Incorporated: 1898 as International Silver Company
Sales: $561.2 million (1995)
Stock Exchanges: NASDAQ
SICs: 2731 Book Publishing; 3469 Metal Stampings, Not Elsewhere Classified; 6719 Holding Companies, Not Elsewhere Classified
Formerly the largest silver company in the world, Insilco Corporation is no longer involved in the silver business, but lives on as a manufacturer of industrial and consumer products. Based in suburban Columbus, Ohio, Insilco operated for more than a half century as the International Silver Company before adopting the Insilco name and diversifying into a host of businesses that eventually supplanted the company’s reliance on the production of silverware to sustain its existence. By the mid-1990s, Insilco was supported by three primary business segments: electronics and communications; automotive components; and office products and specialty publishing. Insilco chairman Durand B. Blatz announced to a Forbes reporter in the early 1980s: “I think I’ve created a financially harmonious company that is motivated in special niches to produce better-than-average profits and tends to balance itself.” While presenting an accurate, if somewhat vague, description of Insilco’s operations during the first few years of the decade, perhaps the most interesting aspect of Blatz’s remark were the words “I’ve created.” Indeed, Blatz had created a company through some highly unique measures, transforming the world’s largest silver company into a completely new, modern enterprise positioned for the 21st century.
Nineteenth Century Origins
Insilco began its existence as the International Silver Company, which traced its start in the silver business back to 1898, when it began producing silver and pewter spoons and dishes. During the ensuing 50 years, the company developed into a giant, wielding enough sway in the silver market to draw repeated criticism for operating as a monopoly. The target of trustbusters, International Silver held a resolute grip on the world’s silver business, ranking as the largest silver company in the world during the first half of the 20th century. However, before the century was through both the name and the business of International Silver would be gone, and Durand Blatz would be there to witness it all.
Initial Diversifications in the 1950s
Blatz joined International Silver in 1957, when the company still reigned supreme in the silver industry. By the time of Blatz’s arrival, the company had already begun to diversify, albeit for practical rather than strategic reasons. In 1955, the company had made its first acquisition, purchasing Times Wire & Cable, a coaxial cable manufacturer.
The purchase of Times Wire & Cable, which would later become one of the Insilco’s flagship enterprises as Times Fiber Corporation, did not formally mark the beginning of a diversification program. Instead, the acquisition was completed largely because Times Wire & Cable’s operations could easily be moved into an empty silver factory owned by International Silver. “The empty-factory syndrome was the only reason they finally bought Times,” Blatz later explained, “after having turned it down three times.”
Nevertheless, Times Wire & Cable would later represent an important strategic asset for Insilco, particularly in the late 1970s, when the coaxial cable manufacturer would be merged with another acquisition, Fiber Communications, Inc. The marriage of Times Wire & Cable and Fiber Communications, a small New Jersey company led by two of the scientists who had developed fiber optics at Western Electric, would give Insilco a firm foundation in the high-technology communications field, one of the chief areas of business that would support the company once it severely restricted its involvement in the silver business. The purchase of Times Wire & Cable thus unintentionally signalled changes that would sweep through International Silver, changes made for strategic reasons once Blatz took control of the company.
Durand Blatz Named CEO in 1966
Nine years after joining International Silver, Blatz became the company’s chief executive officer. Blatz was responsible for much of International Silver’s diversification away from silver, spearheading many of the more than 30 sizeable acquisitions that were completed during the 1960s and 1970s, acquisitions that increasingly placed less and less of an emphasis on the production of silverware. After changing its name from International Silver Company to the abbreviated Insilco Corporation in 1969, the company completed several acquisitions that would define its operations during the 1980s and contribute toward much of its growth during the 1970s.
One of the company’s strengths during the 1970s was its modular housing group, a business area whose chief gains were realized through two acquisitions. In 1972, Insilco acquired Miles Homes, a leader in the build-it-yourself housing market. Purchased for $29 million, Miles Homes had sales of $7.8 million, which would rise to $58 million by 1980; similarly its eventual net operating earnings of $11 million increased considerably from the $1.7 million posted in 1972. Complementing this acquisition was Insilco’s 1979 acquisition of Nationwide Homes, a manufacturer that constructed finished houses and shipped them in two parts from a limited area surrounding the company’s base in Martinsville, Virginia.
Aside from the steadily growing housing group supporting the company and the promising Times Fiber Communications, Inc. subsidiary created through the merger of Times Wire & Cable and Fiber Communications, Insilco was supported by more than a dozen operating companies during the early 1980s, most of which were small and positioned in market segments of their own. Describing these other businesses, Blatz related, “Each is in a specific, isolated area that is more than ordinarily profitable and one that we can understand.” Included within this group of companies were several strong entities that rounded out Insilco’s operations, creating a well-balanced corporation with good potential for growth.
Insilco’s office products group was highlighted by two new subsidiaries: Rolodex Corp., a perennial leader in the rolling-file business, and McDonald Products, a maker of expensive desktop accessories. Insilco also scored success with the purchase of Taylor Publishing Company, which published high school and college yearbooks as well as specialty books and gave the company an entry into the publishing business. The acquisition of three paint companies, Enterprise, Sinclair, and Red Devil, added another business group to Insilco’s business. Although Insilco’s paint business was recording less-than-spectacular results during the early 1980s, each of the three companies was serving different segments of the market and together represented the seventh-largest concern among U.S. paint companies.
Conspicuous by its absence from the list of Insilco’s major businesses during the early 1980s was the silver business, which contributed less than five percent of Insilco’s nearly $650 million in annual sales at the start of the decade. International Silver Co., after more than half a century of underpinning the company’s existence, operated as one small division during the early 1980s. In fact, a combination of low-priced silverware imports, inflated silver prices, and changing American lifestyles had hobbled Insilco’s silver business since the 1970s, and as the years passed and the company’s diversification program continued, the former mainstay business of the company withered away.
As the silver business declined, plants were shuttered and workers were laid off, but Blatz kept the tool-and-die making operations that had been developed during International Silver’s decades as the preeminent silver company in the world. With these facilities, Blatz maneuvered Insilco into a new business area, converting them into production plants geared for the manufacture of precision parts for high-technology companies such a Pratt & Whitney and Sikorsky. From the early 1980s forward, Blatz would look to develop this business further, keeping his eye out for additional precision-tooling acquisitions.
After years of posting marginal profits, Insilco’s silver business began losing money in 1982, slipping into the red and, as a consequence, damaging its parent company’s image. By the following year Insilco had abandoned the business altogether, selling the subsidiary to Katy Industries Inc., a conglomerate based in Elgin, Illinois.
In the years following the divestiture of its silver business, Insilco stood on stable ground, supported by businesses that were recording modest growth, with its electronics and communications group representing the most promising facet of its operations. Headed by Times Fiber Communications, Insilco’s electronics and communications group was complemented by a computer circuity group, which manufactured electronic components and supplied assembly services for computer companies. Elsewhere in the company’s operations, Stewart Stamping also contributed meaningfully to Insilco’s growth by manufacturing billions of small metal parts and electronic assemblies for companies such as North American Phillips and Western Electric.
Growth Through Excellence
Not long after the sale of International Silver Co. in 1983, however, Blatz’s “financially harmonious company” entered a period of drastic change and discord. In 1988 a pair of Midland, Texas, investors acquired publicly-traded Insilco and took the company out private in a leveraged buyout (LBO). The LBO was a costly affair, saddling Insilco with deleterious debt and seriously affecting its ability to operate successfully during the years immediately following its acquisition. Three years after the LBO, fettered to the suffocating weight of $800 million of debt, Insilco filed for protection under Chapter 11 of the U.S. Bankruptcy Code, marking the inglorious end to what had been a thriving concern for nearly a century.
For those associated with the company, bankruptcy in 1991 was a regrettable development, regrettable because financial failure had occurred for reasons that had nothing to with the company’s condition. Indeed, in the years leading up to bankruptcy, Insilco’s subsidiaries had been performing well. However, but the debt incurred from the 1988 LBO had delivered the fatal blow, thrusting an obstacle before the company that it could not surmount, no matter the relative health of its operating subsidiaries. For a company with roots stretching back to the 19th century, the decades of work devoted to turning it into a company that could survive and grow into the 21st century appeared to be in vain. Insilco had collapsed financially just as the technology supporting the company was recording explosive growth, dashing hopes that it could reap the rewards of the three decades of diversification.
However, corporate spirit remained high enough to fuel the development of a plan to mount a revival of Insilco, keeping hopes alive that the storied firm could resume operation as a viable concern. In April 1993, that hope was made reality when Insilco emerged from under the protective blanket of Chapter 11 and once again entered the business fray. With a newly-assembled and highly experience management team led by chief executive officer Robert L. Smialek, Insilco embarked on its new era of existence focused intently on developing its core businesses.
Rebirth in the Mid-1990s
Encouraging success was recorded quickly, as the company’s three chief business groups—office products/specialty publishing, electronics/telecommunications, and automotive parts—each demonstrated quick success. The electronics and telecommunications division, referred to as the technologies group, manufactured high-technology products such as modular plugs and jacks for computer networking, cellular, and telecommunications. Through its automotive components group, the company manufactured thermal components, such as heat exchangers, steel parts, and decorative stainless steel tubing. Rounding out Insilco’s operations was its office products and specialty publishing group, which was led by the company’s Rolodex and Taylor Publishing subsidiaries. Each of these three business segments generated roughly one-third of Insilco’s total annual sales.
As the company prepared for the late 1990s with $561 million in sales in 1995, its well-balanced, diversified businesses fueled hope that the turmoil of the late 1980s and early 1990s was completely behind the company and that Insilco employees, management, and shareholders could look forward to an era of strong financial performance. Though the 1990s version of the company bore no resemblance to the business founded nearly a century earlier, the legacy of International Silver Co. and its creation, Insilco, provided a history of excellence to guide the new concern toward a profitable future.
Stewart Connector Systems, Inc.; Signal Transformer Company; Signal Carbide, Inc.; Signal Dominicana, S.A. (Dominican Republic); Stewart Stamping Corporation; Escod Industries; Steel Parts Corporation; McKenica; Romac Metals; General Thermodynamics; Thermalex, Inc. (50%); Rolodex/ Curtis; Taylor Publishing Company.
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—Jeffrey L. Covell