Crompton & Knowles Corp.

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Crompton & Knowles Corp.

One Station Place
Metro Center
Stamford, Connecticut 06902
(203) 352-5400
Fax: (203) 353-5424

Public Company
Incorporated: 1900 as Crompton & Knowles Loom Works
Sales: $530 million
Employees: 2,300
Stock Exchanges: New York
SICs: 2865 Cyclic Organic Crudes Dyes & Pigments; 2869 Industrial Organic Chemicals, Nee; 3559 Special Industry Machinery, Nee; 2842 Specialty Cleaning Polishing; 2099 Food Preparations, Nee; 3559 Special Industry Machinery, Nee; 2800 Chemicals & Allied Products

Crompton & Knowles Corporation is a medium-sized company whose business is divided into three highly specialized areas: dyemaking, the manufacture and marketing of extrusion equipment and components (for processing of plastics), and the production of flavors, food colorings, and fragrances for the food processing and pharmaceutical industries. Crompton & Knowles is one of the largest dye producers in America for the textile and related industries and the sole supplier of 40 percent of the dyes it makes.

Crompton & Knowless roots lie in the cotton weaving industry, one of the first enterprises to be mechanized in western Europe in the late eighteenth century. William Crompton was a New England businessman who originated an improved loom, which he began manufacturing and marketing in the town of Worcester, Massachusetts, in 1837. For the next four decades, the Crompton Loom Works was practically without competitors, and it steadily prospered. Toward the end of this exclusive reign, Lucius J. Knowles, another New England businessman, developed an improved version of the textile loom in 1862, whereupon he too established his own company, L. J. Knowles & Bros., in the town of Warren, Massachusetts.

There was no bad blood between the two competitors until 1879, when Knowles decided to move his manufacturing establishment to Cromptons hometown of Worcester. The next eighteen years witnessed fierce rivalry between the two firms, both of which meanwhile developed many improvements in their respective looms, perhaps because of the intense pressure of competition. Finally, in 1897, the two companies took the surprising but sensible step of merging into the Crompton & Knowles Loom Works. The new company prospered and expanded; by 1907 it had opened offices and warehouses in Philadelphia and in Charlotte, North Carolina. In time, Crompton & Knowles, whose mainstay was the manufacture and marketing of the textile loom, became renowned for the production of multi-color weaving machines, which were exported all over the world. By World War II, the company was one of the largest textile machinery manufacturers in the world.

Meanwhile, the Neversink Dyeing Company, a business that would add an important dimension to the Crompton & Knowles firm in future decades, operated in Reading, Pennsylvania. Founded by Nathan Althouse, this company became one of the biggest textile dyeing facilities in the nation by World War I. Unfortunately, as the war in Europe progressed, the company was increasingly deprived of dyestuffs. To relieve this crisis, the firm began manufacturing its own dyes. By the end of the war, the company had changed so much that it adopted a new name, the Althouse Chemical Company, and thereafter it emphasized research into new and improved dye products for natural textiles as well as for the increasingly popular synthetic fabrics.

The Crompton & Knowles Loom Works continued to produce and sell its famous textile machines until the advent of the World War II, when traditional production gave way to fulfilling military needs. With the return to civilian production in 1945, Crompton & Knowless work force stood at 3,000, nearly 800 more than the present-day firm with its greater productive capacities and far greater sales revenues. The company continued to manufacture its textile machines well into the early 1950s.

While there was still strong demand for the textile machinery in the early 1950s, it became apparent that the companys future success depended on diversification rather than reliance on only one major commercial product. In 1954 the firm branched off into the dye and chemical business with the purchase of the Althouse Chemical Company. The purchase laid the foundations for the manufacture of dyestuffs, which would eventually become the companys most important enterprise.

Crompton & Knowles continued to manufacture textile weaving machines, and through most of the 1960s the textile machinery division was the companys biggest in terms of sales revenues. However, diversification continued, and other enterprises gradually dwarfed the textile machinery business. The process drastically altered the companys identity and size. In 1956 stockholders changed the name of the company from Crompton & Knowles Loom Works to Crompton & Knowles Corporation; the company ceased manufacturing textile looms altogether by 1981.

Further expansion took place in 1969, when Crompton & Knowles established its first European subsidiary, Crompton & Knowles Tertre, a dye and chemical company in Belgium; this was followed in 1971 with the acquisition from Ciba Chemical & Dyestuff Company of Intracolor, another dye and chemical enterprise that further strengthened Crompton & Knowless dye manufacturing base. Seven years later, the Harshaw Chemical Companys dye business was bought up in Lowell, North Carolina.

When the Du Pont Company exited the dye business in 1979, Crompton & Knowles was waiting eagerly in the wings to purchase its holdings, which included the high-quality Sevron dye products. The range of Crompton & Knowless dyestuffs expanded significantly. Two years later, the company bought the rights from the Du Pont company to manufacture Dybln dyes for polyester and cotton textiles. Crompton & Knowles acquired and absorbed other dye and chemical businesses, becoming in the process a leader in the domestic dye business.

The companys dye and chemical business had expanded so much, that by the early 1980s, Crompton & Knowles supplied dyes and chemicals to a variety of industries including paper, leather, printing ink, and heat transfer printing establishments, in addition to the textile and garment industry.

Over the years, dye and chemical operations became the companys biggest division and its mainstay. In 1960, the company diversified further into the manufacture of flavors, food colorings, and fragrances for the food processing and drug industries, the companys second major operation. In that year, Crompton & Knowles acquired the Bates Chemical Company, founded in 1923 when the federal government first certified food colorings. Crompton & Knowles expanded even further in this direction when it acquired the American Flavor & Fragrance Company in 1980. Still, the firm was not considered a major player in the flavor/fragrance market until 1988, the year it acquired the Ingredients Technology Corp. of Pelhem, New York, as a major subsidiary.

A third significant operation was added to the company in 1961 with the purchase of the Davis-Standard Company, a major manufacturer of plastic processing, or extrusion, machinery and systems, marking the origins of present-day Crompton & Knowless multi-million dollar extrusion machinery business. This purchase added a great variety of products to Crompton & Knowless inventory. Within two decades, the company had not only survived but altered its identity significantly, expanding from the production of only one major commercial product, to hundreds of diverse products and three principal operations.

By the mid-1980s, Crompton & Knowles was the last remaining U.S. dye producer and marketer, one of the largest as well, marketing its products to Europe, Latin America, and Asia. It was also a leading provider of dyes to the clothing and hosiery businesses in North America. How and why this company succeededincreasing sales revenues 15 percent during the worst year of the recession in the early 1990shad much to do with the dynamic leadership of its president and CEO Vincent Calarco. When he came on board in 1985, the company had not fully recovered from the economic downturn of the early 1980s. Calarco expanded the companys business by buying up dye operations that large companies, such as Du Pont and Allied Chemical, were unloading. By the early 1990s, Crompton & Knowles had a healthy eight percent share of the worldwide market in dye products, and had strengthened its own dye business, especially in carpeting and clothing. Moreover, Crompton & Knowles became the sole producer of at least 40 percent of its own dye products, making it the most influential dyestuff producer and marketer in North America. Under Calarcos management, the companys specialty process equipment and controls division gradually moved out of the cable business and into the far more lucrative medical tubing, food packaging, and blow molding equipment fields, which were ignored or underestimated by bigger competitors. Calarco also led Crompton & Knowles further into international business endeavors.

In the early 1990s, 75 percent of Crompton & Knowless sales came from its specialty chemicals division. As a leading manufacturer of dyestuffs in North America, the company furnished dyes to both the textile and industrial markets. The companys wide range of industrial dyes and chemicals were used for paper and leather products including shoes and luggage. Its textile dyes and chemicals were used in knit and woven clothing, carpets, draperies, and automotive furnishings, including seat belts. Company technicians and specialists produced a variety of chemical intermediates (essential to the making of dyes) for the textile industry as well as a steady stream of artificial flavor, color, and fragrance ingredients to the food and drug industries, a small but growing business that was part of the specialty chemicals division. Flavor substances, including seasonings, were marketed to the food processing and beverage industries, and increasingly to the pharmaceutical industry as well, especially for coated tablets and flavored medicines. Fragrance formulas were in great demand by the household products industry, most often for floor care and cleaning products.

Approximately one quarter of Crompton & Knowless sales derived from the specialty process equipment and controls division. This division manufactured and marketed a variety of extrusion machines and systems and blow molding equipment (usually attached to extruders), which processed plastic products such as sheeting for cars, appliances, sports equipment, and film. Specially designed extrusion systems recycled plastics, a technology that was found to be increasingly in demand by companies and communities alike.

On the eve of the twenty-first century, Crompton & Knowles had evolved a significant international business. The acquisition in 1969 of a subsidiary in Tertre, Belgium (present-day Crompton & Knowles Europe SA) was the companys first step toward major overseas expansion and penetration of the European market. In 1991 the company purchased ICI Colours in Oissel, France, from a major British chemical firm. In one stroke, this acquisition doubled Crompton & Knowless productive capacity in Europe, making the company a major player in the European dye and chemical markets. In the 1990s, worldwide sales of Crompton & Knowless products in the Latin America, Europe, and Asia reached record levels, constituting approximately one third of sales revenues.

By the early 1990s, the U.S. dyestuff market had become a $1 billion industry. Only a handful of dye manufacturers produced over 50 percent of the worlds dyes, and competition was intense. With its increasing international presence and diverse businesses, Crompton & Knowles was poised to become a global leader in the dye and chemicals fields.

Principal Subsidiaries

Crompton & Knowles Europe SA (Belgium); Crompton & Knowles France SA (France); Ingredient Technology Corp.

Further Reading

C & K Operation Net Up 21% in Quarter, Daily News Record, January 29, 1993, p. 10.

Labate, John, Crompton & Knowles, Fortune, July 12, 1993, p. 100.

Morris, Kathleen, Crompton & Knowles: Playing the Niches in Slumping Markets, Financial World, November 12, 1991, p. 16.

Reingold, Jennifer, Niche Rich: Crompton & Knowles Hunts for Treasure in Staid Marketsand Strikes Gold, Financial World, June 22, 1993, p. 56.

Bright Acid Dyes, Textile World, March, 1992, p. 64.

Crompton & Knowles Corp. to Purchase a Unit of Imperial Chemical Industries PLC, Wall Street Journal, May 11, 1992, p. B3.

Crompton & Knowles Corp., Wall Street Journal, December 16, 1992, p. Cll.

Sina Dubovoj