertisements, and direct mailings, sales of the Gem Flue Stopper jumped to nearly 2,400 gross in 1903. The early Gem Flue Stoppers were priced generally higher than competing flue stoppers; the company added a fourth, lower-priced stopper design to the Gem line in 1902.

Clark was not yet satisfied with his relatively inefficient operation. The volume of Gem Flue Stopper sales was not high enough to keep the punch press working full-time. In addition, cutting the blanks for the stoppers left a great deal of scrap metal. To improve efficiency, Clark added a new product line, the Gem Ointment Boxes, cut from the leftover material. In 1903, Clark added two more products, a Crispy Toaster for the stovetop and the Gem Flour Sifter. By the end of that year, the Clarks decided to move fully into manufacturing, and they sold their hardware store.

Renamed the J.L. Clark Manufacturing Company in 1904, the company began operations in a 7,000-square-foot facility in Rockford's Water Power District. With a $25,000 investment, Clark installed a complete line of punch presses, seamers, beading machines, and shears. The company also added a metal lithographing press and baking ovens. Its first lithographing order was for the decoration of fire extinguishers. By then, the company had 13 employees. One of its early major customers was Rockford-based W.T. Rawleigh, then a worldwide distributor of household and pharmaceutical products. As Rawleigh's product line grew, Clark's production expanded into a broad range of containers for products such as cosmetics and spices. In its first year of operation, Clark Manufacturing produced more than 500,000 pieces, including nearly 400,000 Gem Flue Stoppers. By 1905, the number of company employees increased to 41. Four years later, when Clark added a company-designed and -produced bodymaker, employment rose to 89.

Production continued to increase and by 1911 the company had outgrown its Water Power District facility, which by then had reached nearly 20,000 square feet. The company purchased a 15-acre tract on the edge of town and designed and built a modern 55,000-square-foot plant, including storage space and corporate offices, which was considered among the most uptodate in the country. By then, Clark customers included many leading manufacturers, such as Milton Bradley and others. Sales of the Gem Flue Stopper continued to rise, topping 500,000. But Clark's other products also contributed to its growth. According to an early newspaper article on the company, Clark's total production volume reached 50 million pieces per year by 1911.

Growth Between the Wars and Beyond

Clark's growth slowed somewhat during World War I (in 1919, the year founder John Clark died, the company posted the first of only two unprofitable years in its history). But with Harold Clark leading the company, Clark regained its momentum in the decade that followed. Photographic lithography processes were added to the production line, and this, coupled with the addition of a rotary printing press in 1925, allowed the company not only to speed up production but also to improve quality, establishing Clark's long-held reputation for excellence. Between 1918 and 1928, sales tripled, from $408,000 to nearly $1.4 million. In 1924, an addition to the plant doubled its production area.

Clark's growth enabled it to survive the Great Depression of the 1930s. Despite declining sales, down to $800,000 in 1933, in part due to a cutback to a four-day workweek, the number of the company's employees actually grew. The drop in consumer spending during the Depression encouraged companies to turn to quality packaging, which improved the durability of their products and were more attractive to consumers. At this time, 3M, among others, became a longtime Clark customer. This trend helped raise Clark's revenues, to $1.1 million in 1936 and to $1.4 million in 1937. The next year, however, Clark posted its second annual loss. But Clark received a new boost to revenues when the company designed the first metal battery jacket, later to become an industry standard, for Ray-O-Vac. The company also invested heavily in capital improvements, raising the quality and efficiency of production.

The outbreak of World War II stimulated Clark's growth, as production was converted to wartime orders, and the company established three branch plants to continue filling consumer orders. The company added a new major customer, Gillette, in the 1940s, designing and producing the packaging for that company's razor blades. At the same time, Clark began producing Band-Aid boxes, baby powder cans, and tape dispensers for Johnson & Johnson, which soon became the company's largest customer. By 1946, the company was able to add a new addition to its Rockford plant; two years later, the plant expanded again, and in 1950, Clark doubled its lithograph facility. Then, in 1951, Clark completed a 31,000-square-foot expansion of the Rockford plant.

In 1952, longtime employee Ralph Rosecrance replaced Harold Clark, who died the following year, as president of the company. Under Rosecrance, the company made its first acquisition, buying the Liberty Can and Sign Company of Lancaster, Pennsylvania, in 1955 for $2 million. The acquisition gave the company increased access to the important East Coast market. Clark's sales, which had reached $10.7 million in 1954, rose to nearly $15 million in 1956.

Company Perspectives:

For nearly 100 years, through both good times and bad, CLARCOR has focused on profitable growth markets with above-average opportunities and on continual improvement in each of our businesses. This is our core strategy. It was put in place many years ago and is still the foundation of CLARCOR. We believe there is tremendous value in consistencyboth in strategy and in execution. These principles guide our company today as they have in the past.

The Liberty acquisition proved to be the first in a series, as the company moved to expand its product offerings. Significant among these was the 1959 acquisition of G. Felsenthal & Sons of Chicago, which brought Clark into plastics for the first time. The following year, Clark developed a plastic spice can closure to replace the traditional sliding metal closures, which were prone to rust, tended to stick, and were generally difficult to use. A second spice can closure was designed, with lift-tops for a shaker and for spooning, which attracted the attention of McCormick & Company, then the country's largest spice supplier. When Clark was awarded a contract to supply all of McCormick's spice cans, Clark built a 40,000-square-foot plant in California to satisfy the growing demand there. By the mid-1960s, Clark's customers included other major spice companies, including Durkee, French, and A&P. At the same time, Clark added another 41,000 square feet to its Rockford lithographing operations. By 1964, when the company made its initial public offering, sales had reached $23 million, with earnings of $1.2 million.

The newly public company next embarked on a string of acquisitions that not only raised its revenues to $82 million by 1976 but also allowed the company to diversify into a wide range of packaging materials. One of Clark's most important acquisitions was that of Maryland-based Stone Container Corporation, which gave Clark a technological and market lead in the manufacture of composite cans. Other acquisitions increased the company's plastic molding capabilities. As then President William Nelson told Forbes in 1979, Clark's diversification efforts were made because "[t]here's always a possibility-that metal containers will become too expensive for some uses. Today there's no other firm that can offer such versatility in materials."

By the end of the 1970s, Clark posted net earnings of $12 million on sales of nearly $105 million. The company's diversification efforts were succeeding, bringing revenues to $124.5 million in 1981, despite the national slide into a recession. But it was in that year that diversification would take on a new meaning for the company.

Becoming a Filtration Giant in the 1980s

Clark had succeeded by pursuing niche markets, avoiding head-on competition with industry giants such as American Can Co., Crown Cork & Seal Co., and Continental Group. In 1981, however, Clark made its largest acquisition to date, that of the J.A. Baldwin Manufacturing Company in Kearney, Nebraska, bringing Clark into a new market altogether. Baldwin was a maker of premium quality heavy-duty filters, with a product line of more than 2,100 filters for oil, fuel, air, coolants, hydraulic, and transmission applications. With a base of 2,500 distributors, Baldwin was a national brand name.

The Baldwin acquisition helped boost revenues to $174 million and net earnings of $16 million by 1984. In addition, filtration was soon to become more important to the company's bottom line. Sales in Clark's packaging division began to slip in the second half of the 1980s as customers turned to other materials or to manufacturing their own packaging. The company began to invest more heavily in its filtration business, acquiring in 1986 Dahl Manufacturing, Inc. of California and that company's line of marine filters, diesel engine fuel/water separators, and related products. The company further enhanced its nonpackaging business with the acquisition of Michigan Spring Company, adding close-tolerance spring and wire forms to the company's product line and increasing its molded plastics capabilities. Clark began producing its first all-plastic packages, containers for Colgate Palmolive Co.'s Curad bandages.

In 1987 Clark changed its name to CLARCOR Inc. to emphasize its diversified status. Nelson, by then chairman and CEO, retired and was replaced by Larry Gloyd, former company president. Under Gloyd, the company managed to reverse the slide in its packaging revenues. Yet that market was increasingly seen as too mature for further domestic growth. Accordingly, the company moved to boost its filtration business, acquiring HEFCO of New Jersey, which enabled CLARCOR to enter the industrial filtration market. At the same time, the company attempted to move beyond manufacturing and into the services market, with the acquisition of the Furst Group, an executive placement firm, leading to the establishment of a short-lived Services Group. Sales by the end of the 1980s had topped $202 million.

Key Dates:

1904:
John Lewis Clark, co-owner of J.L. Clark Hardware Company, sells his hardware store to concentrate on manufacturing metal products, such as the Gem Flue Stopper; the company is renamed the J.L. Clark Manufacturing Company.
1955:
The first acquisition, that of Liberty Can and Sign Company of Lancaster, Pennsylvania, is completed.
1959:
The acquisition of G. Felsenthal & Sons of Chicago brings Clark into plastics for the first time.
1964:
The company goes public.
1981:
The company enters the filter field via the purchase of J.A. Baldwin Manufacturing Company of Kearney, Nebraska.
1987:
To emphasize its diversified status, the firm changes its name to CLARCOR Inc.
1993:
CLARCOR acquires Louisville, Kentuckybased Airguard Industries, Inc., maker of commercial environmental control systems.
1997:
United Air Specialists, Inc., a Cincinnati producer of commercial and industrial air filtration systems, is acquired.
1999:
CLARCOR pays Mark IV Industries, Inc. $141 million for three filtration businesses, including Purolator Products Air Filtration Company.
2000:
The one-stop-shopping Total Filtration Program is launched.

As the 1990s began, CLARCOR's filtration business already represented more than half of the company's total revenues. The recession of these years, however, placed pressure on the company's earnings. The company undertook a series of divestitures, exiting all but its filtration and consumer packaging businesses. In 1991 the company entered its first overseas partnership, purchasing a 20 percent stake in GUD Holdings, Ltd., the largest filtration products maker in Australia. The following year, CLARCOR expanded its locomotive filter capacity with the acquisition of M&J Diesel Locomotive Filter Co. of Chicago and made plans to move into other transportation markets, including heavy equipment and boating, as well as nontransportation industries such as generators.

The sale of CLARCOR's precision products subsidiaries enabled the company, in 1993, to purchase with cash Airguard Industries, Inc., a Louisville, Kentucky-based maker of commercial environmental control systems, allowing the company to take advantage of business generated by the passage of the Clean Air Act. The company also purchased Eurofilter Airfilters Ltd. of England, giving the company access to the European market and expanding its product line to include gas turbine filters. At the same time, CLARCOR entered a joint venture agreement with Filtros Continental in Mexico City, forming Filtros Baldwin de Mexico. The following year, CLARCOR acquired Filtros Continental, the second largest filter maker in Mexico, changing its name to Fibamex.

These acquisitions helped fuel a growth in revenues, with a 20 percent rise both in 1993 and 1994. The 1995 purchase of Hastings Manufacturing Company of Michigan, which added filtration products for the automotive and light truck markets, helped boost CLARCOR's sales that year to $290 million and net earnings to $22 million. By 1996, CLARCOR was present in nearly every filtration market, with a dominant position in many of the market segments. A joint venture with Weifang Power Machine Fittings Ltd. in China, closed at the end of 1995, continued CLARCOR's international expansion. Also in 1995 Norman E. Johnson was promoted to president and chief operating officer, with Gloyd remaining chairman and CEO.

Expanding Air Filtration Operations in the Late 1990s

The 1993 acquisition of Airguard Industries had marked CLARCOR's first substantial move into the market for air filters for industrial and commercial customersthe firm having previously focused primarily on fluid filters. Air filtration was believed to have better growth prospects in part because of stricter U.S. Environmental Protection Agency regulations. Through a number of strategic ventures in the late 1990s CLARCOR made further inroads into the air filtration sector. In early 1996 the company took a 70 percent interest in Baldwin-Unifil S.A., a South African joint venture that simultaneously acquired Unifil (Pty.) Ltd., maker of air filters for heavy-duty transportation equipment and automobiles. In February 1997 CLARCOR paid $28 million in stock for United Air Specialists, Inc. (UAS), a Cincinnati-based producer of commercial and industrial air filtration systems. UAS had 1996 revenues of $40.8 million. The following month CLARCOR gained a Southeast Asian base for its industrial and environmental filter production by purchasing Airklean Engineering Pte. Ltd., a distributor of air filtration products headquartered in Singapore. Early in 1998 CLARCOR completed a minor though strategic acquisition, that of Air Technologies, Inc. (ATI) of Ottawa, Kansas, principally a producer of air filtration products to clean the air exiting out of painting operations. CLARCOR now had a full range of air filtration products for painting applications as it had previously purchased producers of filters that cleaned air coming into painting facilities and those that filtered the air within such facilities.

By 1999 revenues had reached $477.9 million, with just 13 percent of the total coming from the company's founding consumer packaging operations. About 37 percent of revenues was already attributable to the nascent industrial and environmental filtration business. Half of sales derived from the engine filtration segment, which was by far the most profitable CLARCOR unit, generated more than three-quarters of operating profits. In September 1999, however, the corporation completed a major acquisition that substantially increased the industrial/environmental filtration segment. That month CLARCOR paid Mark IV Industries, Inc. about $141 million for three filtration businesses: Purolator Products Air Filtration Company, a Henderson, North Carolinabased producer of a wide variety of air filters used in heating, ventilation, and air conditioning systems; Torino, Italybased Facet International, a maker of industrial process filters and filtration systems used in aviation refueling and general industry; and Purolator-Facet Filter Products, which was headquartered in Greensboro, North Carolina, and focused on specialty filtration products for aerospace, fluid processing, and hydraulic systems. The deal did not include the well-known Purolator brand of automotive filters (which Mark IV sold earlier in 1999 to Arvin Industries, Inc.).

A huge jump in revenues, to $652.1 million in 2000, resulted from this major acquisition. Industrial/environmental filtration was now the firm's largest segment, responsible for nearly 50 percent of revenues. In March 2000, meantime, Gloyd retired and Johnson was appointed chairman, president, and CEO.

Total Filtration Program in the Early 2000s

The economic travails of the early 2000s certainly affected CLARCOR, but the company remained solidly profitable. This was principally because the bulk of its revenuesabout 80 percentwere of the recurring kind, composed of aftermarket filters that were necessary for the continuing operation of various equipment. One of the corporation's major initiatives during this period was the launch of the Total Filtration Program in 2000. Through this program, CLARCOR began offering its customers the opportunity to use one company for all of its filter needs, including the supply, installation, and service of a full range of filtration products. Some companies were buying such products from as many as 50 different vendors, so the new program had the potential to significantly reduce these companies' purchasing and sourcing costs.

CLARCOR strengthened its Total Filtration Program through additional acquisitions. In June 2001 CLARCOR spent about $29 million for several filtration management companies that together made up one of the leading distributors of filtration products to some of the largest firms in North America. The acquired companies were combined into one company called Total Filtration Services, Inc. (TFS), which was based in Rochester Hills, Michigan. TFS became the linchpin for the Total Filtration Program. Three smaller acquisitions were completed in 2002, including Locker Filtration Limited, a U.K.-based producer of heavy-duty air filters, gas turbine filters, and specialty bag filters.

Through 2002, CLARCOR had recorded 16 consecutive years of revenue growth and had increased its dividends for 19 straight yearsstellar achievements. The company had a number of strategies in place as it aimed to continue these trends, including: getting more nonautomotive customers into the Total Filtration Program; increasing revenues from filter services, which were generally more profitable than the sale of filter products themselves; expanding the use of the Purolator and Facet brand namestwo of CLARCOR's better known trademarks; increasing operations in China; and seeking additional acquisitions. The filter industry remained highly fragmented, with no firm holding more than an 8 percent market share, so there appeared to be ample opportunity for CLARCOR to bolster its already impressive position.

Principal Subsidiaries

CLARCOR Consumer Products, Inc.; J.L. Clark, Inc.; Clark Europe, Inc.; CLARCOR Filtration Products, Inc.; Airguard Industries, Inc.; Airklean Engineering Pte. Ltd. (Singapore); Airguard Asia Sdn. Bhd. (Malaysia); Airguard de Venezuela, S.A. (70%); Purolator Products Air Filtration Company; Baldwin Filters, Inc.; Baldwin Filters N.V. (Belgium); Baldwin Filters Limited (U.K.); Baldwin South Africa, Inc.; Baldwin-Unifil S.A. (South Africa; 80%); Hastings Filters Ltd. Canada; Baldwin Filters (Aust.) Pty. Limited (Australia); CLARCOR UK Limited; Clark Filter, Inc.; Filtros Baldwin de Mexico (90%); Purolator Facet, Inc.; Facet FCE S.A.R.L. (France); Facet Iberica S.A. (Spain); Facet Industrial B.V. (Netherlands); Facet Industrial U.K. Limited; Facet Italiana, S.p.A. (Italy); Facet USA Inc.; Filter Products, Inc.; GS Costa Mesa, Inc.; Locker Filtration Limited (U.K.); FilterSource; Purolator Filter GmbH (Germany); Total Filtration Services, Inc.; Total Filtration Services LLC of VC (Mexico); Total Filter Technology, Inc.; United Air Specialists, Inc.; CLARCOR International, Inc.; Baldwin-Weifang Filters Ltd. (China; 75%); CLARCOR Foreign Sales Corporation (Barbados); CLARCOR Trading Company.

Principal Competitors

Donaldson Company, Inc.; Cummins, Inc.; Flanders Corporation; AAF-McQuay Inc.; Pall Corporation; CUNO Incorporated.

Further Reading

Berman, Phyllis, "Virtue Well Rewarded," Forbes, August 20, 1979, p. 120.

Clarcor Inc., From Hardware Store to Clarcor, 19041989, Rockford, Ill.: CLARCOR Inc., 1989.

"Company Interview: CLARCOR Inc.," Wall Street Transcript, August 25, 2003.

Liebowitz, David S., "Playing with the Big Boys," Financial World, June 8, 1993, p. 88.

Murphy, H. Lee, "Acquisitions Fueling Expansion at Clarcor," Crain's Chicago Business, April 18, 1994, p. 28.

, "Aftermarket Sales Bolster Clarcor Results," Crain's Chicago Business, April 7, 2003, p. 18.

, "Air Filtration Acquisitions Vital to Clarcor Expansion Effort," Crain's Chicago Business, March 30, 1998, p. 20.

, "As Core Biz Lags, Clarcor Shifts to Air Filters to Pump Up Sales," Crain's Chicago Business, April 7, 1997, p. 28.

, "Clarcor Repackage Tied to Expansion," Crain's Chicago Business, April 18, 1988, p. 40.

, "Clarcor Set to Add Overseas Plant to Support Global Push at Home," Crain's Chicago Business, April 10, 1995, p. 49.

M. L. Cohen

update: David E. Salamie

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Clarcor Inc.

Clarcor Inc.

2323 S. 6th Street
Rockford, Illinois 61104
U.S.A.
(815) 962-8867
Fax: (815) 962-0417
Public Company
Incorporated: 1904 as J.L. Clark Manufacturing Co.
Employees: 2,350
Sales: $221 million (1995)
Stock Exchanges: New York

SICs: 3714 Motor Vehicle Parts & Accessories; 2656 Sanitary Foods Containers; 3542 Machine ToolsMetal Forming Types; 3299 Nonmetallic Mineral Products, Not Elsewhere Classified

Clarcor Inc. is a leading manufacturer of mobile, industrial, and environmental filtration products and a top producer of specialty packaging products. Despite Clarcors long history and strong reputation as a maker of top-quality packaging for such consumer goods as battery shells, razor blade containers, and bandage boxes, filtration products account for the largest portion of the companys sales. Clarcors filtration division, through operating subsidiaries Baldwin Filters, Inc. and Hastings Filters, Inc., both headquartered in Kearney, Nebraska, Airguard Industries, Inc., based in Louisville, Kentucky, and Clark Filter, Inc. in Lancaster, Pennsylvania, contributed 76 percent of the companys 1995 sales and 81 percent of its operating profit for that year. Together, these subsidiaries produce more than 18,000 filtration products, including aftermarket and OEM mobile heavy duty filters, locomotive engine filters, gas turbine filters, and environmental and industrial filtration systems, giving Clarcor the broadest product line in that market.

J.L. Clark, Inc., the operating subsidiary responsible for Clarcors consumer division, based at the companys original headquarters in Rockford, Illinois, commands a strong position in such niche markets as metal spice packaging, specialty plastic closures, decorative promotional metal packaging, and others, for such companies as Johnson & Johnson, Gillette, and McCormick & Company, and such brands as Ray-O-Vac batteries, Sucrets, Crayola crayons, and Kodak film containers. Although metal working has traditionally formed the core of Clarcors consumer division, since the mid-1980s the company has expanded into plastic packaging, which accounted for nearly 20 percent of consumer sales in 1995. Consumer products formed 24 percent of Clarcors $290 million in 1995 sales. Given the relatively mature domestic markets for both the companys filtration and consumer products, Clarcor moved to expand its international presence, including joint partnerships and subsidiaries in China, Mexico, Europe, and Australia.

A Turn-of-the-Century Flue Stopper

John Lewis Clark was born in Vermont in 1845, but moved with his family to Rockford, Illinois in 1857. After graduating from high school, Clark joined the Union Navy, serving under Farragut during the Civil War. When that war ended, Clark, then 20 years old, returned to Rockford and obtained an apprenticeship as a tinsmith with a local hardware store. Throughout his apprenticeship, Clark dreamed of opening his own hardware store, which he accomplished in 1874 when he and a friend opened the Robinson & Clark Hardware store in Rockford. This partnership lasted for ten years. The partners eventually sold the store; Clark planned to move west and become a cattle rancher. The day before he intended to leave, however, the new owners begged Clark to buy back the store. Clark did.

The store, especially its tinsmith shop, prospered. In 1889 Clark formed a new partnership and opened a larger store. This partnership, the Clark & McKenney Hardware Co., also lasted ten years, until Clark bought out his partner and brought in his son, Lewis Harold Clark, as a partner. The store was renamed the J.L. Clark Hardware Company in 1899. With the elder Clarks tinsmithing expertise and the younger Clarks Cornell University education, the pair set out to develop a product and move into manufacturing.

One year later, Clark received a patent for an improved flue stopper. These round disks were needed to plug the holes left in walls when oil and coal stoves were dismantled for the summer. Clark sold 271 gross of his Gem Flue Stoppers that first year, primarily to local hardware dealers. It cost the store $70 for the dies and punch press needed to start large-scale production of the flue stopper. Originally a flat blank disk, the Gem Flue Stopper was soon available in three styles, with raised and embossed blanks featuring attractive lithographed designs. In 1901, sales of the stoppers grew to 500 gross. Through a small network of hardware sidemen, jobbers, advertisements and direct mailings, sales of the Gem Flue Stopper jumped to nearly 2,400 gross in 1903. The early Gem Flue Stoppers were generally priced higher than competing flue stoppers; the company added a fourth, lower-priced stopper design to the Gem line in 1902.

Clark was not yet satisfied with his relatively inefficient operation. The volume of Gem Flue Stopper sales was not high enough to keep the punch press working full-time. And cutting the blanks for the stoppers left a great deal of scrap metal. To improve efficiency, Clark added a new product line, the Gem Ointment Boxes, cut from the leftover material. In 1903, Clark added two more products, a Crispy Toaster for the stovetop and the Gem Flour Sifter. By the end of that year, the Clarks decided to move fully into manufacturing, and they sold their hardware store.

Renamed the J.L. Clark Manufacturing Company in 1904, the company began operations in a 7,000-square-foot facility in Rockfords Water Power District. With a $25,000 investment, Clark installed a complete line of punch presses, seamers, beading machines, and shear. The company also added a metal lithographing press and baking ovens. Its first lithographing order was for the decoration of fire extinguishers. By then, the company had 13 employees. One of its early major customers was Rockford-based W.T. Rawleigh, then a worldwide distributor of household and pharmaceutical products. As Rawleighs product line grew, Clarks production expanded into a broad range of containers for products such as cosmetics and spices. In its first year of operation, Clark Manufacturing produced more than 500,000 pieces, including nearly 400,000 Gem Flue Stoppers. By 1905, the number of company employees jumped to 41. Four years later, when Clark added a company-designed-and-produced bodymaker, employment rose to 89.

Production continued to increase and by 1911 the company had outgrown its Water Power District facility, which by then had reached nearly 20,000 square feet. The company purchased a 15-acre tract on the edge of town and designed and built a modern 55,000-square-foot plant, including storage space and corporate offices, which was considered among the most up-to-date in the country. By then, Clark customers included many leading manufacturers, including Milton Bradley and others. Sales of the Gem Flue Stopper continued to rise, topping 500,000. But Clarks other products also contributed to its growth. According to an early newspaper article on the company, Clarks total production volume reached 50 million pieces per year by 1911.

Growth Between the Wars and Beyond

Clarks growth slowed somewhat during World War I (in 1919, the year founder John Clark died, the company posted the first of only two unprofitable years in its history). But with Harold Clark leading the company, Clark regained its momentum in the decade that followed. Photographic lithography processes were added to the production line, and this, coupled with the addition of a rotary printing press in 1925, allowed the company not only to speed up production but also to improve quality, establishing Clarks long-held reputation for excellence. Between 1918 and 1928, sales tripled, from $408,000 to nearly $1.4 million. In 1924, an addition to the plant doubled its production area.

Clarks growth enabled it to survive the Depression of the 1930s. Despite declining sales, down to $800,000 in 1933, in part due to a cutback to a four-day workweek, the number of the companys employees actually grew. The drop in consumer spending during the Depression encouraged companies to turn to quality packaging, which improved the durability of their products and were more attractive to consumers. At this time, 3M, among others, became a long-time Clark customer. This trend helped raise Clarks revenues, to $1.1 million in 1936 and to $1.4 million in 1937. The next year, however, Clark posted its second annual loss. But Clark received a new boost to revenues when the company designed the first metal battery jacket, later to become an industry standard, for Ray-O-Vac. The company also invested heavily in capital improvements, raising the quality and efficiency of production.

The outbreak of World War II stimulated Clarks growth, as production was converted to wartime orders, while the company established three branch plants to continue filling consumer orders. The company added a new major customer, Gillette, in the 1940s, designing and producing the packaging for that companys razor blades. At the same time, Clark began producing Band-Aid boxes, baby powder cans, and tape dispensers for Johnson & Johnson, which soon became the companys largest customer. By 1946, the company was able to add a new addition to its Rockford plant; two years later, the plant expanded again, and in 1950, Clark doubled its lithograph facility. Then, in 1951, Clark completed a 31,000-square-foot expansion of the Rockford plant.

Company Perspectives:

We are a market driven, worldwide provider of quality engineered products and related services to chosen global environmental and consumer products markets, committed to profitable growth through proven innovation, integrity and people orientation.

In 1952, long-time employee Ralph Rosecrance replaced Harold Clark, who died the following year, as president of the company. Under Rosecrance, the company made its first acquisition, buying the Liberty Can and Sign Company of Lancaster, Pennsylvania in 1955 for $2 million. The acquisition gave the company increased access to the important East Coast market. Clarks sales, which had reached $10.7 million in 1954, rose to nearly $15 million in 1956.

The Liberty acquisition proved to be the first in a series, as the company moved to expand its product offerings. Significant among these was the 1959 acquisition of G. Felsenthal & Sons of Chicago, which brought Clark into plastics for the first time. The following year, Clark developed a plastic spice can closure to replace the traditional sliding metal closures, which were prone to rust, tended to stick, and were generally difficult to use. A second spice can closure was designed, with lift-tops for a shaker and for spooning, which attracted the attention of McCormick & Company, then the countrys largest spice supplier. When Clark was awarded a contract to supply all of McCormicks spice cans, Clark built a 40,000-square-foot plant in California to satisfy the growing demand there. By the mid-1960s, Clarks customers included other major spice companies, including Durkee, French, and A&P. At the same time, Clark added another 41,000 square feet to its Rockford lithographing operations. By 1964, when the company made its initial public offering, sales had reached $23 million, with earnings of $1.2 million.

The newly public company next embarked on a string of acquisitions that not only raised its revenues to $82 million by 1976, but also allowed the company to diversify into a wide range of packaging materials. One of Clarks most important acquisitions was that of Maryland-based Stone Container Corp., which gave Clark a technological and market lead in the manufacture of composite cans. Other acquisitions increased the companys plastic molding capabilities. As then President William Nelson told Forbes in 1979, Clarks diversification efforts were made because [t]heres always a possibility that metal containers will become too expensive for some uses. Today theres no other firm that can offer such versatility in materials.

By the end of the 1970s, Clark posted net earnings of $12 million on sales of nearly $105 million. The companys diversification efforts were succeeding, bringing revenues to $124.5 million in 1981, despite the national slide into a recession. But it was in that year that diversification would take on a new meaning for the company.

Becoming a Filtration Giant in the 1980s

Clark had succeeded by pursuing niche markets, avoiding head-on competition with industry giants such as American Can Co., Crown Cork & Seal Co., and Continental Group. In 1981, however, Clark made its largest acquisition to date, that of the J.A. Baldwin Manufacturing Company in Kearney, Nebraska, bringing Clark into a new market altogether. Baldwin was a maker of premium quality heavy-duty filters, with a product line of more than 2,100 filters for oil, fuel, air, coolants, hydraulic, and transmission applications. With a base of 2,500 distributors, Baldwin was a national brand name.

The Baldwin acquisition helped boost revenues to $174 million and net earnings of $16 million by 1984. In addition, filtration was soon to become more important to the companys bottom line. Sales in Clarks packaging division began to slip in the second half of the 1980s as customers turned to other materials or to manufacturing their own packaging. The company began to invest more heavily in its filtration business, acquiring in 1986 Dahl Manufacturing, Inc. of California and that companys line of marine filters, diesel engine fuel/water separators, and related products. The company further enhanced its nonpackaging business with the acquisition of Michigan Spring Company, adding close-tolerance spring and wire forms to the companys product line and increasing its molded plastics capabilities. Clark began producing its first all-plastic packages, containers for Colgate Palmolive Co.s Curad bandages.

In 1987, Clark changed its name to Clarcor to emphasize its diversified status. Nelson, by then chairman and CEO, retired and was replaced by Larry Gloyd, former company president. Under Gloyd, the company managed to reverse the slide in its packaging revenues. Yet that market was increasingly seen as too mature for further domestic growth. Accordingly, the company moved to boost its filtration business, acquiring HEFCO of New Jersey, which enabled Clarcor to enter the industrial filtration market. At the same time, the company attempted to move beyond manufacturing and into the services market, with the acquisition of the Furst Group, an executive placement firm, leading to the establishment of a short-lived Services Group. Sales by the end of the 1980s had topped $202 million.

As the 1990s began, Clarcor s filtration business already represented more than half of the companys total revenues. The recession of these years, however, placed pressure on the companys earnings. The company undertook a series of divestitures, exiting all but its filtration and consumer packaging businesses. In 1991, the company entered its first overseas partnership, purchasing a 20 percent stake in GUD Holdings, Ltd., the largest filtration products maker in Australia. The following year, Clarcor expanded its locomotive filter capacity with the acquisition of M&J Diesel Locomotive Filter Co. of Chicago, and made plans to move into other transportation markets, including heavy equipment and boating, as well as nontransportation industries such as generators.

The sale of Clarcors precision products subsidiaries enabled the company, in 1993, to purchase with cash Airguard Industries, Inc., a Louisville, Kentucky-based maker of commercial environmental control systems, allowing the company to take advantage of business generated by the passage of the Clean Air Act. The company also purchased Eurofilter Airfilters Ltd. of England, giving the company access to the European market and expanding its product line to include gas turbine filters. At the same time, Clarcor entered a joint venture agreement with Filtros Continental in Mexico City, forming Filtros Baldwin de Mexico. The following year, Clarcor acquired Filtros Continental, the second-largest filter maker in Mexico, changing its name to Fibamex.

These acquisitions helped fuel a growth in revenues, with a 20 percent rise both in 1993 and 1994. The 1995 purchase of Hastings Manufacturing Company of Michigan, which added filtration products for the automotive and light truck markets, helped boost Clarcors sales that year to $290 million and net earnings to $22 million. By 1996, Clarcor was present in nearly every filtration market, with a dominant position in many of the market segments. A joint venture with Weifang Power Machine Fittings Ltd. in China, closed at the end of 1995, continued Clarcors international expansion. Overseas sales, which accounted for 13 percent of the companys revenues in 1995, were expected to rise to 25 percent or more by the year 2000.

Principal Subsidiaries

Airguard Industries, Inc.; Baldwin Filters, Inc.; Baldwin Filters N.V. (Belgium); Baldwin Filters Limited (England); Baldwin Filters (Aust.) Pty. Limited (Australia); Filtros Baldwin de Mexico (Fibamex) (Mexico); Baldwin-Weifang Filters Ltd. (China); Clark Filter, Inc.; Hastings Filters, Inc.; J.L. Clark, Inc.

Further Reading

Berman, Phyllis, Virtue Well Rewarded, Forbes, August 20, 1979, p. 120.

Clarcor Inc., From Hardware Store to. . . Clarcor: 1904-1989, Rockford, 111.: Clarcor Inc., 1989.

Liebowitz, David S., Playing with the Big Boys, Financial World, June 8, 1993, p. 88.

Murphy, H. Lee, Acquisitions Fueling Expansion at Clarcor, Crain s Chicago Business, April 18, 1994, p. 28.

, Clarcor Repackage Tied to Expansion, Crains Chicago Business, April 18, 1988, p. 40.

, Clarcor Set To Add Overseas Plant To Support Global Push at Home, Crains Chicago Business, April 10, 1995, p. 49.

M.L. Cohen

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