Harsco Corporation

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Harsco Corporation

P.O. Box 8888
Camp Hill, Pennsylvania 17011-8888
(717) 763-7064 Fax: (717) 763-6424

Public Company
Incorporated: 1956
Employees: 10,500
Sales: $1.94 billion
Stock Exchanges: New York Boston Philadelphia Pacific
SICs: 3795 Tanks and Tank Components; 3711 Motor Vehicles & Car Bodies; 3443 Fabricated Plate Work, Boiler Shop; 3491 Industrial Valves; 3446 Architectural Metalwork; 3494 Valves and Pipe Fittings, Nec

Harsco Corporation was formed in 1956 as the result of a merger between Harrisburg Steel Corporation, Heckett Engineering Inc., and Precision Castings Co. Within the next three decades, through a series of acquisitionswhich were integrated as company divisions and subsidiariesas well as divestitures of unprofitable divisions and profitable joint ventures, Harsco grew into a multinational Fortune 500 company.

By the early 1990s Harsco was a diversified international company marketing 17 different types of products and services for defense, industrial, commercial, and construction applications. The company boasted nearly 270 manufacturing, reclamation, distribution, and service facilities located in 36 states in the United States and in 13 foreign nations.

The diversity of the markets served has enabled Harsco to withstand economic and political pressures that can affect revenues and profits. Recessions and slow economic times can alter demand for some of its products and services, and governmental budgets can affect demand for defense-related products. In general, any upturn in the domestic industrial and commercial sectors has a positive effect on most of the companys product lines. Additional revenue growth comes from international sales and acquisitions.

Harsco Corporation is structured into three main business groups, which are managed through more than 20 operating companies formed into 11 divisions. The groups are Industrial Services and Building Products, Engineered Products Group, and Defense Group. Many of the divisions within these groups are domestic or international leaders in their specific markets.

The Industrial Services and Building Products Group includes three market-leading divisions, Heckett Engineering, Patent Scaffolding, and Reed Minerals. The group serves the worldwide steel industry through metal reclamation and specialized steel mill services; supplies scaffolding equipment to electric utilities; serves the construction industry with scaffolding, shoring, and concrete forming equipment and industrial plant maintenance; and serves the roofing shingle industry through the reclamation of coal slag and the manufacture of roofing granules and slag abrasives for construction and general industrial uses.

In the early 1990s the Industrial Services and Building Products Group accounted for 18 percent of the companys total revenues. The group is especially affected by ups and downs in the commercial construction industry, because it depends on the demand for infrastructure repair and rebuild projects, metal reclamation, and roofing granules. A weak construction market hit the Patent Scaffolding division during the recession of the late 1980s and early 1990s. As a result, three domestic branch offices were closed, two domestic offices were consolidated, and some foreign offices were shut down. At the same time, increased demand can come unexpectedly. The devastating Hurricane Andrew in Florida and harsh weather conditions in the South in 1992 spurred demand for roofing granules, as many homes needed to be rebuilt.

Harsco Corporations Engineered Products Group consists of 18 operating units that provide domestic and international markets with various commercial, energy-related, and general industrial applications. Serving the transportation market are Fairmont Tamper, IKG Industries, and Structural Composite Industries. Providing for the gas containment and regulation segment of the energy industry are Taylor-Wharton Cylinders, Taylor-Wharton Cryogenics, Plant City Steel, and American Tank and Welding Co. Plant City Steel is an international leader in the production and distribution of containment products such as propane tanks, cryogenic vessels, and steel high pressure cylinders. American Welding and Tank Company is at the top of its market in the production and sale of domestic propane tanks.

Other divisions of the Engineered Products Group include the Patterson-Kelley division, which supplies heat transfer equipment for industrial applications. Astralloy provides steel for use in the mining, steel, pulp, and paper industries. Nutter Engineering makes equipment for the gas processing, refining, and chemical industries. Combat Engineering Ltd. supplies warm-air heating systems. Pocono Fabricators makes special cement used for such purposes as lining steel tanks. Also part of the Engineered Products Group are Capitol Manufacturing, which serves the industrial, hardware, and oil industries, and Sherwood, which makes couplings and precision valves for industrial and commercial markets.

Like the Industrial Products Group, the Engineered Products Group is subject to slowdowns and upturns in the general industrial sector. Increased revenues come from higher appropriations for infrastructure repair and rebuild programs and any recovery in the natural gas industry. In the early 1990s this group accounted for 24 percent of the companys total sales.

The third and final group comprising Harsco Corporation is the Defense Group, which includes BMY Combat Systems and BMY-Wheeled Vehicles. BMY Combat Systems is a world leader in the design, manufacture, and support of such military products as howitzers, earthmovers, and recovery vehicles. BMY-Wheeled Vehicles is one of three armored tracked vehicle makers in the United States and a major supplier of wheeled vehicles for the U.S. military and its NATO (North Atlantic Treaty Organization) allies. The Defense Group contributes 48 percent of Harsco Corporations total revenues. In fact, sales for 1992 set a record, but they came after sizeable lulls in 1988 and 1989, when the U.S. Pentagon slashed budgets as the cold war ended. In addition to sales to the U.S. Government, several foreign governments bought trucks, tank recovery vehicles, howitzers, ammunition carriers, and other defense equipment from Harsco.

Harscos history dates back to between 1953 and 1955, when the Harrisburg Steel Company acquired Heckett Engineeringwhich became a division of Harscos Industrial Products and Building Services GroupTaylor-Wharton, and Precision Castings Co., Harriss first three major acquisitions. Heckett Engineering Co. had been founded in 1939 by a Dutch immigrant, Eric Heckett, who installed the first successful large-scale metallic recovery plant in the United States at Republic Steels South Chicago plant. The Heckett of the 1990s, a division of Harscos, is a leader in slag processing and uses specialized equipment and technology to retrieve the greatest quantity of recoverable metallics from slag. The scrap is then refined and returned to make steel at large mills and mini-mill steel producers. Heckett also provides environmental services such as dust suppression, material handling activities, and total scrap handling and preparation.

Hecketts operations are divided into a North American business unit that operates at 40 locations in the U.S., Canada and Mexico and an International business unit that has operations in more than 20 locations in Europe, Asia, Africa, and the Far East. By the early 1990s Heckett was the Harscos largest and most profitable non-defense business.

The original Harrisburg Steel Company also acquired Taylor-Wharton, which became the Harsco division and consisted of Taylor-Wharton Cryogenics and Taylor-Wharton Cylinders. Taylor-Wharton Cryogenics has facilities on three continents and manufactures cryogenic storage vessels. Taylor-Wharton Cylinders was originally founded in 1742 and is the oldest metalworking company in continuous operation in the nation. This division is the international market leader in high pressure cylinder production.

About a decade after the 1956 merger that created the Harsco Corporation, the company embarked on a high level of acquisition activity. In 1966 Harsco acquired the Irving Subway Grating Co., the first commercial steel grating company, founded in 1912. In the same year, Harsco acquired two other grating makers and formed them as the IKG Industries Division. In 1974 Patterson-Kelley Co. Inc. was merged with Harsco. Patterson-Kelley had begun operating in 1880 as a producer of water heaters for commercial and industrial sites. The company was the first to develop fully packaged water heaters that could be easily installed with just a few connections.

Originally, Patterson-Kelley operations were part of the Taylor-Wharton Co. division, but in 1976 the Patterson-Kelley division was established. The division consists of six operating units that make water heaters and other equipment for the chemical processing industry. One of its units, Air-x-changers is a leading international supplier of air-cooled heat exchangers. This division is especially sensitive to conditions in the natural gas processing and petrochemical industries. Slowdowns in these industries can depress demand for Patterson-Kelleys products.

Continuing its acquisitions, in 1982 Harsco bought Astralloy-Vulcan Corp., a world leader in the supply and fabrication of high-strength and wear-resistant steels used in the mining, steel, and pulp and paper industries. The following year the company acquired Structural Composites Industries, Inc., the worlds largest manufacturer of compressed gas composite cylinders and Super Tanks. Structural Composites Industries makes compressed gas composite cylinders used in self-contained breathing apparatus used by firefighters, coal miners, and rescue workers; manufactures gas storage equipment used for the inflation of aircraft escape slides, life rafts, and helicopter flotation bags; makes oxygen storage equipment for aircraft, home therapy, and hospitals as well as energy storage equipment for military systems.

In 1983 Harsco acquired Reed Materials Inc., which was the first company in the United States to convert utility coal slag into granules for asphalt roofing shingles. Reed Materials, operating at 15 facilities in 12 states, is also one of the major sources for slag blasting abrasives for industrial surface preparation. In addition, it is the first U.S. granule supplier to provide artificially colored slag granules for manufactuers use on the exposed surface area of an asphalt shingle. Reed Minerals blasting abrasives made from utility slag provide a lower health risk to workers because they have a lower free silica content than sand.

In 1986 Harsco acquired Easco Corp. and merged Eascos operations with IKG Industries Division. In the same year, Borden Metal Products Co. was bought and also folded into the IKG Industries Division. The division is the worlds largest producer of bar grating for various commercial, industrial, building, and transportation-related applications. IKG Industries markets its products under three trade names, IKG Borden, manufacturing steel, aluminum, and fiberglass gratings; IKG Greulich, which makes bridge flooring systems; and IKG Deck Span, a producer of safety grating.

The IKG division is affected by economic conditions in the industrial, construction, and energy markets at home and abroad. Poor economic conditions lowered demand for the divisions products. As a result of slow sales in the late 1980s and early 1990s, one plant was shut down in 1993.

Other activity in the 1980s and early 1990s included the 1986 sale of the Broderick Division to Broderick Co. In 1989 Harsco acquired certain assets of Railway Maintenance Product Division and created Heckett Technology Services Inc. as a wholly owned subsidiary.

From 1989 to 1990 the Harscos Defense Group was able to stem some of its losses due to Pentagon cutbacks by supplying equipment to the U.S. Army and foreign nations. In 1989 the U.S. Army chose to purchase the M88A1E1 made by BMY-Combat Systems. The vehicle is a 139,000-pound updated version of the companys M88 recovery vehicle that aids disabled tanks on the battlefield. With new tanks weighing 70 tons, a strong recovery vehicle is needed to tow the tanks to safety, when they are rendered inoperable in the midst of battle. In 1990 BMY-Combat Systems was awarded a contract to supply howitzers to South Korea. The Persian Gulf War of 1990 also helped to spur sales for Big Foot, a five-ton truck whose tires partially deflate for sand travel.

Acquisition and divestiture activity also continued. In 1990 Harsco acquired Universal Granule Inc. and formed another wholly owned subsidiary, Heckett Yugoslavia Ltd. The following year, Harsco sold its unprofitable CanTex division to a subsidiary of Sumitomo Corp. and in 1992 sold its hydraulic tools product line to a subsidiary of Textron, Inc.

Also that year, Harsco acquired the Tamper business of Canron Inc. of Toronto for its Engineered Products Group. This company was a wholly owned subsidiary of Ivaco, Inc., of Montreal, but its U.S. headquarters was in South Carolina, where railway maintenance-of-way equipment for the domestic and international railroad industry is made. Tampers other facilities were located in Australia and the United Kingdom, where it is known as Permaquip, and in India. Harsco integrated Tampers operations into its Fairmont Railway Motor Division and renamed it Fairmont Tamper. Tamper, the companys third most profitable unit in the early 1990s, was expected to bring to Harsco its expertise in handling concrete ties, which are the standard in Europe as well as in U.S. passenger rail lines.

In 1992 Harsco announced that it was combining its defense business with FMC Corporation. The BMY-Combat Systems Division and FMCs Defense Systems Group would be jointly owned with FMC holding a controlling interest of 60 percent. According to Malcolm W. Gambill, chairman and chief executive officer of Harsco, In an era of shrinking defense budgets, this combination will remove unneeded higher cost capacity, while combining lower cost capacity with advanced integrated systems technology and logistical capabilities for our customers in stronger, consolidated organization. We see this partnership as a very positive way to address the changes that are occurring in the defense industry and are highly optimistic about its prospects.

The joint venture was part of the defense industry trend toward consolidation as a result of lower spending on defense on the part of the Pentagon. The new company would hold strong positions both in the United States and internationally in the sales of tracked combat vehicles, artillery systems, recovery vehicles, armored gun systems, and combat earthmovers. The joint venture was contracted to build the U.S. Armys Multiple Launch Rocket System carrier and the Navys Vertical Launch Systems in addition to a range of naval guns, artillery systems, and tracked vehicles such as the Bradley Fighting Vehicle.

Harscos acquisition activity continued in the early 1990s. In 1993 the company acquired a majority equity position in INFLEX, S.A., a manufacturer of steel cylinders for permanent and liquefied gases. INFLEX, based in Buenos Aires, Argentina, has a production facility in San Luis. Gambill commented, The acquisition of INFLEX, S.A. strengthens Harscos Gas Containment division by extending our global reach into South America. Our goal is to become the world leader in the near-term in the gas containment market, and INFLEX strategically positions us for further domestic and international growth.

Also in 1993 Harsco bought the assets of Wayne Corp., a manufacturer of school buses. Production was transferred to the BMY-WVD facility in Marysville, Ohio. This was a defense conversion effort so that the skills and capabilities of the work force as well as plant facilities could be used if defense work lessened.

Throughout its history, Harsco Corporation has been able to adjust to varying economic and political conditions. In addition to exploring new markets globally, adding to its assets with acquisitions, and divesting itself of units with disappointing sales, the Harsco of the early 1990s had the goal of developing new proprietary products and services.

Principal Subsidiaries

Heckett Technology Services Inc.; Heckett Yugoslavia Ltd.

Further Reading

Briefs, New York Times, September 27, 1991, D3; September 25, 1992, p. D3.

Business Brief, Wall Street Journal, January 7, 1993, p. B4.

Colodny, Mark M., Frank Carlucci Goes Hunting, Fortune, February 25, 1991, p. 155.

Company Briefs, New York Times, July 11, 1990, p. D3.

FMC and Harsco Are Planning to Merge Most Operations in the Defense Sector, Wall Street Journal, December 3, 1992, p. A5.

Harsco Corporation Annual Report, Camp Hill, PA: Harsco Corporation, 1992.

Johnston, Phil W., Clunk, Clang, Clatter, Popular Science, May 1989, p. 56.

News Briefs, Aviation Week & Space Technology, December 7, 1992, p. 19.

A Profile of Harsco Corporation, Camp Hill, PA: Harsco Corporation.

A Sleeping Beauty With a Suitor, Business Week, November 19, 1990, p. 128.

Dorothy Kroll