Haynes International, Inc.
Haynes International, Inc.
Haynes International, Inc.
Incorporated: 1915 as Haynes Stellite Company
Sales: $434.41 million (2006)
Stock Exchanges: NASDAQ
Ticker Symbol: HAYN
NAIC: 331491 Nonferrous Metal (Except Copper and Aluminum) Rolling, Drawing, and Extruding; 331492 Secondary Smelting, Refining, and Alloying of Nonferrous Metal (Except Copper and Aluminum); 421510 Metals Service Centers and Offices
Haynes International, Inc., is a leading American producer of nickel- and cobalt-based alloys, a technology the company’s founder, Elwood Haynes, pioneered in the early part of the 20th century. The company’s high temperature resistant metals have applications in the aerospace industry, which accounts for most of revenues, while corrosion-resistant alloys make up a significant business with the chemical processing industry. Haynes has manufacturing facilities in Kokomo, Indiana; Arcadia, Louisiana; and Mountain Home, North Carolina, as well as metals service centers located in the United States, Europe, and Asia. The company offers products in a variety of forms, including sheet, bar, wire, and tubing, as well as fittings and flanges.
The story of Haynes International began early in the 20th century with scientist and engineer Elwood Haynes. A native of Indiana, Haynes graduated from a polytechnic institute and did some graduate work in chemistry at Johns Hopkins before returning home to take a job with a natural gas and oil concern. Haynes was perhaps best known during his day as the inventor of one of the first gasoline-powered automobiles, called the Pioneer, which he introduced in 1894. His Haynes-Apperson Automobile Company manufactured cars until 1924. Haynes’s other passion, however, was metallurgical experimentation. He developed a lightweight yet durable metal during this time that he called “stellite” (from the Latin word stella (“star”), receiving patents for it in 1912, and incorporated the Haynes Stellite Company in Kokomo, Indiana, in 1915. Stellite was a tungsten and cobalt-chromium alloy, referred to later as an early form of stainless steel, with applications in the manufacture of machine parts, particularly lathe or cutting tools, and metal utensils, including dental instruments.
Bolstered too by the demand for the metal during World War I, Haynes Stellite was highly successful from the onset, with sales surpassing $3 million by 1918. Among Haynes’s customers was Union Carbide and Carbon Corporation, which purchased stellite for its cutting tools. In 1920, Haynes accepted an offer from Union Carbide to purchase his company, and he withdrew from his leadership role. Haynes died in 1925 at the age of 68.
Haynes Stellite carried on, and, under the parentage of Union Carbide, continued to develop new alloys. New cobalt-based products were soon followed by nickel-based alloys, which resisted corrosion. Hastelloy B, a nickel-based alloy that would be used for decades, was among the more successful, and eventually was found in high temperature applications such as rocket nozzles for the Viking Mars landing vehicles. A subsequent product called Hastelloy C made it into the Apollo program, while Hastelloy X, introduced in 1953, was featured in numerous jet aircraft. Stellite too gained new ground and flourished, especially during World War II when the company became the top producer of stellite blades or “buckets” used in the superchargers for airplane engines. Stellite and Hastelloy both figured in production of the Navy’s search light reflectors.
After the war, Haynes continued to develop new alloys and the products found new applications, particularly in aircraft engines. products In 1967 the company introduced an alloy called Haynes 188 that provided even more heat resistance. This incorporated lanthanum, chromium, and tungsten in a nickel base. It was used in the massive Pratt & Whitney F100 engines that powered the F-15, which set many speed and altitude records and served as the West’s best interceptor aircraft for decades. Haynes 230, an alloy of nickel, chromium, tungsten, and molybdenum, eventually supplanted Haynes 188. A similar formulation was found in Hastelloy C-22.
In 1970 Union Carbide sold Haynes to Cabot Corporation of Waltham, Massachusetts, and it become a division of the global chemicals giant. According to Cabot’s annual report at the time, Haynes Stellite “profoundly changed the nature of the Company by launching Cabot in a new direction—high performance materials—by providing major diversification strength, and by broadening our technological base in a way that is complementary to the technical skills we have in the performance chemical field.”
Research and development efforts continued apace, with the introduction of a new generation of Hastelloy alloys. Moreover, the company began extending its reach abroad, opening several service centers in Europe.
Recognizing the need to keep pace with technology to stay competitive, Haynes installed a $60 million Steckel rolling mill at its Kokomo facility in 1982. While the company’s technology evolved, so did its marketing, in response to market conditions. A trend in the 1980s toward lower inventories and more outsourcing of assemblies to subcontractors caused the company to focus more on small orders. Around the same time, Haynes licensed production of its alloys to Japan’s Mitsubishi Metal Corporation. By the end of the 1980s, the company had four service centers in the United States and another three in Europe.
In 1987, Cabot spun Haynes off as an independent company, incorporated in Delaware under the name Haynes International, Inc. Struggling financially after overextending its reach its efforts to diversify, Cabot sold an estimated 40 percent of the company to Prudential Insurance Company of America, with management acquiring another 5 to 10 percent. Dr. Paul Troiano became Haynes’ CEO in 1986. Michael D. Austin, former head of British Steel’s Tuscaloosa steel mini-mill, replaced him in 1993 and served for six years in that capacity.
Haynes International, Inc., headquartered in Kokomo, Indiana, USA, is a world leader as the inventor, developer, and producer of quality high performance nickel- and cobalt-based alloys. Haynes International, Inc., is a technology and service oriented company devoted to the development and manufacture of highperformance nickel- and cobalt-based alloys for service in severe corrosion and high-temperature applications. Superior customer service and technical support are provided worldwide by well-trained professionals within the company. Haynes’ service centers and affiliates have available in-stock sheet, plate, bar, wire, tubing, forging stock, fittings, and flanges.
In 1989 a new holding company formed by Haynes management and Morgan Lewis Githens & Ahn Inc., a private investment firm based in New York, bought Cabot’s 53 percent share of Haynes for $76 million. Prudential also sold its holdings, though it retained an indirect interest through its participation in Morgan Lewis’s investment fund, allowing Morgan Lewis to amass a 90 percent holding. Cabot had sold most of its other metals businesses as well.
Haynes began the 1990s with annual revenues in excess of $200 million; however, sales dropped considerably as a global recession hit its aviation industry customers hard in the early part of the decade. Officials considered selling the company in 1995 due to lagging earnings. The markets, particularly aerospace, soon rebounded, however. Nevertheless, the company had another change of ownership within a couple of years. Another investment firm, the Blackstone Group, acquired control of Haynes in 1997.
Francis J. Petro became president and CEO of Haynes in 1999. He had previously led the Inco Alloys unit of The International Nickel Company of Canada. Blackstone had proposed buying Inco Alloys for $410 million and combining it with Haynes in 1998, but the Justice Department blocked the deal on antitrust grounds.
With Blackstone’s plans to grow the business by merger thwarted, the company looked to international markets for growth. By the end of the 1990s, Haynes International was a global business. It had 1,000 employees, most of them based at the home facility of Kokomo, Indiana. This plant supplied feedstock for a couple of other plants making bars, plate, and wires. There were several service centers extending distribution to Europe and Asia. China and India were emerging as important international markets.
BANKRUPTCY REORGANIZATION AND GOING PUBLIC
Haynes had not had any major labor disputes since the 1960s, but contract renewal negotiations with United Steelworkers stalled in 2002 as the union’s contract came up for renewal. A lockout ensued. A couple of years later, Haynes would emerge from bankruptcy proceedings with labor concessions such as increased flexibility in scheduling.
Haynes experienced a difficult year in 2003 as both the chemicals and aerospace industries suffered in a global recession. At the same time, power companies put off installing new land-based turbines due to the slow economy and fallout from the Enron scandal. After earning just under a million dollars in the previous fiscal year, Haynes suffered a loss of $72 million in fiscal 2003 as revenues slipped from $226 million to $178 million. Its debts totaled $140 million as it and its U.S. subsidiaries and affiliates filed for bankruptcy protection on March 29, 2004.
Haynes emerged from bankruptcy on August 31, 2004, with a new structure, merging former parent company, Haynes Holdings, Inc., with Haynes International, Inc., the surviving entity. The Blackstone Group, which held 72 percent of Haynes’ equity before the restructuring, saw its holding reduced to less than 4 percent.
The company was soon in growth mode again. In November 2004, Haynes acquired The Branford Wire and Manufacturing Company of Mountain Home, North Carolina, for about $8 million in cash. Branford made wire of stainless and nickel alloy.
Revenues rose by a third in the fiscal year ended September 30, 2006, reaching a record $434 million (figures after 2004 reflect “fresh start” reporting). After losing $4 million in the previous year, the company was in the black again, posting a net gain of $35.5 million. The upturn was attributed to better market conditions, increased efficiency due to upgraded mill equipment, and success of the company’s new 282 alloy.
Aerospace continued to be the company’s largest segment, generally accounting for 40 percent of revenues. Sales to the chemical processing industry made up 20 to 30 percent of the total, with land-based turbines accounting for a little less than that.
- Elwood Haynes patents a new metal alloy he calls “stellite.”
- Haynes Stellite Company is formed in Kokomo, Indiana.
- Union Carbide and Carbon acquires Haynes.
- Haynes is acquired by Cabot Corporation.
- Haynes is incorporated in Delaware.
- Private investment firm Morgan Lewis Githens & Ahn Inc. buys Haynes.
- Blackstone Group acquires Haynes.
- Haynes files Chapter 11 but emerges from bankruptcy within a few months.
- Haynes goes public on the NASDAQ.
After the reorganization, some of the company’s shares had been traded over-the-counter on the “pink sheets.” By the end of 2006, its share price had risen from $9.90 to $54. The company went public on the NASDAQ General Market System in March 2007. The offering was priced at $65 a share; proceeds went toward paying off debt. The initial public offering helped extend the shares beyond a few hedge funds, increasing liquidity and value.
Frederick C. Ingram
PRINCIPAL OPERATING UNITS
Arcadia, Louisiana; Chennai, India; Houston, Texas; Kokomo, Indiana; La Mirada, California; Lebanon, Indiana; Lenzburg, Switzerland; Milan, Italy; Mountain Home, North Carolina; Openshaw, England; Paris, France; Shanghai, China; Winsor, Connecticut; Singapore; Zürich, Switzerland.
Allegheny Technologies, Inc.; Krupp VDM GmbH; Special Metals Corporation.
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