Atchison Casting Corporation
Atchison Casting Corporation
Sales: $468.3 million (2000)
Stock Exchanges: New York
Ticker Symbol: FDY
NAIC: 331511 Iron Foundries; 331528 Other Nonferrous Foundries (Except Die-Casting); 331513 Steel Foundries (Except Investment)
Atchison Casting Corporation produces iron, steel, and non-ferrous castings and forgings for customers involved in more than 35 markets. The company’s metal castings range in size from a few ounces to 550,000 pounds and are manufactured by 20 operating units. Atchison Casting’s subsidiaries are located principally in the eastern half of the United States. Internationally, the company maintains facilities in Canada, Great Britain, and France.
Atchison Casting was formed during the early 1990s, but the assets the company owned enjoyed a far lengthier legacy. During its first four months in existence Atchison Casting existed in name only, a barren corporate entity organized expressly to acquire a foundry and machine shop in Atchison, Kansas. Once the acquisition was completed, the company gained its first asset and its link to the past.
The Atchison foundry traced its origins to the 19th century and the age of railroads. The foundry began operating in 1872 to supply iron castings to the Atchison, Topeka, and Santa Fe Railroad, indirectly marking Atchison Casting’s entry into a market that would support the company more than a century later. In 1906, the foundry’s operations were combined with a machine shop, the St. Joseph machine shop. In 1930, another major expansion was completed when a new steel foundry was built in Atchison. In 1956, the Atchison works acquired a company named Rockwell Spring and Axle Company, which later became the defense industry behemoth known as Rockwell International Corporation. Rockwell, with diversified interests that made it one of the largest conglomerates in the world, acquired the Atchison foundry and St. Joseph machine shop to support its valve divisions. Rather than rely on an outside supplier, Rockwell used the Atchison works to produce its own steel castings, a relationship that endured for the ensuing three decades.
Under Rockwell’s stewardship, the Atchison operations flourished, benefiting from the vast financial resources of its parent company. Rockwell’s commitment to advancing foundry technology turned the Atchison foundry into a leading producer of large carbon and low alloy steel castings. Eventually, however, Rockwell’s commitment to the Atchison works began to wane, particularly after the company sold its valve divisions in 1989. The divestiture of the valve divisions was just one of a series of divestitures the company would make in the 1990s, as it sought to tailor itself into an industrial automation company. Early in the decade, the metal castings division became a candidate for divestiture, its fate determined in large part by Rockwell’s exit from valve production.
Although it was no longer deemed to be part of Rockwell’s business scope by the beginning of the 1990s, the Atchison/St. Joseph metal castings division was not without its admirers. One interested party was an investor group led by Hugh H. Aiken, who worked for an investment firm located in Boston named Riverside Partners, Inc. Aiken and his associates were intent on entering the castings business and acting as a consolidator. The castings industry was highly fragmented, consisting of thousands of relatively small, independent foundries that could be acquired and absorbed by a single corporate entity, thereby creating an organization whose sum would be greater than its parts. Aiken formed Atchison Castings to be such an organization, incorporating the company in February 1991. Several months later, in June, the acquisition of Rockwell’s metal castings division in Atchison was completed, giving the company a foundation on which to build.
Much of the 1990s would be devoted to expanding on the base established in Atchison, as the company embarked on an exhaustive acquisition campaign. Its lengthiest spell of acquisitive inactivity occurred following its initial acquisition, a nearly two-year period highlighted by the expansion of the facilities in Atchison. A stainless steel-making plant was installed in January 1992 as part of Aiken’s efforts to give the new company a broader footing, both in terms of the types of castings it could produce and the customers it could attract. Customers in the market for shaped metal components essentially had three manufacturing processes from which to choose: forging, fabrication, and castings, each capable of shaping metal according to customer-supplied specifications. Forgings were made by using dies, hammers, or other tools capable of shaping metal through the application of pressure. Metal fabricators fulfilled their customers’ needs by welding together individual pieces of metal. Castings were made by pouring molten metal into a mold and waiting for the metal to solidify, which, unlike fabricated metal components, created a seamless metal component. If made properly, castings were generally lighter, stronger, and more corrosion-resistant than fabricated parts and less expensive than forgings, giving Aiken and his management team advantages they hoped to exploit.
The installation of the stainless steel-making plant in early 1992 added casting capabilities that enabled Atchison Casting to diversify its product line and its customer base. Although such internal expansion contributed to growth, Atchison Casting’s greatest gains were achieved on the acquisition front, where the company could play out its primary role as a consolidator. Once the company switched into the acquisition mode, it did so with vigor, beginning with its second acquisition, the February 1993 purchase of Amite Foundry and Machine, Inc. Both the foundry and machine shop, located in Amite, Louisiana, were shuttered when Aiken completed the deal, but both facilities were re-opened once Atchison Casting assumed control.
Fueling Expansion with 1993 Public Offering
After acquiring Amite, Atchison Casting’s next move shored up its resources for the flurry of acquisitions to follow. In October 1993, the company completed its initial public offering (IPO) of stock, earning $23.3 million in net proceeds, which provided some of the capital required to adopt the posture of a consolidator. Investors were introduced to a company that had carved its niche in the transportation industry, the legacy inherited by acquiring the operations in Atchison. The company specialized in manufacturing train undercarriages, supplying the large steel structures used to support locomotives and mass transit trains. Customers such as General Electric Co. and General Motors Co. relied on Atchison Casting for the fundamental metal components required to manufacture their products, linking the Kansas-based concern with some of the largest manufacturers in the world. These relationships were not lost on investors, who helped provide the financial means for Aiken to diversify his company’s customer base further.
New markets opened up for Atchison Casting following its IPO, as acquisitions added new capabilities and new customers. In April 1994, the company paid $14 million for $24 million-in-sales Prospect Foundry, Inc., a manufacturer of ductile and gray iron castings. At the time of the acquisition, the market for ductile iron castings was growing at a faster rate than the steel or gray iron markets, giving Atchison Casting entry into a lucrative market that served customers in the transportation, construction, agricultural, and hydraulic equipment industries. Atchison Casting’s capabilities were enhanced two months later, when the company acquired CMI-Quaker Alloy, Inc. from CMI International Inc. The acquisition, valued at approximately $3.5 million, gave Atchison Casting Pennsylvania-based operations that produced stainless and high alloy steel castings for the pump and valve industries. Before the end of the year, the company completed one more acquisition, purchasing Canadian Steel Foundries, Ltd. in December. Aside from strengthening Atchison Casting’s capabilities in manufacturing large castings, the purchase of Canadian Steel also gave the company access to hydroelectric and steel mill markets.
By the end of 1994, sales reached $82.5 million, up from the $54.7 million the company recorded during its first year in 1992. Atchison Casting duplicated its acquisition total from 1994, purchasing three companies in 1995. The first purchase of the year occurred in January, when the company acquired Kramer International, Inc., a leading manufacturer of castings for the pump industry. The purchase of Empire Steel Castings, Inc. followed a month later, increasing Atchison Casting’s capacity for producing carbon, low alloy, and stainless steel castings. In December 1995, the success of the Prospect Foundry acquisition a year and a half earlier encouraged Aiken to deepen the company’s involvement in ductile iron castings. Missouri-based La Grange Foundry, Inc., a producer of smaller gray and ductile iron castings, was acquired, helping Atchison Casting to post $141.5 million in sales for the year.
Atchison manufactures highly engineered metal castings and forgings that are utilized in a wide variety of products, including cars, trucks, gas, steam and hydroelectric turbines, mining equipment, locomotives, passenger rail cars, pumps, valves, army tanks, navy ships, paper-making machinery, oilfield equipment, reactor vessels for plastic manufacturing, computer peripherals, office furniture, home appliances, satellite receivers and consumer goods. Having completed nineteen acquisitions since 1991, the Company has established itself as a leading consolidator in the casting industry. As a result of these acquisitions, the Company has the ability to produce castings from a wide selection of materials, including carbon, low-alloy and stainless steel, gray and ductile iron, aluminum and zinc as well as the ability to manufacture parts in a variety of sizes, ranging from small die cast components for the computer industry that weigh a few ounces to mill stands for the steel industry that weigh up to 280 tons. The Company believes that its broad range of capabilities, which addresses the needs of many different markets, provides a distinct competitive advantage in the casting and forging industry.
As Atchison Casting entered its fourth full year of operation, Aiken’s shopping spree intensified. The company completed four acquisitions in 1996, beginning with the March 1996 acquisition of G&C Foundry Company, which, like La Grange Foundry, produced smaller gray and ductile iron castings. Next, in September, the company purchased LA Die Casting Inc., a producer of precision aluminum and zinc die castings for the computer, communications, and recreation industries. October saw Aiken set his sights north across the border again, where Atchison Casting acquired Ontario-based Canada Alloy Castings, Ltd., a producer of stainless, carbon, and alloy steel castings for, among others, the power generation and pulp and paper machinery markets. Before the end of the month, Aiken agreed to acquire Pennsylvania Steel Foundry and Machine Co., entrenching the company’s presence in the northeastern United States, where it operated two foundries gained through the Empire Steel and Quaker Alloy transactions. Pennsylvania Steel, a producer of carbon and high-alloy steel castings, generated $19 million in revenue at the time of the acquisition.
By the end of 1996, Atchison Casting’s revenue volume had swelled to $185 million, more than tripling the total recorded after the company’s first year in business. Acquisitions fueled the growth, creating a company with nine foundries operating in seven states and in Canada. The acquired foundries steered Atchison Casting into new markets and established relationships with a greatly expanded customer base. When the company commenced business in 1991, it served 12 customers. By 1996, Aiken counted more than 300 customers involved in a variety of markets, including locomotive, farm equipment, military, utility, mass transit, and general industrial.
Late 1990s Acquisitions
Aiken’s strategy for the late 1990s was a continuation of the acquisition campaign that had driven the company’s growth during the first half of the 1990s. In February 1997, the company acquired Jahn Foundry Corp., a Springfield, Massachusetts-based producer of iron gray castings for the industrial and automotive markets. After completing a secondary public offering of stock in May 1997, Aiken used some of the proceeds to acquire Beloit Corporation’s castings division in July 1997. Renamed PrimeCast Inc., the acquisition added four foundries and $31 million in revenue to Atchison Casting’s fold. The last acquisition of the year occurred in October 1997, when Inverness Castings Group, Inc., a producer of aluminum die castings, became the company’s 15th foundry.
For the first time in its history, Atchison Casting extended its reach overseas in 1998. In April, the company acquired Great Britain-based Sheffield Forgemasters Group Ltd. for $51.5 million. A $177 million-in-sales company, Sheffield gave Atchison Casting entry into European markets and entry into a new market niche, forgings. In May, the company returned to the domestic front with the acquisition of New Hampshire-based Claremont Foundry, Inc., a producer of steel castings for the mass transit and mining and construction markets. In September, Atchison Casting deepened its involvement in Canada with the acquisition of another Ontario-based company, London Precision Machine & Tool, Ltd. Operator of an industrial machine shop, London Precision served the locomotive, pulp and paper, and mining and construction markets.
By the end of the 1990s, Aiken’s acquisition campaign began to wind down. The company completed one acquisition in 1999, the purchase of France-based Founderie d’Autun, but completed no significant acquisitions in 2000. The company had no plans to add to its roster of operating companies in 2001. Instead, Aiken and management team devoted their energies to integrating the acquisitions of the previous nine years, taking the time to efficiently absorb the assets that had pushed annual revenues up to $475 million. As Atchison Casting prepared for the future, its confidence was shaken by the closure of three foundries in late 2000. The Claremont foundry was shuttered in December 2000, followed by the closure of a steel foundry in Pennsylvania and an iron foundry in Wisconsin later in the month. Slackening demand forced the company to shut down the foundries, slowing Atchison Casting’s stride as it entered its second decade of existence.
Amite Foundry and Machine, Inc.; Canada Alloy Castings, Ltd.; Canadian Steel Foundries, Ltd.; Claremont Foundry, Inc.; Empire Steel Castings, Inc.; Kramer International, Inc.; London Precision Machine & Tool Ltd. (Canada); Pennsylvania Steel Foundry & Machine Co.; PrimeCast, Inc.; Quaker Alloy, Inc.; Sheffield Forgemasters Group Limited (U.K.); Founderie d’Autun (France); The G&C Foundry Company; Jahn Foundry Corporation; La Grange Foundry Inc.; Inverness Castings Group, Inc; LA Die Casting, Inc.
AMSTED Industries Incorporated; Grede Foundries, Inc.; Intermet Corporation.
- Hugh Aiken and investment group purchase Rockwell International’s metal casting division.
- Atchison Casting converts to public ownership.
- A secondary public offering of stock is completed.
- First overseas acquisition is completed.
- Three Atchison Casting foundries are closed.
“Atchison Buys Prospect Foundry,” American Metal Market, April 6, 1994, p. 7.
“Atchison Buys Quaker Alloy,” American Metal Market, May 12, 1994, p. 2.
“Atchison Casting Agrees to Buy Pennsylvania Firm,” American Metal Market, October 29, 1996, p. 5.
“Atchison Casting Buys Beloit Unit,” American Metal Market, July 10, 1997, p. 3.
“Kansas-Based Atchison Casting Completes Purchase of British Company,” Knight-Ridder/Tribune Business News, April 8, 1998.
“Kansas Foundry Operator Reports Higher Sales for Quarter,” Knight-Ridder/Tribune Business News, August 15, 1997.
Labate, John, “Atchison Casting,” Fortune, November 14, 1994, p. 258.
Sacco, John E., “Atchison Casting Closes Two Subsidiary Foundries,” American Metal Market, December 4, 2000, p. 2.
—Jeffrey L. Covell