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Federal-Mogul Corporation

Federal-Mogul Corporation

26555 Northwestern Highway
Southfield, Michigan 48034
U.S.A.
(248) 354 7700
Fax: (248) 354-8983


Web site: http://www.federal-mogul.com

Public Company
Incorporated: 1924
Employees: 56,000
Sales: $1.80 billion (1997)
Stock Exchanges: New York
Ticker Symbol: FMO
SICs: 2891 Adhesives & Sealants; 3053 Gaskets, Packing & Sealing Devices; 3452 Bolts, Nuts, Rivets, & Washers; 3562 Ball & Roller Bearings; 3592 Carburetors, Pistons, Rings, Valves; 3714 Motor Vehicle Parts & Accessories

Federal-Mogul Corporation manufactures precision components for cars, trucks, and construction vehicles, marketing its products to original equipment manufacturers (OEMs) and af-termarket customers in the United States and around the world under brand names such as Federal-Mogul, Signal-Stat, and TRW. It also packages products for third-party private label brands. The company has about 20 manufacturing facilities in the United States and six other countries. Federal-Mogul sells its own products to major global automakers, including BMW, General Motors, and Nissan. It distributes about 150,000 auto parts to nearly 10,000 automotive aftermarket customers, primarily independent warehouse distributors, but also local parts suppliers and parts retailers.

The company rose to prominence through a series of expansions and acquisitions, which included the Bearing Company of America in 1953, the Bower Roller Bearing Company in 1955, and National Seal in 1956. In the early 1990s, Federal-Mogul sought to offset fluctuating demand in the OEM market by entering into aftermarket sales.

The Muzzy-Lyon Company & The Mogul Metal Company, 1899-1923

The history of Federal-Mogul may be traced to 1899, when J. Howard Muzzy and Edward F. Lyon, two mill supply vendors in Detroit, began searching for ways to produce better Babbitt metal. Babbitt metal, an alloy of tin, antimony, and copper, had been patented in 1839 by Isaac Babbitt as an anti-friction agent surrounding moving metallic locomotive parts. The use of Babbitt metal remained the principal means of preventing rotating metallic shafts from overheating and wearing out. However, the introduction of combustible engines early in the 20th century prompted a need for new, improved Babbitt metal.

Having developed an alternative formula for Babbitt metal, Muzzy and Lyon left secure jobs at J.T. Wing and Company, a vendor of mill and factory supplies and rubber goods, where their friendship and business acumen had gradually matured.

Determined to be their own bosses in the market they knew best, the two partners opened their first facility on Woodward Avenue in Detroit, Michigan, in 1900. During this time, the mill and factory supply business was highly competitive, and many producers offered shoddy merchandise at inexpensive prices. However, Muzzy and Lyon established a reputation for high-quality products and were able to reinvest most of their profits back into the business. They used aggressive and imaginative advertising, providing money-back guarantees and coupons good for prizes ranging from pocket rulers to firearms.

Whatever time Muzzy could spare from his primary responsibility of managing the financial and manufacturing end of the business he devoted to experimentation with Babbitt metals. Lyon, when not on the road selling company products, joined his partner in blending new formulas of tin, antimony, and lead. Their company soon garnered major orders from Clark Motor Company and the Sheffield Motor Company. As a result of the increased business, the partners formed a subsidiary company called the Mogul Metal Company.

During this time, the traditional method of making motor bearings was to pour molten Babbitt metal directly onto the motor block and to shape the metal to fit by hand. Mechanics replaced worn bearings by laboriously gouging out the old metal and then pouring in the new. When Sheffields parent organization, the Fairbanks Morse Company, inquired as to whether die cast metals could be manufactured to form standard size bearings, Muzzy and Lyon began working on a method. They purchased a typecasting machine, and, by modifying it, they were able to make some of the new parts themselves, while commissioning various machine shops to produce the rest. The design and construction of Muzzys and Lyons new machine remained a secret, and while the partners had limited mechanical and engineering experience, the machine proved successful.

The potential of the die casting machine so impressed the partners that they decided to drop the mill supply business completely. The company would devote its entire resources to manufacturing and mechanizing automotive bearings and Babbitt metals. They sold their products under the brand names of Duro (made according to a purchased formula) and Mogul (their own formula developed by Muzzy and Lyon). Orders for their die cast bearings began to arrive, and, in 1910, an important order was placed for 10,000 connecting rod bearings for the massive Buick 10, one of the first cars to use parts produced by Mogul Metal. That year, the partners nearly lost a large order from the Hudson Motor Company, when they refused to compromise their secret processes by allowing Hudson engineers to inspect the plant.

Federal-Mogul Corporation, 1924-54

In 1923, Muzzy learned that Douglas-Dahlin, a large Kansas City-based parts distributor, stood in danger of bankruptcy while owing Mogul a large sum of money. S.C. Reynolds, vice-president of Federal Bearing and Bushing, which also stood to lose money, called Muzzy to discuss the situation, proposing a trip to Kansas City to protect their interests. When Muzzy and Reynolds began discussing their companies and assessing their relative strengths and weaknesses, they realized the advantages of a merger. The Federal Bearing employees were expert bronze foundry men but lacked the capacity to produce Babbitt. MuzzyLyon, on the other hand, operated a complete Babbitt foundry but purchased bronze on the market. The companies merged in 1924, taking the name Federal-Mogul Corporation. To protect its investments, Federal-Mogul took over the near-bankrupt Douglas-Dahlin Company, entering the parts distribution business.

In 1927, Federal-Mogul purchased U.S. Bearings Company, an Indiana distributor that resold replacement bearings. The following year, Federal-Moguls involvement in the service business increased substantially with the acquisition of the Watkins Manufacturing Company of Wichita, Kansas. Following this major expansion, Federal-Mogul also purchased the Pacific Metal Bearing Company in San Francisco, primarily to supply its West Coast branches. In 1936, the corporation acquired the Indianapolis-based Superior Bearings Company, and, in 1937, the service division went international with the acquisition of the former Watkins Rebabbitting Limited, with Canadian locations in Toronto, Montreal, and Winnipeg. By 1939, Federal-Mogul was operating 53 service branches across the North American continent.

World War II led to further expansion. By 1941, Federal-Mogul had over 50 facilities devoted to military production, turning out millions of bearings, bushings, and seals for military applications. The companys marine division won highly competitive U.S. Navy tests for PT boat propellers and secured orders for over 24,000 Super Equi-poise wheels for every PT boat propeller used by all the Allied navies, including that of the Soviet Union. The marine division grew from a workforce of 50 in 1942 to nearly 1,000 by the end of the war. Moreover, from September 1939 to July 1945, the total area of Federal-Mogul plants increased nearly threefold, and annual sales were more than double the best prewar amounts.

Although postwar employee layoffs were necessary, the company continued to grow through acquisition. In 1953, Federal-Mogul merged with Bearings Company of America, marking the single largest acquisition in its history. The merger of the Bearings Company brought 610 new employees and approximately 121,000 square feet of manufacturing space into the organization.

Federal-Mogul-Bower Bearings, Inc., 1955-64

Company Perspectives:

Federal-Mogul has over 250 locations, across 6 continents, in 24 countries, with 56,000 employees worldwide. Headquartered in Southfield, Michigan, Federal-Mogul is a $7 billion automotive parts manufacturer providing innovative solutions and systems to global customers in the automotive, light truck, heavy-duty, railroad, farm and industrial markets. A century of people serving customers through manufacturing mastery has made Federal-Mogul a global leader in the automotive industry. Recognized by our customers as the supplier of choice for powertrain systems, sealing systems, and general products of leading edge innovation and technology, Federal-Mogul is a dynamic, growth-oriented company dedicated to delighting customers.

Even more significant growth occurred in 1955 when Federal-Mogul acquired the Bower Roller Bearing Company. Soon thereafter, the corporation announced its third major merger in as many years, when The National Motor Bearing Company (National Seal Division) joined the new Federal-Mogul-Bower Bearing Corporation in July 1956. At the time of the merger, National was one of the countrys largest manufacturers of oil seals and a variety of other specialized parts ranging from grommets and gaskets to fiberglass ducts and railroad journal boxes. The acquisition earned the company its first listing among Fortune magazines 500 largest American companies, ranking 350 with sales that exceeded $100 million that year. By the end of the 1950s, Federal-Moguls service division had expanded from 58 to 96 branches, and the number of customers had doubled to over 10,000. The mergers and increased efficiency of the 1950s had increased annual sales to four times their 1949 level.

During the 1960s, the corporations timely response to innovations in automobile production ultimately resulted in large dividends. One such development involved the steady expansion of foreign automobile manufacturers, facilitated by mass production technology and the development of the European Common Market. Observing a threat to American export sales, Federal-Mogul management began investing in foreign manufacturing operations and purchasing interests in various major European bearing firms. Domestic expansion also continued, and the firm began to focus on manufacturing parts for the highly sophisticated missile market. In 1964, Federal-Mogul opened a new oil seal facility that was publicized as the most highly mechanized plant of its kind in the world. The following year, the company purchased Steering Aluminum, a piston factory, and the Vellum-oid Company, a manufacturer of gaskets and gasket materials.

Federal-Mogul Corporation... Again, 1965-90s

The companys name was changed back to Federal-Mogul Corporation in April 1965. One year later, Federal-Moguls world headquarters officially relocated from its location in downtown Detroit to its present location in Southfield, Michigan, in July 1966.

The early 1970s marked a domestic expansion into the southern states. A highly automated new plant in Princeton, Kentucky, opened in late 1970, with 50,000 square feet devoted to producing super alloy metal powders. In 1971, a new plant in Virginia began manufacturing aluminum sleeve bearings, while another Federal-Mogul plant was introduced for the manufacture of bimetal bushings and bearings. The following year, an additional powdered metal parts plant was opened in Ripley, Tennessee, and, soon thereafter, a new 360,000-square-foot plant in Hamilton, Alabama, began producing tapered roller bearings ranging up to eight inches in diameter.

Economic recession in 1975 prompted management at Federal-Mogul to begin reassessing its long-term strategy. Although the company quickly recovered from the recession, recording its fourth consecutive year of record sales and earnings in 1979, management had found that the companys earnings were overly reliant on the fortunes of automotive OEMs. In the 1980s, chairperson and CEO Tom Russell placed increasing emphasis on a strategy of diversification, making acquisitions and entering into joint ventures to strengthen its manufacturing position. In July 1985, Federal-Mogul acquired the Mather Company, a manufacturer of high performance sealing products for the automotive and industrial markets and a leader in PTFE (Teflon) technology. In January 1986, the purchase of the Carter Automotive Company, Inc., a manufacturer and distributor of automotive fuel pumps and systems, and, in September of that year, the acquisition of Signal-Stat, a manufacturer, marketer, and distributor for lighting and safety components, further strengthened its position. In August 1989, Federal-Mogul completed a joint venture agreement with G. Bruss GmbH and Co. KG, a German manufacturer of seals and specialty molded products.

Dennis J. Gorley, who assumed Federal-Moguls chief executive office upon Russells 1989 retirement, accelerated his predecessors diversification scheme. Gorley spearheaded Federal-Moguls expansion into the automotive aftermarket, which promised higher profit margins and more stability than the OEM market. From 1989 to 1993, the firm continued to strengthen its operations through additional acquisitions, acquiring some of the best-known brands in automotive replacement parts and divesting itself of some peripheral OEM businesses. Principal acquisitions included: the vehicular lighting assets of R.E. Dietz and Co. in March 1990; German manufacturer of automotive and diesel engine bearings, Glyco AG in October 1990; Brown & Dureau (Australia) and Sealed Power Replacement. The company made its largest purchase ever in 1992, when it bought TRW Inc.s automotive aftermarket business (AAB). The former TRW operations expanded Federal-Moguls European and Japanese penetration and constituted nearly 20 percent of annual revenues in 1993.

During this period, Federal-Mogul worked to improve efficiency through automation, capital improvements, and staff reductions. The company adopted bar code technology for inventory control and invested in guided vehicles, hand-held scanners, and computers for its Jacksonville, Alabama, worldwide distribution center. These modernizations cut order fulfillment time from three days to one. Federal-Mogul also moved to transform its export operations into international enterprises. By 1993, 21 percent of the companys sales were generated by businesses outside the United States and Canada, while another 13 percent of annual revenues still came from exports.

The transition was not entirely smooth; Federal-Mogul recorded net losses in 1991 and 1992 totaling $87.4 million. However, when the company reported a $40.1 million profit for 1993, Financial World praised the companys sound acquisition strategy, good cost controls, and participation in international markets. Noting that the companys stock had outperformed the Standard & Poors 500 Index, CEO Gorley maintained that recent progress was just the beginning, telling shareholders in the companys annual report that Federal-Mogul was positioning itself as a company capable of sustained earnings growth. In March 1993, Federal-Moguls lighting and electrical division was named one of the first General Motors Worldwide Suppliers of the Year for its excellence in quality, service, and price.

In September 1995, the company acquired Seal Technology Systems (STS), one of Europes leading designers and manufacturers of a specialized range of seals and gaskets for the automotive sector and other industrial markets. Chrysler Corporation recognized the company for outstanding manufacturing plant performance in the areas of Quality, Delivery, and Warranty in May 1996, with its Gold Pentastar Award being given to Federal-Moguls Blacksburg, Virginia engine bearing manufacturing facility. In November of that year, Dick Snell took the helm as chairman, CEO, and president of Federal-Mogul. Another accolade came in January 1997, when Federal-Moguls engine bearings facility in Orleans, France, was honored with the first-ever Platinum Award for supplier excellence from the Rover Group, for winning the Gold Supplier Excellence Award three consecutive years. Concurrently, Federal-Moguls STS division won the Rover Groups Silver Supplier Excellence Award for the second consecutive year.

Acquisition Spree, 1997-98

Beginning in October 1997, the company went on an acquisition spree, acquiring T&N PLC, one of the worlds leading suppliers of high-technology automotive components, engineered products, and industrial materials.

In January 1998, Federal-Mogul acquired privately owned Pel-Pro Inc.the premier automotive and industrial gasket manufacturer for the North American aftermarket and OE heavy-duty market, headquartered in Skokie, Illinoisand its subsidiaries. The acquisition of the venerable company (founded in Chicago in 1918 as Felt Products Manufacturing Company to manufacture Ford Model T car felt gaskets and washers) brought the Michigan giant capabilities in a broad variety of products, including custom and standard potting, encapsulation, and embedment compounds, resins, adhesives, sealants, epoxy and polyurethane compounds. The $720 million ($225 million common stock/$495 million cash) acquisition also brought 1,800 new employees to Federal-Mogul.

In March, Federal-Mogul strengthened its market position in Asia by increasing the companys ownership in KFM Bearing Co., Ltd., the leading manufacturer of engine bearings, bushings, and related parts for automotive and other applications in Korea, a joint venture formed that year with Kukje Special Metal Co., Ltd., from 30 percent to 87 percent. Also in March, the company expanded its engine bearing operations in Europe when it acquired Gdansk, Poland-based Bimet S.A., a manufacturer of engine bearings, bushings, and related products, bringing 600 employees and sales of $12 million to the company.

In October of that year, Federal-Mogul also acquired Tri-Way Machine Limited, a privately owned manufacturer of machines and machining systems serving the world metal-cutting industry, headquartered in Windsor, Ontario, Canada, and its subsidiary, J.I.S. Machining Ltd., a machiner of pow-ertrain components. A second acquisition that month was Cooper Automotive, a business unit of Cooper Industries, Inc., whose principal products included brakes and friction, lighting, chassis parts, ignition, and wiper blades.

With over 250 locations across six continents, with 56,000 employees worldwide, and a century of business experience to its credit, Federal-Mogul reigned as a longtime leader in the automotive industry and yet promised to be a dynamic, growth-oriented company, with its eye on innovation well into the 21st century.

Principal Subsidiaries

BHW GmbH; Bimet SA; Carter Automotive Company, Inc.; Conaba S.A. de C.V. (51%); F-M Motorentiele Holding GmbH; Federal-Mogul Boliviana, S.A.; Federal-Mogul Bruss Scaling Systems (74%); Federal-Mogul Canada Investment Co.; Federal-Mogul Canada Ltd.; Federal-Mogul Cayman Investment Company Ltd.; Federal-Mogul Comercio International, S.A.; Federal-Mogul de Costa Rica, S.A.; Federal-Mogul de Guatemala, S.A.; Federal-Mogul de Venezuela C.A.; Federal-Mogul del Ecuador, S.A.; Federal-Mogul Distribuidora SAC (66%); Federal-Mogul Dominicana, S.A.; Federal-Mogul Funding Corp.; Federal-Mogul GmbH; Federal-Mogul Handelsgesell-schaft MBH; Federal-Mogul Holding U.K., Ltd.; Federal-Mogul Japan KK; Federal-Mogul Ltd.; Federal-Mogul New Zealand Ltd.; Federal-Mogul Panama, S.A.; Federal-Mogul Pty. Ltd.; Federal-Mogul S.A. de C.V. (61%); Federal-Mogul S.A. (France); Federal-Mogul S.A. (Switzerland); Federal-Mogul SpA; Federal-Mogul Uruguay; Federal-Mogul Venture Corp.; Federal-Mogul World Trade Chile Ltda (99%); Federal-Mogul World Trade de España, S.A.; Federal-Mogul World Trade B.C.; Federal-Mogul World Trade Hong Kong, Ltd.; Federal-Mogul World Trade, Inc.; Federal-Mogul World Trade Ltd.; Federal-Mogul World Trade Pte. Ltd.; Federal-Mogul World Trade SDN BHD; Federal-Mogul World Wide, Inc.; Federal-Mogul Westwind Air Bearings Ltd. (89%); Pel-Pro Chemical Products L.P.; Pel-Pro Inc.; Pel-Pro Specialty Sealing Products L.P.; Femosa Mexico S.A. (90%); Glyco AG; Glyco Antriebstechnik GmbH; Glyco B.V.; Glyco do Brasil; Glyco KG; H. Minoli S.A.I.C. (59%); In-De-Co.; KFM Bearing Co. Ltd. (87%); Manufacturas Metálicas Linan S.A.; Mather Seal Co.; Metaltec, Inc.; Raimsa S.A. de C.V. (70%); Servicios Administrativos Industriales, S.A.; Servicios de Components Automotrices, S.A.; Subensambles Internacionales S.A. de C.V.; T&N PLC; Villa Fane Auto Supply, Inc.

Further Reading

APS/Big A Auto Parts Challenge New Gasket Supplier to Speed Vendor Changeover, Automotive Marketing, November 1995, p. 108.

Bates, Chris, Profile of a Successful Exporter, Fel-Pro, Inc., Business America, June 28, 1982, p. 11.

Cowans, Deborah Shalowitz, Pel-Pro Family-Friendly Benefits to Stay for Now Despite Sale, Business Insurance, January 19, 1998, p. 2.

_____, Investing in Employee Wellness: Companies See Big Returnsfrom Offering Preventive Benefits, Business Insurance, March 11,1996, p. 3.

Crown, Judith, Family Ties Will Be Strained in Pel-Pro Deal, Grains Chicago Business, December 1, 1997, p. 4.

Elliot Lehman and Lewis Weinberg, Industry Week, October 27,1980, p. 53.

Elstrom, Peter J.W., Chaos Shattering Trade with Mideast, Grains Chicago Business, January 21, 1991, p. 4.

Employer Panel Shares Plan Experiences, Employee Benefit Plan Review, October 1991, p. 45.

Employers Family Benefits Attract Workers, Employee Benefit Plan Review, March 1992, p. 20.

Federal-Mogul, Rubber World, February 1998, p. 8.

Federal-Mogul Corp. Continues Its Buying Binge, Wards Auto World, April 1998, p. 57.

Federal-Mogul Finishes Purchase, Wall Street Journal, February 25,1998, p. B6.

Federal-Mogul Plans to Buy Pel-Pro for $720 Million, New York Times, January 13, 1998, p. C3.

Federal-Mogul, Southfield, MI, Has Completed the Acquisition of Fel-Pro, a Privately-Owned Manufacturer Headquartered in Skokie, IL, for $720 Million, Rubber World, March 1998, p. 12.

Federal-Mogul to Acquire Fel-Pro, Industrial Distribution, February 1998, p. 28.

Green, J. Howard, Doing Well by Doing Good, Time, May 20,1996, p. 42.

Hershey, Robert D., Jr., Paradise Lost?: A Takeover of Workers Dream Factory, International Herald Tribune, May 16, 1998, p. 19.

_____, Subjects Uneasy as a Benevolent Reign Ends, New York Times, June 7, 1998, p. B13.

Hogan, Brian J., Pump Rotor Secured to Shaft by Anaerobic Adhesive; Bonding Permits Design Modifications That Simplify Pump Manufacture, Design News, September 23, 1985, p. 110.

McGeehan, Patrick, Federal-Mogul Buys Fel-Pro for $720 Million, Wall Street Journal, Europe, February 25, 1998, p. 8.

Melcher, Richard, Warm and Fuzzy, Meet Rough and Tumble; A Takeover Puts a Manufacturers Generous Perks to the Test, Business Week, January 26, 1998, p. 38.

Panchapakesan, Meenakshi, Federal-Mogul: Shifting Gears, Financial World, January 18, 1994, p. 24.

Personnel, Automotive News, August 7, 1995, p. 25.

Puchalsky, Andrea, Federal-Mogul Expected to Purchase Fel-Pro Inc., Wall Street Journal, Europe, January 12, 1998, p. 3.

_____, Federal-Mogul Plans to Buy Fel-Pro Inc., Wall Street Journal, January 12, 1998, p. A3.

_____, Federal-Mogul Sets Pact for Fel-Pro, a Car-Parts Maker, Wall Street Journal, January 13, 1998, p. A6.

Stone, Gene, et al, Workstyle, Inc., January 1986, p. 45.

Tait, Nikki, Federal-Mogul Expands Further with $720M Buy, Financial Times, January 13, 1998, p. 26.

Zingraff, Mike, Jr., Domestic Pel-Pro Claims Best Import Gaskets Coverage, Motor Age, September 1991, p. 78.

updated by Daryl F. Mallett

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Mallett, Daryl. "Federal-Mogul Corporation." International Directory of Company Histories. 1999. Encyclopedia.com. 31 Aug. 2016 <http://www.encyclopedia.com>.

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Federal-Mogul Corporation

Federal-Mogul Corporation

P.O. Box 1966
Detroit, Michigan 48235-9988
U.S.A.
(313) 354-7700

Public Company
Incorporated: 1924
Employees: 14,400
Sales: $992.9 million
Stock Index: New York Pacific
SICs: 3714 Motor Vehicle Parts and Accessories; 3562 Ball and Roller Bearings; 3592 Carburetors, Pistons, Rings, Valves; 3452 Bolts, Nuts, Rivets, and Washers; 3053 Gaskets, Packing and Sealing Devices

Federal-Mogul Corporation manufactures precision components for the automotive industry, marketing its products to original equipment manufacturers (OEMs) and aftermarket customers in the United States and around the world. The company rose to prominence through a series of expansions and acquisitions, which included the Bearing Company of America in 1953, the Bower Roller Bearing Company in 1955, and National Seal in 1956. In the early 1990s, Federal-Mogul sought to offset fluctuating demand in the OEM market by entering into aftermarket sales.

The history of Federal-Mogul may be traced to 1899, when J. Howard Muzzy and Edward F. Lyon, two mill supply vendors in Detroit, began searching for ways to produce better babbitt metal. Babbitt metal, an alloy of tin, antimony, and copper, had been patented in 1839 by Isaac Babbitt as an antifriction agent surrounding moving metallic locomotive parts. The use of babbit metal remained the principal means of preventing rotating metallic shafts from overheating and wearing out. However, the introduction of combustible engines early in the twentieth century prompted a need for new, improved babbit metal.

Having developed an alternative formula for babbit metal, Muzzy and Lyon left secure jobs at J. T. Wing and Company, a vendor of mill and factory supplies, where their friendship and business acumen had gradually matured. Determined to be their own bosses in the market they knew best, the two partners opened their first facility in 1900. During this time, the mill and factory supply business was highly competitive, and many producers offered shoddy merchandise at inexpensive prices. However, Muzzy and Lyon established a reputation for high quality products and were able to reinvest most of their profits back into the business. They used aggressive and imaginative advertising, providing money-back guarantees and coupons good for prizes ranging from pocket rulers to firearms.

Whatever time Muzzy could spare from his primary responsibility of managing the financial and manufacturing end of the business he devoted to experimentation with babbitt metals. Lyon, when not on the road selling company products, joined his partner in blending new formulas of tin, antimony, and lead. Their company soon garnered major orders from Clark Motor Company and the Sheffield Motor Company. As a result of the increased business, the partners formed a subsidiary company called the Mogul Metal Company.

During this time, the traditional method of making motor bearings was to pour molten babbitt metal directly onto the motor block and to shape the metal to fit by hand. Mechanics replaced worn bearings by laboriously gouging out the old metal and then pouring in the new. When Sheffields parent organization, the Fairbanks Morse Company, inquired as to whether die cast metals could be manufactured to form standard size bearings, Muzzy and Lyon began working on a method. They purchased a typecasting machine, and, by modifying it, they were able to make some of the new parts themselves, while commissioning various machine shops to produce the rest. The design and construction of Muzzys and Lyons new machine remained a secret, and while the partners had limited mechanical and engineering experience, the machine proved successful.

The potential of the die casting machine so impressed the partners that they decided to drop the mill supply business completely. The company would devote its entire resources to manufacturing and mechanizing automotive bearings and babbitt metals. Orders for their die cast bearings began to arrive, and, in 1910, an important order was placed for 10,000 connecting rod bearings for the massive Buick 10. That year, the partners nearly lost a large order from the Hudson Motor Company when they refused to compromise their secret processes by allowing Hudson engineers to inspect the plant.

In 1923, Muzzy learned that Douglas-Dahlin, a large Kansas City-based parts distributor, stood in danger of bankruptcy while owing Mogul a large sum of money. S.C. Reynolds, vice-president of Federal Bearing and Bushing, which also stood to lose money, called Muzzy to discuss the situation, proposing a trip to Kansas City to protect their interests. When Muzzy and Reynolds began discussing their companies and assessing their relative strengths and weaknesses, they realized the advantages of a merger. The Federal Bearing employees were expert bronze foundrymen but lacked the capacity to produce babbitt. Muzzy-Lyon, on the other hand, operated a complete babbitt foundry but purchased bronze on the market. The companies merged in 1924, taking the name Federal-Mogul Corporation. To protect its investments, Federal-Mogul took over the near-bankrupt Douglas-Dahlin Company, entering the parts distribution business.

In 1927, Federal-Mogul purchased U.S. Bearings Company, an Indiana distributor that resold replacement bearings. The following year, Federal-Moguls involvement in the service business increased substantially with the acquisition of the Watkins Manufacturing Company of Wichita, Kansas. Following this major expansion, Federal-Mogul also purchased the Pacific Metal Bearing Company in San Francisco, primarily to supply its West Coast branches. In 1936, the corporation acquired the Indianapolis-based Superior Bearings Company, and, in 1937, the service division went international with the acquisition of the former Watkins Rebabbitting Limited, with Canadian locations in Toronto, Montreal, and Winnipeg. By 1939, Federal-Mogul was operating 53 service branches across the North American continent.

World War II led to further expansion. By 1941, Federal-Mogul had over 50 facilities devoted to military production, turning out millions of bearings, bushings, and seals for military applications. The companys marine division won highly competitive U.S. Navy tests for PT boat propellers and secured orders for over 24,000 Super Equi-poise wheels for every PT boat propeller used by all the Allied navies, including that of the Soviet Union. The marine division grew from a work force of 50 in 1942 to nearly 1,000 by the end of the war. Moreover, from September 1939 to July 1945, the total area of Federal-Mogul plants increased nearly threefold, and annual sales were more than double the best prewar amounts.

Although postwar employee layoffs were necessary, the company continued to grow through acquisition. In 1953, Federal-Mogul merged with Bearings Company of America, marking the single largest acquisition in its history. The merger of the Bearings Company brought 610 new employees and approximately 121,000 square feet of manufacturing space into the organization. Even more significant growth occurred in 1955 when Federal-Mogul acquired the Bower Roller Bearing Company. Soon thereafter, the corporation announced its third major merger in as many years, when The National Motor Bearing Company joined the new Federal-Mogul-Bower Bearing Corporation in 1956. The acquisition earned the company its first listing among Fortune magazines 500 largest American companies, ranking 350 with sales that exceeded $100 million that year. By the end of the 1950s, Federal-Moguls service division had expanded from 58 to 96 branches, and the number of customers had doubled to over 10,000. The mergers and increased efficiency of the 1950s had increased annual sales to four times their 1949 level.

During the 1960s, the corporations timely response to innovations in automobile production ultimately resulted in large dividends. One such development involved the steady expansion of foreign automobile manufacturers, facilitated by mass production technology and the development of the European Common Market. Observing a threat to American export sales, Federal-Mogul management began investing in foreign manufacturing operations and purchasing interests in various major European bearing firms. Domestic expansion also continued, and the firm began to focus on manufacturing parts for the highly sophisticated missile market. In 1964, Federal-Mogul opened a new oil seal facility that was publicized as the most highly mechanized plant of its kind in the world. The following year, the company purchased Steering Aluminum, a piston factory, and the Vellumoid Company, a manufacturer of gaskets and gasket materials.

The early 1970s marked a domestic expansion into the southern states. A highly automated new plant in Princeton, Kentucky, opened in late 1970, with 50,000 square feet devoted to producing super alloy metal powders. In 1971, a new plant in Virginia began manufacturing aluminum sleeve bearings, while another Federal-Mogul plant was introduced for the manufacture of bimetal bushings and bearings. The following year, an additional powdered metal parts plant was opened in Ripley, Tennessee, and, soon thereafter, a new 360,000 square foot plant in Hamilton, Alabama, began producing tapered rolling bearings ranging up to eight inches in diameter.

Economic recession in 1975 prompted management at Federal-Mogul to begin reassessing its long-term strategy. Although the company quickly recovered from the recession, recording its fourth consecutive year of record sales and earnings in 1979, management had found that the companys earnings were overly reliant on the fortunes of automotive OEMs. In the 1980s, chairperson and CEO Tom Russell placed increasing emphasis on a strategy of diversification. Toward this end, in 1985, Federal-Mogul acquired the Mather Company, a manufacturer of high performance sealing products for the automotive and industrial markets and a leader in Teflon technology. Moreover, the purchase of the Carter Automotive Company, a manufacturer of fuel systems, further strengthened Federal-Moguls position.

Dennis J. Gorley, who assumed Federal-Moguls chief executive office upon Russells 1989 retirement, accelerated his predecessors diversification scheme. Gorley spearheaded Federal-Moguls expansion into the automotive aftermarket, which promised higher profit margins and more stability than the OEM market. From 1989 to 1993, the firm acquired some of the best-known brands in automotive replacement parts and divested some peripheral OEM businesses. Principal acquisitions included: Dietz Lighting, Glyco Engine Bearings, Brown & Dureau (Australia) and Sealed Power Replacement. The company made its largest purchase ever in 1992, when it bought TRW Inc.s automotive aftermarket business (AAB). The former TRW operations expanded Federal-Moguls European and Japanese penetration and constituted nearly 20 percent of annual revenues in 1993.

During this period, Federal-Mogul worked to improve efficiency through automation, capital improvements, and staff reductions. The company adopted bar code technology for inventory control and invested in guided vehicles, hand-held scanners, and computers for its Jacksonville, Alabama, worldwide distribution center. These modernizations cut order fulfillment time from three days to one. Federal-Mogul also moved to transform its export operations into international enterprises. By 1993, 21 percent of the companys sales were generated by businesses outside the United States and Canada, while another 13 percent of annual revenues still came from exports.

The transition was not entirely smooth; Federal-Mogul recorded net losses in 1991 and 1992 totaling $87.4 million. However, when the company reported a $40.1 million profit for 1993, Financial World praised the companys sound acquisition strategy, good cost controls, and participation in international markets. Noting that the companys stock had outperformed the Standard & Poors 500 Index, CEO Gorley maintained that recent progress was just the beginning, telling shareholders in the companys annual report that Federal-Mogul was positioning itself as a company capable of sustained earnings growth.

Principal Subsidiaries:

Carter Automotive Company, Inc.; Mather Seal Co.; Metaltec, Inc.; Federal-Mogul Funding Corp.; Federal-Mogul World Wide, Inc.; Federal-Mogul Venture Corp. Federal-Mogual World Trade, Inc.; Federal-Mogual Bruss Scaling Systems (74%); Federal-Mogul Distribuidora SAC (66%); In-De-Co., H. Minoli S.A.I.C. (59%); Federal-Mogul Pty. Ltd.; Federal-Mogul Handelsgesellschaft MBH; Federal-Mogul World Trade E.G.; Federal-Mogul World Trade Ltd.; Federal-Mogul Boliviana, S.A.; Federal-Mogul Comercio International, S.A.; Glyco do Brasil; Federal-Mogul Canada Investment Co.; Federal-Mogul Canada Ltd.; Federal-Mogul Cayman Investment Company Ltd.; Federal-Mogul World Trade Chile Ltda (99%); Federal-Mogul de Costa Rica, S.A.; Federal-Mogul Dominicana, S.A.; Federal-Mogul del Ecuador, S.A.; Federal-Mogul S.A. (France); BHW GmbH; Federal-Mogul GmbH; F-M Motorentiele Holding GmbH: Glyco AG; Glyco KG; Glyco Antriebstechnik Gmbh: Federal-Mogul de Guatemala, S.A.; Federal-Mogul World Trade Hong Kong, Ltd.; Federal-Mogul SpA; Federal-Mogul Japan KK; Federal-Mogul World Trade SON BHD; Conaba S.A. de C.V. (51%); Federal-Mogul S.A. de C.V. (61%); Manufacturas Metalicas Linan S.A.; Raimsa S.A. de C.V. (70%); Servicios Administra-tivos Industrials, S.A.; Sericios de Components Automotrices, S.A.; Subensambles Internacionales S.A. de C.V.; Femosa Mexico S.A. (90%); Glyco B.V.; Federal-Mogul New Zealand Ltd.; Federal-Mogul Panama, S.A. Villa Fane Auto Supply, Inc.; Federal-Mogul World Trade Pte. Ltd.; Federal-Mogul World Trade de Espana, S.A.; Federal-Mogul S.A. (Switzerland); Federal-Mogul Holding U.K., Ltd.; Federal-Mogul Ltd.; Federal-Mogul Westwind Air Bearings Ltd. (89%); Federal-Mogul Uruguay; Federal-Mogul de Venezuela C.A.

Further Reading:

Panchapakesan, Meenakshi, Federal-Mogul: Shifting Gears, Financial World, January 18, 1994, p. 24.

updated by April Dougal Gasbarre

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"Federal-Mogul Corporation." International Directory of Company Histories. 1995. Encyclopedia.com. 31 Aug. 2016 <http://www.encyclopedia.com>.

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"Federal-Mogul Corporation." International Directory of Company Histories. 1995. Retrieved August 31, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2841400104.html

Federal-Mogul Corporation

Federal-Mogul Corporation

P.O. Box 1966
Detroit, Michigan 48235
U.S.A.

Public Company
Incorporated:
May, 1 1924
Employees.12,500
Sales:$942 million Market Value:$568 million
Stock index : New York Pacific

Federal-Mogul Corporation had its origins in the Muzzy-Lyon Company, which was founded in Detroit, Michigan, in 1899 to sell mill and factory supplies. This firm, which became a national producer of bearings and bearing alloys, combined in 1924 with Federal Bearing and Bushing to form a new company called the Federal-Mogul Corporation. The growth of the organization through a series of expansions and acquisitions made it an important defense supplier during World War II. That growth continued with the acquisition of Bearing Company of America in 1953, the merger of Bower Roller Bearing Company into Federal-Mogul in 1955, and the acquisition of National Seal in 1956. In more recent years, the company has acquired a number of other units in both the United States and abroad. With headquarters in South-field, Michigan, Federal-Mogul presently operates some 40 plants, more than 50 distribution centers, and four major research facilities throughout the world. Its product line ranges from a variety of precision parts for the transportation, farm equipment, construction and manufacturing industries, to aerospace components.

The history of Federal-Mogul goes back to the turn of the century when two young Detroit mill supply vendors began searching for ways to produce better babbitt metal. Babbitt metal, an alloy of tin, antimony, and copper, had been patented in 1839 by Issac Babbitt as an antifriction agent surrounding moving metallic locomotive parts. It remained the principal means to prevent rotating metallic shafts from overheating and wearing out. However, the 19th century methods were unsuitable for 20th century combustible engines. J. Howard Muzzy and Edward F. Lyons success in developing new formulas for and applications of babbitt metal would help to make more efficient automobile engines possible.

Muzzy and Lyon left secure jobs to begin their new business. As employees of J.T. Wing and Company, a vendor of mill and factory supplies, their friendship and business acumen had gradually matured. Determined to be their own bosses in the market they knew best, the two partners wasted no time opening the doors to their first building in 1900. The mill and factory supply business was highly competitive at the turn of the century. Many producers offered shoddy merchandise at inexpensive prices. The business also required a large running inventory of slow moving items, which would stretch the new firms limited capital. Nonetheless, the partners established a reputation for quality items and made it through the early years, putting most of their profits back into the business. They also used aggressive and imaginative advertising, providing money-back guarantees and coupons good for prizes ranging anywhere from pocket rulers to firearms.

Whatever time Muzzy could spare from his primary responsibility of managing the financial and manufacturing end of the business he devoted to endless experimentation with babbitt metals. Lyon, when not on the road selling company products, joined his partner in blending new formulas of tin, antimony and lead. Their hard work paid off with major orders from Clark Motor Company and the Sheffield Motor Company. As a result of the increased business, the partners formed a subsidiary company called the Mogul Metal Company.

An inquiry from Sheffields parent organization, the Fairbanks Morse Company, started Muzzy-Lyon on its next important breakthrough. The traditional method of making motor bearings was to pour molten babbitt metal directly onto the motor block and to shape the metal to fit by hand. Mechanics replaced worn bearings by laboriously gouging out the old metal and then pouring in the new. Why not die cast metals into standard size bearings? The partners purchased a typecasting machine and began modifying it. They were able to make some of the new parts themselves and commissioned various machine shops to produce the rest. In this way, the design and construction of their new machine remained a secret. Neither partner had any mechanical or engineering experience, but the machine worked.

The potential of the die casting machine so impressed the partners that they decided to drop the mill supply business completely. The company would devote its entire resources to manufacturing and mechandizing automotive bearings and babbitt metals. Soon orders for Moguls die cast bearings began to arrive. The year 1910 brought an important order for 10,000 connecting rod bearings for the massive Buick 10. That same year the partners nearly lost a large order from the Hudson Motor Company when they refused to compromise their secret processes by allowing Hudson engineers to inspect the plant.

Despite a difficult business climate, the Muzzy-Lyon management retained enough confidence in the future to expand in 1923. The most significant events began when Muzzy learned that Douglas-Dahlin, a large Kansas City-based parts distributor, stood in danger of bankruptcy while owing the company a large sum of money. S.C. Reynolds, vice president of Federal Bearing and Bushing, called Muzzy to discuss the situation. His company was also faced with losing a large sum of money; consequently, the two men traveled together to Kansas City to protect their interests. On the trip they became friends and, when they compared their companies and assessed their relative strengths and weaknesses, they realized the advantages of a merger. The Federal Bearing employees were expert bronze foundrymen but lacked the capacity to produce babbitt. Muzzy-Lyon, on the other hand, operated a complete babbitt foundry but purchased bronze on the market. It seemed like a perfect partnership. The names of Muzzy-Lyon Company and Federal Bearing were replaced by Federal Mogul Corporation.

To protect its investments, Federal-Mogul took over the near-bankrupt Douglas-Dahlin Company. Suddenly Federal-Mogul was in the service business. Other acquisitions followed shortly. In 1927 Federal-Mogul purchased U.S. Bearings Company, an Indiana distributor that resold replacement bearings. The following year, Federal-Moguls involvement in the service business increased substantially with the acquisition of the Watkins Manufacturing Company of Wichita, Kansas. Following this major expansion, Federal-Mogul also purchased the Pacific Metal Bearing Company in San Francisco, primarily to supply its West Coast branches. The corporation acquired the Indianapolis-based Superior Bearings Company in 1936. In 1937 the service division went international with the acquisition of the former Watkins Rebabbitting Limited that had locations in Toronto, Montreal, and Winnipeg, Canada. By 1939 Federal-Mogul operated 53 service branches across the North American continent.

World War II led to further expansion. By 1941 Federal-Mogul plants exhibited signs such as, Defense Plant, part of the Arsenal of Democracy, and over 50 of their facilities were devoted to military production. Federal-Mogul plants turned out millions of bearings, bushings and seals for military applications. Their marine division won highly competitive U.S. Navy tests for PT boat propellers and secured orders for over 24,000 Super Equi-poise wheels for every PT boat propeller used by all the Allied navies, including the Soviet Union. From 50 employees in 1942, the marine division grew to a workforce of nearly 1,000 by the end of the war. From September of 1939 to July of 1945, the total area of Federal-Mogul plants had increased nearly threefold. The workforce had grown correspondingly and annual sales were more than double the best prewar amounts.

Employee layoffs after the war failed to impede the additional acquisition of compatible companies. In 1953 Federal-Mogul merged with Bearings Company of America to mark the single largest acquisition in its history. The merger of the Bearings Company brought 610 new employees and approximately 121,000 square feet of manufacturing space into the organization. Even more significant growth occurred in 1955 when the Bower Roller Bearing Company merged with Federal-Mogul. The relationship that had begun with a 1950 sales agreement had culminated into a union of the two businesses. The ink had scarcely dried on the Bower agreement when the corporation announced its third major merger in as many years. The National Motor Bearing Company would join the new Federal-Mogul-Bower Bearing Corporation in 1956. The acquisition earned the company its first listing in the Fortune magazine ranking of the 500 largest American companies. It ranked 350 in 1956 with sales that exceeded $100 million that year.

As the 1950s drew to a close, the corporation could look back on a decade of substantial growth. The service division alone had gone from 58 to 96 branches, and the number of customers had doubled to over 10,000. The mergers and increased efficiency of the 1950s had increased annual sales to four times their 1949 level.

Further successes marked the 1960s. The corporations timely response to the changing face of world automobile production ultimately resulted in large dividends. The early 1960s saw a steady increase in the market share commanded by foreign automobile manufacturers. The worldwide spread of mass production technology, the development of the European Common Market, and increasing nationalism threatened American export sales. Federal-Mogul management noted this trend and in March of 1960 started to invest in foreign manufacturing operations and purchased interests in various major European bearing firms. Domestic expansion also continued and the firm turned more and more to specializing in the highly sophisticated missile market. In 1964 the company opened a new facility that was publicized as the most highly mechanized oil seal plant in the world. In 1965 the company purchased Steering Aluminum, a piston factory, and the Vellumoid Company, a manufacturer of gaskets and gasket materials.

The early 1970s marked a domestic expansion into the southern states. A highly automated new plant in Princeton, Kentucky opened in late 1970. The 50,000 square foot facility was devoted to production of super alloy metal powders. In 1971 a new plant in Virginia started to manufacture aluminum sleeve bearings while another plant emphasized the manufacture of bimetal bushings and bearings. An additional powdered metal parts plant in Ripley, Tennessee opened in 1972. The following year a new 360,000 square foot plant in Hamilton, Alabama began producing tapered rolling bearings ranging up to eight inches in diameter.

The 1975 recession caused management at Federal-Mogul to reassess its long-term strategy. Earnings were too closely tied to the original-equipment automotive industry which traditionally led the national economy into and out of recessions. However, 1976 brought the beginning of economic recovery. The integration of the international manufacturing operations with domestic product lines paid off and as the decade of the 1970s drew to a close it was apparent that Federal-Mogul had made a rapid recovery from the 1975 recession. Despite a depressed automotive market, 1979 marked Federal-Moguls fourth consecutive year of record sales and earnings.

Tom Russell, the current president of Federal-Mogul, is said to be placing an emphasis on the strategy of diversification. In 1985 the corporation acquired the Mather Company, a manufacturer of high performance sealing products for the automotive and industrial markets and a leader in Teflon technology. The purchase of the Carter Automotive Company, a manufacturer of fuel systems with significant sales, further strengthened Federal-Moguls position.

The days when an expanding automobile industry made for a good future in the bearing business have given way to a time when large numbers of stockholders expect constant growth and high dividends. For Federal-Mogul, this will result in a continued strategy of diversification and reorganization in the years to come.

Principal Subsidiaries

Huck Manufacturing Co.; Federal-Mogul World Trade Corp.; Federal-Mogul World Trade, Inc.; Mather Co. The company also has subsidiaries in the following countries: Brazil, Canada, England, France, Italy, Mexico, and West Germany.

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"Federal-Mogul Corporation." International Directory of Company Histories. 1988. Encyclopedia.com. 31 Aug. 2016 <http://www.encyclopedia.com>.

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