CTB International Corporation

views updated

CTB International Corporation

State Road 15 North
P.O. Box 2000
Milford, Indiana 46542
U.S.A
Telephone: (219) 658-4101
Fax: (219) 658-3471
Web site:http://www.ctbinc.com

Public Company
Incorporated: 1952 as Chore-Time Equipment Inc.
Employees: 1,200
Sales: $259.11 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: CTBC
NAIC: 332311 Prefabricated Metal Building and Component Manufacturing; 333922 Conveyor and Conveying Equipment Manufacturing

CTB International Corporation is a leading producer of equipment used by the grain, poultry, swine, and egg production industries. The company’s main products include feed and grain storage bins, automated feeding, watering, and ventilation systems, and commercial egg laying and handling systems. Marketed under the trade names Chore-Time, Brock, Fancom, Roxell, Sibley, and Staco, CTB’s products are sold in more than 90 countries around the world through a network of more than 1,000 distributors. The company maintains facilities in the United States, Europe, and Latin America.

1950s: A Better Way of Feeding Chickens

The forerunner to CTB International was founded in 1952 by a 42-year-old entrepreneur named Howard S. Brembeck. A native of northern Indiana, Brembeck entered the University of Chicago in 1929, with plans to major in economics. By the end of his freshman year, however, the United States was held immobile by the grip of the Depression. The Urbana, Indiana, bank in which the Brembeck family had its money deposited had collapsed, taking with it the family’s savings.

Dropping out of college, Brembeck returned home and took a $5-a-week apprenticeship with Cyclone Manufacturing. Cyclone was a maker of chicken seed throwers—canvas bags with hand cranks that farmers used to scatter the feed around the barnyard. Under the tutelage of Cyclone’s owner and Brembeck’s second cousin D.E. Speicher, Brembeck learned about virtually every aspect of the manufacturing business—from materials purchasing, to product design, to sales.

By 1944, he had become the general manager of Cyclone. When he was offered a high-paying executive position with a farm-implement distributor in Alliance, Ohio, he left Indiana and moved his young family to the neighboring state. Eight years later, however, Brembeck was tired of working for someone else. Quitting his job, he began working in his home, experimenting with a new and better kind of chicken feeder. He named his fledgling manufacturing business Chore-Time Equipment.

In 1954, Brembeck moved his business back to Indiana, renting a run-down garage near the small town of Milford to manufacture his product. By 1955, his three-year-old business had sales of more than $100,000. He was not entirely satisfied with the feeding device, however. “I still thought there had to be a more efficient way to feed chickens,” he explained in an August 2000 interview with the Indianapolis Star. By the end of the 1950s, he had invented a more complicated feeding system: a motorized auger that carried feed from the storage gin to the feeder, and that could go up, down, and around corners. It was this device that set his business on the path to success.

As sales of the motorized feeding device increased, Chore-Time continued to grow and to develop new products to serve the poultry and livestock industries. In 1957, Brembeck began manufacturing small hopper bins for the bulk storage of feed. He formed a separate company—Brock Manufacturing Inc.—to handle this new business.

1960-80s: Continued Growth

In 1967, Brembeck partnered with another businessman, Forrest Ramser, to establish Roxell, N.V. Based in Belgium, Roxell was to serve as the European arm of Chore-Time, manufacturing and marketing a line of feeding and storage equipment similar to that of Chore-Time.

In 1976, Brembeck restructured his businesses, merging Chore-Time Equipment and Brock Manufacturing into a single corporation: CTB Inc. The company retained Chore-Time and Brock as trade names, however, continuing to market products under the increasingly well-known brands. That same year, Brembeck’s daughter, Caryl, joined CTB’s board of directors.

CTB’s European operation, Roxell, was spun off from the company in 1985, coming under separate ownership. Also in 1985, CTB formed a new subsidiary: CTB Vinyl Products. The new company, which evolved from CTB’s manufacture of vinyl products for agricultural use, manufactured residential and commercial vinyl products such as fencing and decking materials.

The late 1980s saw another member of the Brembeck family join CTB. In 1988, Brembeck’s grandson, Chris Chocola, became an employee of the family business, soon attaining the rank of general manager of CTB’s Brock division.

Early to Mid-1990s: A Flurry of Changes

At the beginning of the 1990s, CTB had sales of more than $100 million. In June 1992, the company established a South American office, production facility, and warehouse in Uruguay. The new office was to be a home base for CTB’s plans to broaden its market in Argentina, Brazil, Paraguay, and Uruguay. A few years after establishing its Uruguay plant, the company incorporated Chore-Time Brock Ltda. in Brazil, to serve the Brazilian market. Also in the early 1990s, the company boosted the capacity of its domestic operations, expanding both its Chore-Time plant and its Brock plant in Milford.

In July 1993, Chris Chocola became executive vice-president of CTB, and the following March he was named the company’s CEO. In 1995, the 85-year-old Howard Brembeck retired, and without its founder, early in the following year, CTB was acquired by American Securities Capital Partners, L.P., a New York-based private investment firm. American Securities’ managing director, Michael Fisch, became the chairman of CTB’s board of directors. The Chocola family—Brembeck’s daughter and her son—retained a minority stake in the company, and Chris Chocola remained as the company’s president and CEO.

Under its new ownership, CTB began to expand and diversify more rapidly, making two significant acquisitions in 1997. The first of these acquisitions was Fancom Holding B.V., a Netherlands-based maker of climate-control and software systems used in the poultry and livestock industries. The second acquisition was the grain systems division of Butler Manufacturing Co., a Kansas City, Missouri-based producer of commercial and agricultural grain bins. Butler’s primary market was in the western grain belt, while CTB’s grain bin business was stronger in the east. In addition, Butler’s bins were of different sizes and shapes than CTB’s line. Therefore, the purchase served to approximately double the size of the company’s grain bin business, and to strengthen its presence in terms of both geography and product lines. CTB paid a total of $41.6 million for the Fancom and Butler acquisitions, which had a combined total of almost $70 million in sales in 1996. And at the same time it was working to finalize its acquisitions, CTB shed a division that fit less tightly with is agricultural focus. The company sold CTB Vinyl Products to Royal Group Technologies Ltd.

In August 1997, just a few months after finalizing its Butler and Fancom acquisitions, CTB went public, selling five million shares on the NASDAQ and raising $70 million in the offering. The shares sold represented less than 40 percent of the total number of shares; American Securities continued to own a controlling interest—approximately 39 percent—in the company.

CTB used its IPO proceeds to pay off debt associated with the Fancom and Butler acquisitions and then embarked on a course of rapid growth, fueled largely by further acquisitions. In February 1998, CTB entered into a joint venture with Rota Industria de Maquinas Agricolas, a Brazilian manufacturing company. The new enterprise, christened Rota Brock Ltda., produced commercial grain storage silos, feed bins, and grain and seed handling equipment.

Late 1990s: Downturn and Restructuring

More growth was soon to follow. In April 1998, CTB announced that it had agreed to purchase Sibley Industries, of Anderson, Missouri. Sibley, which had been in business since 1928, was manufacturer of poultry brooders, heaters for poultry and livestock, and livestock handling equipment. In June, CTB announced its plan to acquire STACO, Inc., a Shaefferstown, Pennsylvania manufacturer of feeders and other equipment for the swine-raising industry. And in January 1999, the company re-acquired Roxell N.V., the Belgium-based company that Howard Brembeck had started in 1967 and sold in 1985. Roxell, by that time, had sales of $41 million, net income of $1.9 million, and facilities in Arkansas and Brazil, as well as Belgium.

Company Perspectives:

The company’s goals are: 1. To make systems for the care of poultry and livestock, and feed and grain storage and handling systems that users consider the best in the world. 2. To do such an outstanding job of selling and servicing our products that users will prefer our products to all others. 3. To create a working environment that gives employees the opportunity to develop their best selves and do their best work. 4. To develop alert, progressive management in all areas. 5. To build a business dedicated to: EXCELLENCE IN ALL THINGS.

The late 1990s were difficult for CTB, however. The Asian economic crisis sent ripples through many of the company’s markets and made an especially serious impact on its operations in Brazil. By early 1999, Brazilian economic conditions forced CTB to dissolve its newly formed Rota Brock Ltda, before it even began manufacturing. Things were not going especially well for CTB at home, either. In the fall of 1998, the U.S. hog industry suffered a major downturn, with prices dropping lower than they had been in decades. This was followed by a softening in the egg market in 1999. The combination of domestic and foreign circumstances resulted in damage to CTB’s bottom line. In 1998, the company experienced a 34 percent decline in net income. Although earnings improved slightly in 1999, they still fell below the company’s expectations.

In March 1999, Chris Chocola retired the offices of CTB president and CEO, becoming the company’s board chairman. His replacement was Victor Mancinelli, a veteran of the agricultural manufacturing industry. Mancinelli had served since 1992 as executive vice-president and chief operating office for Gehl Company, a manufacturer of construction and agricultural equipment used by dairy and livestock farmers.

The shift in leadership was not the only change afoot at CTB as 1999 unfolded. In November of that year, the company announced that it was restructuring its organization to streamline operations, improve efficiency, and reduce cost. As part of the reorganization, CTB cut its Milford, Indiana, staff by 12 percent for a projected annual reduction in payroll expenses of $2.1 million. The company also modified its plant layouts, introduced new manufacturing techniques, and organized into business units in order to dedicate employees to consistently serving specific customer groups. Once the reorganization was complete, the company was organized into three groups: the protein group (devoted to the production of pork, poultry, and eggs), the grain group, and the international group.

CTB’s streamlining efforts paid off in 2000. The company saw four quarters of improvement, and ended the year with $13 million in net earnings—up $2.8 million from the previous year, despite the fact that sales for the year actually decreased by $13.5 million. Even so, the company continued to tweak its operations to enhance cost savings. In December 2000, it restructured its Netherlands-based Fancom subsidiary to reduce staffing by nearly 20 percent and to consolidate two of the subsidiary’s facilities. It also made further cost-cutting adjustments at its Milford location and at various other operating units.

The company also began to grow its product line again. In November 2000, it purchased patents, trademarks, and trade names for a line of products manufactured and marketed by ABC Industries. ABC’s product lines included dry bulk handling equipment and dust-control devices. The specific products acquired by CTB included bin sweeps for use in grain bin unloading, a dust-control product used in grain and industrial receiving facilities, and a line of bucket elevators and conveyors used to move grain. CTB planned to begin producing these new products through its Brock division.

2001 and Beyond

CTB continued to face significant challenges as it looked to the future. The domestic market for poultry had begun to soften in late 2000 and continued to be slow into the first quarter of 2001. Not only did this affect the company’s protein group, but caused a trickle-down effect for the grain division as well. As a result, CTB reported first quarter 2001 declines in both sales and net income, as compared to first quarter 2000.

Despite difficult market conditions, CTB remained optimistic about its prospects for the future. In a presentation compiled in the spring of 2001, the company listed five major initiatives in its long-range growth strategy. They included: 1) becoming a best cost manufacturer through greater operational efficiency, improved productivity, and reduced expenses; 2) maintaining a product-driven focus through a commitment to product leadership and the introduction of innovative new products; 3) achieve a greater global presence by expanding its presence in key markets; 4) strengthening itself through acquisition, with the goal of greater product line diversity and distributor presence; and 5) leveraging financial strength by growing sales and earnings.

The company believed that the factors driving its future growth would be primarily population growth, increasing demand for animal protein, and the need for greater production efficiency in the markets it served. In fact, one could almost sum up CTB’s confidence in its future success with the first two lines of its formal business strategy: “People Gotta Eat. It’s A Fact of Life.”

Principal Subsidiaries

Chore-Time Brock B.V (Netherlands); Chore-Time Hog Production Systems; Chore-Time Ltda. (Brazil); Fancom B.V. (Netherlands); Roxell, Inc.; Roxell N.V. (Belgium); Sibley Industries, Inc.

Principal Divisions

Chore-Time/Brock International; Brock Grain & Feed Systems; Chore-Time Egg Production Systems.

Principal Operating Units

Protein Group; Grain Group; International Group.

Principal Competitors

GSI Group Inc.; Gehl Company.

Key Dates:

1952:: Howard Brembeck forms Chore-Time Equipment Inc. to manufacture and sell poultry feeders.
1957:: Brembeck forms Brock Manufacturing Inc. to produce feed storage bins for poultry and livestock farms.
1976:: Chore-Time and Brock are merged into one company: CTB Inc.
1995:: Brembeck retires from CTB.
1996:: The company is acquired by American Securities Capital Partners, L.P.
1997:: CTB goes public, changing its name to CTB International; acquires Fancom Holdings and grain division of Butler Manufacturing.
1998:: Company acquires Sibley Industries and STACO, Inc.
1999:: Company acquires Roxell N.V.; restructures organization.