3 Skidaway Village Square
Savannah, Georgia 31411
Fax: (912) 598-0737
Incorporated: 1897 as Kuhlman Electric Co.
Sales: $456.4 million (1996)
Stock Exchanges: New York
SICs: 3612 Transformers Except Electronic; 3357 Nonferrous Wiredrawing & Insulating; 3714 Motor Vehicle Parts & Accessories
One of the fastest-growing companies in the United States, Kuhlman Corporation is an industrial manufacturing company with its business divided into two business segments: Electrical Products and Industrial Products. The Electrical Products half of Kuhlman represented its core, the company’s greatest money-earner and the historical foundation of the Savannah, Georgia-based concern. Within the company’s Electrical Products division were Kuhlman Electric and Coleman Cable, manufacturers of electric power transformers and electrical and electronic wire and cable, respectively. Kuhlman’s Industrial Products segment comprised Schwitzer, Inc. and Emtec Products Corporation. Schwitzer, founded in 1918, manufactured turbochargers, cooling fans, fan drives, and crankshaft vibration dampeners for the automotive industry. Emtec produced a variety of spring and spring assembly products. During the mid-1990s, Kuhlman operated 17 facilities in 11 states and in two foreign countries (England and Brazil). Kuhlman products were sold in more than 60 countries worldwide.
Kuhlman Electric was formed in 1894 and incorporated three years later in Indiana as Kuhlman Electric Company. The company retained its name when another incorporation took place in Michigan in 1915. Kuhlman Electric from this point forward operated as a manufacturer of transformers for the electrical utility industry, its principal business for roughly a half-century and its exclusive business until the company acquired Detroit Electric Furnace Company in 1938 and began manufacturing small metal melting furnaces. The addition of Detroit Electric Furnace contributed only a small percentage to the company’s total revenue volume, however, leaving Kuhlman Electric overwhelmingly dependent on the production of transformers for revenue. For decades the company remained in this state, doing little to distinguish itself from the scores of manufacturers in its industry and realizing little appreciable physical or financial growth. The company relied on a single manufacturing facility in Bay City, Michigan, during these years, and devoted itself nearly completely to manufacturing devices that regulated electrical currents.
The Kuhlman Electric of the first half of the 20th century was vastly different than the version operating during the latter half of the century. The company that exited the 20th century was a fast-growing, diversified, global competitor bent on expansion and acquisition to record significant growth. The turning point bridging these two distinct eras in the company’s history occurred in 1952, when management resolved to extend Kuhlman Electric’s geographic reach and enter new business areas. That watershed year divorced the company from its comparatively sleepy past and pointed it toward a future of steady growth, forever changing the character of Kuhlman Electric.
Diversification Begins in the 1950s
Management in the early 1950s first set itself the task of increasing Kuhlman Electric’s manufacturing capacity and broadening its geographic scope, objectives that were intended to achieve greater penetration of the electrical transformer market. A second manufacturing plant was constructed in Crystal Springs, Mississippi, in 1952, followed by the establishment of a third manufacturing facility in Salinas, California, three years later. The erection of facilities in 1952 and 1955, and the extension of the company’s presence out on the West Coast provided Kuhlman Electric with a newfound capability to serve the most important markets in the country, rather than serving just the middle portion of the country as the company previously had done. With the company’s initial expansion plan completed, management next moved to complete its other objective, one that led to the multifaceted profile of the company during the 1990s.
In the strategic plan first implemented in 1952 there were two objectives. One was to strengthen the company’s mainstay transformer business, which the construction of additional manufacturing facilities had accomplished, and the other was to lessen Kuhlman Electric’s dependence on transformers, that is, to make the mainstay business less of a mainstay. Kuhlman Electric derived 95 percent of its revenue from transformer sales to electrical utilities, and management wanted that figure reduced. It did not intend to increase the five percent contributed by the company’s involvement in manufacturing metal melting furnaces (Detroit Electric Furnace’s contribution in fact would be reduced), so the quickest and most obvious method to reduce dependence on transformers was to add other business interests through acquisitions. This the company did in 1957 when it acquired California Export Processing Company, a processor of sheet metal parts for the automotive industry. The acquisition proved to be a boon to the company’s bottom line. California Export, which rust-proofed, painted, and finished a large variety of car parts, including fenders, hoods, doors, panels, and tops, began contributing a significant percentage to Kuhlman Electric’s total revenue volume as soon as it was assimilated into the company’s corporate structure as a car-parts processing division.
Expansion and diversification drove annual sales up to $13.7 million by the beginning of the 1960s, in what would turn out to be Kuhlman Electric’s most prolific decade of financial growth since its formation. Much of the growth realized during the 1960s was achieved through acquisitions, a means of expansion Kuhlman Electric’s management did not abandon after the purchase of California Export. The company acquired Detroit-based U.S. Molding Fiberglass Corporation in 1963, renewing its efforts to diversify, but the foray into this business area proved to be only a dalliance. U.S. Molding was sold in 1964, by which point the company had seized a company whose tenure within Kuhlman Electric’s fold would span two decades.
In 1964, at a juncture when the production of transformers accounted for a much reduced 48 percent of Kuhlman Electric’s revenue volume, the company acquired Meier Brass & Aluminum Company, based in Hazel Park, Michigan. Meier Brass, which was christened Meier Metal Servicenters under the auspices of Kuhlman Electric, operated eight facilities that processed a wide range of metal products, such as rods, bars, coils, sheet, plate, tube, pipe, and wire for an equally wide variety of industries. The effect of the Meier acquisition ranked higher than the purchase of California Export in terms of the objectives pursued by Kuhlman Electric’s management. One year after its acquisition, Meier was responsible for 35 percent of Kuhlman Electric’s total revenue volume, by which point the company’s car-parts processing division was contributing 12 percent to total revenue. By the mid-1960s, when annual sales stood at $36 million, or nearly three times their height at the beginning of the decade, the acquisitions completed since 1957 accounted for 50 percent of the increase in sales. In less than a decade the manufacturer of transformers had transformed itself, developing into a diversified manufacturer recording energetic leaps of financial growth instead of the measured steps realized during its first half-century of existence.
One more important acquisition was completed before the 1960s were concluded, and that was the purchase of Quality Spring Products, Inc., a manufacturer of a broad range of mechanical springs for the automotive, home appliance, building, and electric industries. By the end of the 1960s, after registering a robust 16 percent annually compounded growth rate in sales during the decade and after erecting a new transformer plant in Versailles, Kentucky, Kuhlman Electric was generating more than $50 million in sales a year and stood as a vastly different company than the one that had entered the 1950s. The company’s management acknowledged as much in 1967 when the more general corporate title “Kuhlman Corporation” replaced “Kuhlman Electric Company.” Kuhlman Electric subsequently became a subsidiary of Kuhlman Corporation.
Exiting the defining 1960s, Kuhlman comprised six divisions, three of which—Distribution Transformer, Power and Specialty Transformer, and Detroit Electric Furnace—were pre-1950s constituents. Together, Kuhlman’s two transformer divisions accounted for 57 percent of the company’s sales, with Detroit Electric Furnace contributing an additional one percent. The remaining half of the company comprised divisions created from the three acquisitions completed between 1957 and 1965. California Export had been organized as Kuhlman’s Export Processing Division, one of the largest independent rust-proofing operations of its kind in the world and a contributor of seven percent to total sales. Quality Spring Products Division, the mechanical spring manufacturer, contributed another seven percent to total revenue volume. The third member of the new companies to join Kuhlman was the largest, the Meier Brass and Aluminum Division, which delivered nearly one-third of total revenue volume and helped greatly toward the fulfillment of the corporate objectives pursued since 1952.
We at Kuhlman have a clear vision of our corporate goals. We want to be a larger, more diversified company that continues to provide our shareholders with significant returns and consistent earnings growth over an extended period of time. We believe that through size and diversification, we can benefit from greater financial strength and avoid the cyclicality often associated with companies operating in a single industry or geography, with limited product offerings. Just as we are dedicated to serving our shareholders, we are similarly dedicated to the growth and development of all our employees worldwide. Their well-being and advancement not only improve their lives, but also enhance the progress of our Corporation.
Kuhlman Takes Shape for the 1990s
The achievements of the 1960s provided Kuhlman Electric a range of different business interests with which it would enter its second century of business, shaping the company into a diversified manufacturer of electrical and industrial products, but the composition of the company’s businesses during the 1960s was not identical to the Kuhlman of the 1990s. Some subsidiaries would stay, others would be sold, and several key acquisitions remained to be completed in the decades ahead. One of the prominent subsidiaries supporting the company during the 1990s was acquired in 1973, when Kuhlman purchased Emtec, Inc. Emtec, which was organized into Kuhlman’s industrial products segment, strengthened the company’s involvement in the spring business, entrenching the business area entered into through the acquisition of Quality Spring Products.
The next pivotal transaction in the company’s history occurred 12 years later, when Kuhlman executives chose to sell one of the company’s important divisions. Offered on the auction block in 1985 was Kuhlman’s metal distribution operations, the division operated under the purview of Meier Metal Servicenters. Meier, since being acquired in 1964, had served as a valuable aid in reducing Kuhlman’s dependence on transformers, generating a sizeable percentage of the company’s total revenue volume for two decades. With Meier’s departure, Kuhlman leaned on its newly-acquired plastics business, which had been gained several months before the divestiture of Meier when Borse Plastic Products was acquired in March 1985. The company’s involvement in plastics was relatively short-lived, however. In 1990, Kuhlman sold its plastic operations to Solvay America, Inc. for approximately $45 million.
Much was accomplished on the acquisition front during the first half of the 1990s to give the company its corporate structure during the late 1990s. In 1993, Kuhlman paid nearly $9 million for Coleman Cable Systems, Inc., a leading manufacturer and distributor of a broad variety of electrical and electronic wire and cable products. With operating facilities in Arkansas, Florida, Illinois, and North Carolina, Coleman Cable figured prominently among Kuhlman’s operating companies during the late 1990s, composing, along with the company’s flagship Kuhlman Electric subsidiary, its electrical products segment. The other half of the company, its industrial products segment comprising Emtec Products Corporation, was fleshed out with the acquisition of Schwitzer, Inc. in 1995. Schwitzer, a leading designer, manufacturer, and marketer of turbochargers, cooling fans, fan drives, and crankshaft vibration dampeners, added more than $150 million in annual revenue to Kuhlman and gave it operating facilities in North Carolina, Indiana, Georgia, and in two foreign countries, England and Brazil.
As these acquisitions were being organized into the company, Kuhlman recorded impressive gains in its revenue volume. Sales during the company’s 100th anniversary year in 1994 shot up 64 percent to $396 million, swelling to $456 million by 1996. Net income also registered animated growth between 1994 and 1996, jumping from $9.9 million to $17.3 million. The continued increase of these figures was of great interest to the company’s management as it entered the late 1990s and charted its future course.
During the late 1990s, the company was pursuing an aggressive growth strategy aimed at developing Kuhlman into a larger, more diversified company, and acquisitions figured largely in fulfilling this objective. In 1996, two acquisitions were completed, Communications Cable, Inc., and Web Wire Products, that bolstered the company’s electrical products segment, specifically in the fastest-growing areas of the wire and cable industry: telecommunications and data transmission. In early 1997, the company completed another acquisition, purchasing the Transportation Products Group belonging to Kysor Industrial Corporation. Once combined with Kuhlman’s Schwitzer subsidiary, the addition of Kysor’s Transportation Products Group created one of the world’s leading providers of proprietary products used in commercial and industrial transportation applications. Further acquisitions appeared to be in the offing as Kuhlman prepared for the turn of the century, its management wholly focused on increasing the company’s stature as a diversified manufacturer of electrical and industrial products.
Kuhlman Electric Corporation; Coleman Cable Systems, Inc.; Schwitzer, Inc.; Emtec Products Corporation.
Electrical Products Segment; Industrial Products Segment.
“Heavy Utility Demand, Acquisitions Brighten Kuhlman Electric Outlook,” Barron’s, September 26, 1966, p. 23.
Hoddeson, David, “The Pressure’s On,” Barron’s, May 1, 1967, p. 3.
Kirsch, Sandra L., “Kuhlman Corp.,” Fortune, December 18, 1989, p. 128.
“Kuhlman Corp.,” CDA-Investnet Insiders’ Chronicle, April 1, 1996, p. 1.
“Kuhlman Corporation,” Wall Street Transcript, December 29, 1969, p. 19,038.
“Kuhlman Sees Increased Transformer Demand,” Investment Dealers’ Digest, December 22, 1970, p. 30.
Loehwing, David A., “Power Regeneration,” Barron’s, October 29, 1962, p. 3.
—Jeffrey L. Covell