Manitowoc Company, Inc.
Manitowoc Company, Inc.
Manitowoc Company, Inc.
Incorporated: 1902 as Manitowoc Dry Dock Company
Sales: $313 million (1995)
Stock Exchanges: New York
SICs: 3531 Construction Machinery; 3585 Refrigeration & Heating Equipment; 3731 Ship Building & Repair
Manitowoc Company, Inc. is a diversified manufacturer of ice machines and large commercial refrigeration equipment for the hotel, health care, food service, and convenience store industries, and of lattice boom cranes and crane rentals for heavy industry construction, as well as being one of the only three remaining repair and maintenance shipyards for both freshwater and saltwater vessels operating in the Great Lakes Region. The company’s facilities are located in Wisconsin, Tennessee, Iowa, Ohio, Texas, Florida, and Pennsylvania, with additional sales and distribution offices in Europe. In 1995, with the acquisition of The Shannon Group, Inc., a large manufacturer of commercial refrigerators and freezers, Manitowoc became one of the leaders in the food service equipment industry.
The founders of Manitowoc Company, Charles C. West and Elias Gunnell, originally worked for Chicago Shipbuilding Company in Chicago, Illinois. However, in 1899, when Chicago Shipbuilding was purchased by American Shipbuilding based in Cleveland, Ohio, the former firm was subsumed under the latter and lost its decision-making authority and engineering autonomy. Disappointed with the results of the purchase, West and Gunnell decided to buy a shipyard of their own. West, a marine engineer and naval architect, and Gunnell, an experienced shipbuilder, designer, and mechanic, reached the conclusion that their shipyard would build steel ships rather than the wooden ships commonly built at the turn of the century. Yet after consulting their acquaintances within the shipbuilding industry, the two entrepreneurs were convinced that the best plan of action was first to purchase a yard where wooden ship repairs could be done, since this would provide them with financial stability, and then, in due time, buy and install the necessary equipment for building steel ships.
The only shipyard for sale on the shores of Lake Michigan was located in Manitowoc, Wisconsin. Owned by brothers Henry and George Burger, the Manitowoc operation had grown large and lucrative from its extensive wooden ship repair business. Having found an acquisition that ideally suited their purposes, West and Gunnell bought the Burger and Burger shipyard in 1902 for $110,000. Gunnell assumed the position of president and West became the general manager of the new Manitowoc Dry Dock Company. The first vessel launched by Manitowoc Dry Dock was the Cheguamegon, a wooden passenger steamer already under construction at the time of the purchase. By 1903, however, the company had contracted its first steel ship repair job, and by 1905 the firm had launched the passenger steamer Maywood, the first steel vessel built in the Manitowoc shipyard.
In 1904, Gunnell, West, and L. E. Geer, the secretary and treasurer of Manitowoc, had created a separate tool company to manufacture marine engines and other types of machinery necessary to outfit a ship. In 1905, Manitowoc purchased this company and incorporated it within its shipbuilding operations. In 1908, Manitowoc purchased the Steam Boiler Works, a major manufacturer of marine boilers, pulp digesters, dryers, furnaces, ladles, vulcanizers, kilns, buoys, buckets, creosoting retorts, and tanks. These two acquisitions gave Manitowoc the ability not only to build new steel vessels, but the capability to completely equip them for operational service. With sales increasing and financial stability assured, to reflect a more modern image management decided to change the name of the firm to Manitowoc Shipbuilding Company in 1916.
Manitowoc Shipbuilding Company grew dramatically during World War I. Although the war had started in 1914, the United States did not enter the hostilities in Europe until 1917. When Congress declared war on Germany in April of 1917, however, the entire operations of Manitowoc were subsumed under the authority of the U.S. Shipping Board Emergency Fleet. The Board immediately placed a large contract with Manitowoc for 3,500-ton freighters, and the company embarked on an extensive expansion program to fill this order. During the course of the war, Charles West was recruited by the U.S. Navy Bureau of Construction to supervise the construction of a shipbuilding plant at Ford Motor Company near the firm’s headquarters in Michigan. For more than 18 months, West commuted from Manitowoc to Detroit and then back again to fulfill his duties to both companies. Before the war, Manitowoc turned out an average of six ships per year. By the time the war ended in 1918, the company was capable of turning out 18 ships annually and had already made 33 3,500-ton freighters used during the war effort.
Unfortunately, when World War I ended the U.S. government cancelled the remaining freighter contracts with Manitowoc. This loss of wartime revenue led to a postwar depression, not only for Manitowoc but for the entire shipbuilding industry in the Great Lakes region. With its expanded capacity for shipbuilding, and numerous employees hired for the wartime production effort, West and Gunnell searched for new business that would compensate for the disappearance of government contracts. Luckily, the two men arranged for the company’s shipbuilding plant to be converted into a railroad locomotive maintenance and repair shop. This kept the company barely solvent, and with funds enough to pay employee wages, but it was clear that Manitowoc would have to undergo a transformation to survive.
In 1920, West and Gunnell came to a sharp disagreement as to the direction of the company. West was convinced that Manitowoc could only survive by implementing a broadly based diversification strategy. Gunnell, on the other hand, maintained that the company should continue to emphasize its shipbuilding capacity. Unable to reach a point of mutual agreement, the company was put up for sale. Interestingly enough, West made the only offer to purchase the firm. For a total of $410,000, West and Geer bought the company and renamed it the Manitowoc Shipbuilding Corporation. An immediate policy of diversification was established, including an expansion of the boiler works and new products for the machine shop. Since marine boilers were losing their popularity, the boiler works diversified into the manufacture of paper mill equipment, dryers for coal, rock, and clay, brewery tanks, air nozzles, and heating boilers. The machine shop reached an agreement to manufacture Moore Speedcranes under the Moore patents. By 1927, Manitowoc had taken over the manufacture and sale of all of the crane models produced by the Roy and Charles Moore Crane Company. Of course, the diversification program did not mean that shipbuilding at the company was interrupted. During the 1920s, Manitowoc constructed its first self-unloading vessel, two carferries, five tugboats, four deck barges, two dipper dredges, two dump scows, two derrick scows, a floating dry dock, and the largest suction dredge in the world.
The Great Depression and World War II
With the stock market crash of 1929, the era of the Great Depression began in the United States. Manitowoc was, like many other businesses during the time, hard hit by the downward trend in business. Sales dropped precipitously from more than $4 million in 1931 to less than $500,000 by 1933. During the middle of the decade, the company operated at a net loss for four years in a row. Many employees were laid off, and those that remained were forced to take a reduction in their salaries. The company’s shipbuilding business was severely affected by the Depression, and management was forced to rely more heavily on the crane business. During the 1930s, Manitowoc introduced an improved version of the Moore Speedcrane and began a maintenance service to repair and keep cranes in first-class condition. Manitowoc cranes soon garnered a reputation for high quality within the industry and were purchased to help construct the Senate Office Building, the National Gallery of Art, the National Archives, and the Jefferson Memorial, all located in Washington, D.C.
In 1940, as the start of another world war became more evident to U.S. government officials, the Navy contracted Manitowoc to build ten submarines and provided the company with funds to make the necessary plant improvements and expansion. Although West hesitated because of his previous experience with U.S. government contracts, which left the company in dire financial straits after World War I, he reluctantly decided to engage in a comprehensive plant conversion. The increased capacity soon proved itself useful. Just one week after Pearl Harbor had been attacked by the Japanese, which initiated the American involvement in World War II, the company received an order from the U.S. Navy for immediate delivery of six cranes for use in salvaging operations in the harbor. More than 58 cranes were made by the company for the Navy’s Floating Dry Docks during the war, and 79 cranes and shovels were delivered to the U.S. Army.
Aimed at growing the value of the company to investors and all other stakeholders, Manitowoc’s philosophy emphasizes steady, profitable growth and continuous improvement in all facets of company operations, including product innovation and quality, customer service, productivity, and employee safety.
Besides a huge order for submarine construction during the war, Manitowoc also built landing craft for use in both the Pacific and European theaters of operation. Extensive testing was conducted along the shores of Lake Michigan by company engineers, and design changes were made before actual production was begun. Manitowoc built a total of 1,465 landing craft, and received a Presidential Citation for the vehicle’s performance during the Normandy landing in June of 1944. In addition, by the end of the war the company had constructed 28 submarines for the U.S. Navy and had received the Navy “E” for excellence in production five times.
The Postwar Years
The immediate period after War World II brought the same problems that confronted the company after World War I: the necessary reorganization of the company and its manufacturing facilities to a peacetime economy. Unlike what happened the previous time, however, the U.S. Navy reimbursed Manitowoc for its wartime expenses and helped it to dismantle the Navy’s portion of its shipbuilding operations. West, still in control of the company’s direction, decided once again that diversification was the answer. Looking for products to manufacture that did not require significant capital investment, Manitowoc started making dry cleaning units and, in addition, freezers for Firestone and Westinghouse. Soon the firm was making commercial frozen food cabinets used in supermarkets and restaurants and, by 1950, more than 50 percent of Manitowoc’s equipment works was devoted to this business.
Manitowoc’s shipbuilding operation was plagued by union strikes throughout the late 1940s but, with the end of the postwar recession in the marine industry, the firm reclaimed its role as a major shipbuilder and repair facility in the Great Lakes region. During the early 1950s, the company constructed the prototype of Nautilus, the country’s first nuclear submarine. In addition, numerous commercial vessels were built during the decade, including the largest self-unloader on the Great Lakes, a coal hauler, the first diesel-powered carferry, and five crane barges. Charles West was particularly pleased to see his company survive the difficulties of the postwar period and, when he died in 1957, left behind what he considered to be a thriving firm with great potential for the future.
During the 1960s, Manitowoc continued to grow. The manufacture of dry cleaning units was expanded, as well as the production of freezers and frozen food cabinets. In 1967, the company introduced The Manitowoc Ice Dispenser, which quickly became very popular in both the hospital and lodging industries. Since shipbuilding at the time consisted mostly of smaller vessels such as dump scows and crane barges, management decided to combine its operations with another Great Lakes shipbuilding firm and relocate to Sturgeon Bay, Wisconsin. In 1968, Manitowoc purchased all of the assets of the Sturgeon Bay Shipbuilding and DryDock Company and subsequently renamed its reorganized business the Bay Shipbuilding Corporation. This combination of both resources and facilities resulted in major contracts during the 1970s, including the first 1,000-foot ship, built to haul coal for Detroit Edison.
Growth and Transformation During the 1970s and 1980s
In addition to relocating and reorganizing its shipbuilding operation during the early 1970s, the company divested its dry cleaning operation and sold off its freezer and frozen food cabinet business. The most successful and profitable product made by the company after World War II was its custom-built cranes. From the mid-1920s to 1945, management regarded the sale of its cranes as a fortuitous product of a necessary diversification program started after World War I. But after World War II, the demand for the company’s cranes began to increase dramatically. In fact, during the 1950s and 1960s, Manitowoc was at the forefront of developing technological innovations to increase the quality of its cranes. The company was the first manufacturer to use T-1 high-strength steel in booms, design a controlled-torque converter for crane applications, and develop extendible crawlers. In 1967, Manitowoc engineers designed an assembly that doubled the lift capacity of any basic crane. By 1977, sales for Manitowoc cranes were reported at $146.5 million, whereas shipbuilding and repair revenues amounted to $73 million and ice cube maker sales totaled $14.4 million.
During the 1980s, Manitowoc rode an economic roller coaster. The recession of the early 1980s, and the collapse of the petroleum boom, led to a dramatic plunge in Manitowoc’s sales. The company’s crane business fell flat, especially in the areas of large lift cranes used in the construction and offshore oil industries. The company’s manufacture of ice-making machines for the foodservice, health care, and convenience store markets also took a nose dive, and shipbuilding at the Sturgeon Bay facility had to be abandoned altogether. By the end of the decade, conditions at Manitowoc had improved slightly. Manitowoc’s crane business had benefited from the revival of offshore drilling in the Gulf of Mexico, and the company claimed that it was the only manufacturer of large lift cranes left in the United States; all of the firm’s competitors had either sold their holdings to foreign interests or gone out of business. The company’s ice machine business replaced the crane business as Manitowoc’s most profitable operation during the middle and late 1980s, and the Sturgeon Bay facility reported that it was one of only three remaining Great Lakes shipping repair and maintenance shops for the country’s largest iron-ore carriers.
The 1990s and Beyond
During the early 1990s, management at Manitowoc implemented a comprehensive cost-cutting and reorganization strategy, including a revamped marketing program that significantly enhanced the company’s presence across the United States and in Europe. Modernization at the firm’s large crane and boom-truck facilities increased production, and the introduction of new crane designs, especially the Model 888 crane with a 220-ton lift capacity, gained immediate market acceptance. At the same time, Manitowoc expanded its ship repair business to include two additional locations in the Great Lakes Region and, by the mid-1990s, operated more than 60 percent of all dry dock footage on the Great Lakes. Most important of all, however, was the acquisition in 1995 of The Shannon Group, Inc., a major manufacturer of commercial refrigeration equipment. The purchase of Shannon turned Manitowoc into the largest supplier of commercial ice-cube machines and walk-in refrigerators in the world.
By the mid-1990s, Manitowoc had recovered from its losses during the late 1980s. Approximately 39 percent of all sales was from cranes and related products, whereas food service equipment accounted for 54 percent of total sales and shipyard repairs reported seven percent of all sales. In 1995, sales had increased 16 percent over the previous year, and all of the company’s indicators pointed toward an ever-increasing sales volume in the years ahead. With the world’s bestselling heavy-lift lattice boom crane and the addition of The Shannon Group to its commercial refrigeration equipment, Manitowoc is looking forward to larger and larger profits in the years that lead up to the 21st century.
Femco Machine Co.; Kolpak Manufacturing Company; Manitex, Inc.; Manitowoc Engineering, Inc.; Manitowoc Engineering Works PTE, Ltd.; Manitowoc Equipment Works, Inc.; Manitowoc Europe B.V.; Manitowoc Europe Holdings, Ltd.; Manitowoc Europe Limited; Manitowoc International Sales Corp.; Manitowoc Korea Company, Ltd.; Manitowoc Nevada, Inc.; Manitowoc Re-Manufacturing, Inc.; Manitowoc Western Company, Inc.; North Central Crane & Excavator Sales Corp.; The Shannon Group, Inc.; West Manitowoc, Inc.
Byrne, Harlan S., “Manitowoc Company: Cost-Cutting Lays Ground for Earnings Rebound,” Barrons, January 6, 1992, pp. 39–40.
——, “Manitowoc Company: From Cranes to Cold Cash, It Bucks Capital-Goods Trend,” Barrons, November 12, 1990, pp. 41–42.
Conley, Paul F., “Barge Rates Likely To Fall,” Journal of Commerce, January 8, 1996, p. S49(1).
Krapf, David, “Inland Barge Construction Is Booming,” Journal of Commerce, August 26, 1996, p. 8B(1).
Manitowoc: 75 Years of Growth and Diversification, 1902–1977, Manitowoc, Wisconsin: The Manitowoc Company, 1977.
Moore, Walt, “New Company, New Crane,” Construction Equipment, October, 1994, p. 81(1).
Phalon, Richard, “Back in the Game,” Forbes, December 5, 1994, pp. 58–60.
“U.S., Other Nations To Meet on Shipbuilding Subsidiaries,” The Wall Street Journal, October 4, 1996, p. A8(E).