Oneida Ltd.

views updated

Oneida Ltd.

Sherrill Rd.
Oneida, New York 13421
U.S.A.
(315) 361-3100
Fax: (361) 829-3963

Public Company
Incorporated: 1880 as Oneida Community, Limited
Employees: 5,100
Sales: $479.4 million
Stock Exchanges: New York
SICs: 3914 Silverware & Plated Ware; 3262 Vitreous China Table & Kitchenware; 3231 Products of Purchased Glass; 3643 Current-Carrying Wiring Devices

Oneida Ltd. is the world’s largest stainless steel and silver-plated flatware maker. Its operations in the United States, Canada, Mexico, the United Kingdom, and Italy manufacture and market sterling, silver-plated, and stainless products, commercial china tableware, and industrial wire. Oneida also markets tableware and crystal gift items. The company originated in a utopian community established in the mid-nineteenth century, and has had a strong reputation for quality since that time.

The Oneida Community was founded by John Humphrey Noyes in upstate New York in 1848. The Community was founded on Noyes’s theology of Perfectionism, a form of Christianity with two basic values: self-perfection and communalism. These ideals were translated into everyday life through shared property and work as well as “complex marriage”—monogamous marriage was abolished, and children were raised communally from their second year until age 12.

This child care system freed the women as well as the men to take part in the Community’s manufacturing of animal traps, chains, silk items, and silver knives, forks, and spoons. The Oneida Community soon became known not only for the unconventional lifestyle of its members, but also for the quality of its goods. The Newhouse trap invented by a founding member of the community was known around the world.

The Oneida Community existed longer than most other utopias of the nineteenth century in part because of the solvency of its businesses, and the members of the group lived and worked together from 1848 until the late 1870s. Prosperity didn’t shield the organization from conflict, however, and in 1879 the Community split into two factions. Unable to resolve their differences, the members voted to transform the group’s businesses into a joint-stock company, the Oneida Community, Limited, which would be owned and operated by former members of the society. The Community was valued at $600,000 and stocks were distributed according to each member’s original contribution and length of service. The stock was divided among 226 men, women, and children, the majority of whom received between $2,000 and $4,999 in shares. The progressive nature of the new company was reflected in, among other things, the presence of a woman, Harriet Joslyn, as superintendent of the silk mill and a member of the board of directors.

During the fifteen years following Oneida’s reorganization, the company’s financial standing deteriorated. A severe depression in the 1890s, inadequate leadership, and emigration from the community plagued the new company. Some have speculated that the failure of the utopian community contributed to demoralization of the worker/stockholders, further eroding the company’s prospects for success.

But in January 1894, Pierrepont Burt Noyes (P. B. Noyes), the son of Oneida’s founder, rejoined the company after working as an Oneida wholesaler in “The World,” as many Oneidans referred to the world outside their community. At only 23 years old, P. B. Noyes replaced an uncle on Oneida’s board of directors. His experience outside the Community enabled him to see and criticize weaknesses that threatened the company’s existence. Within two months Noyes led a proxy fight to oust directors who clung to old-fashioned business strategies. Nearly 24,000 shares were voted, and Noyes’s side won by just 16 shares. Noyes was offered the position of superintendent at Oneida’s Niagara Falls Plant, and soon raised the operation’s standards of quality to their former levels. In 1899 the company announced its largest profits to date and paid its stockholders a dividend of seven percent.

By the time he reached the age of thirty, Noyes had risen to de facto control of Oneida. The board nominated him to the newly created post of general manager with authority to oversee all of the company’s divisions—canning and manufacturing of tableware, traps, chains, and silk thread. Noyes’s rise to prominence at Oneida marked the company’s emergence into the industrial world of the twentieth century. Before the turn of the century Oneida had relied on its managers’ creativity, thrift, and diligence and the excellent reputation of its products. Noyes introduced the new production methods, competitive strategies, large-scale distribution methods, and promotional efforts that were beginning to typify American industry. In 1904 he established Oneida’s emphasis on marketing and brand recognition by increasing the company’s promotion budget from $5,000 to $30,000 per year. Noyes financed this move by diverting profits from the trap business that would otherwise have been used to expand trap manufacturing, which he saw as a dying business.

From that time on, even during the Depression, advertising remained a major item on Oneida’s balance sheet. Oneida’s earliest advertising campaigns established many of the trademarks that would characterize the company’s advertising for decades to come. The print ads typically appeared in widely circulated women’s magazines. Rather than describe all of its tableware at length, Oneida used most of its advertising space for a picture of one or two pieces of silver plate, which it often associated visually with someone or something attractive. Oneida was also one of the first companies to employ celebrity spokespeople to promote its products. Ten years before the practice was widely accepted, Oneida commissioned Irene Castle, a famous dancer and fashion plate to promote Community ware.

Despite Noyes’s aggressive move to gain control of Oneida, he still sought to maintain the communal harmony and idealism on which the Community was founded. Managers who lost positions on the board of directors retained positions with the company, and many came to respect the new management. In addition, Kenwood, a private community built around the company, gave Oneida a sense of family that remained strong through the early decades of the twentieth century; well into the 1920s, descendants of Oneidans held almost 90 percent of company stock. Noyes sought to make Oneida and the community of Kenwood “modern utopias” by increasing wages, improving work conditions, providing welfare and recreational benefits, and improving the physical environs of Kenwood.

Noyes attracted children of Oneidans who had gone off to college and careers in ’ The World” back to the company by appealing to their sense of ambition: the modern utopia he described meant intellectual challenge, reasonable pay, and self-improvement. The corporate culture was based on the sense of inventiveness and labor/management cooperation that has distinguished the company throughout its history. Oneida’s silverware operations have never suffered a work stoppage due to labor disagreements.

In 1904 Noyes proposed voluntary salary reductions for management when the company encountered financial difficulties. The proposal was enforced in 1914, when all salaried personnel took a 10 percent pay cut until early 1916. In 1921 larger cuts were necessary—Noyes reduced his own salary by half, the directors took a 33 percent cut, and other officials took smaller cuts corresponding to their salaries. The Depression required similar cuts.

Oneida’s chain business was sold in 1912 and the silk industry was liquidated in 1913, when man-made substitutes for silk were invented. The company’s canning business was discontinued in 1915 because it was unable to compete with large-scale modern production methods. But the consolidations enabled Oneida to open its first international factory, in Niagara Falls, Ontario, in 1916.

Noyes resigned from the general managership in 1917 to let younger people into Oneida’s management. Three months after he resigned, the United States entered World War I. Oneida joined the wartime effort with the production of ammunition clips, lead-plated gas shells, and combat knives. The company also served as the principal source of a wide range of surgical instruments used in military hospitals. In 1919 Noyes returned briefly to Oneida after serving with the U.S. government’s Fuel Administration. He later served in Europe on the post-World War I Peace Conference and the Rhineland Commission to decide the particulars of Allied occupation of Germany.

Noyes resumed the general managership of Oneida in 1921 amid financial crisis. After steering the company through that predicament, he gave the general manager position to a son-in-law, Miles E. Robertson, in 1926, retaining the post of president and de facto control of the company. Oneida’s trap business was sold in 1925, which left the company entirely dependent on the silverware manufacture. By 1930, 33 percent of the board of directors was composed of people from outside the community.

In 1935 the company’s name was changed to Oneida Ltd. to differentiate tableware produced by Oneida from that of lower quality subsidiaries of the company, such as Wm. A. Rogers. The name change signaled a new era at Oneida. Noyes ceded control of Oneida to Miles Robertson, although he didn’t formally hand over the presidency until 1950. Robertson was known for his “toughness”: despite the rigors of the Great Depression, Oneida made a profit in 1933, when no other company in the silverware industry could. By this time, Oneida had subsidiaries in Canada and Great Britain.

Robertson began to recruit outside Oneida and Kenwood during that decade as well. After the mid-1930s, Noyes’s ideological influence gave way to more worldly viewpoints. Oneida became less community-oriented and more like a typical corporate culture with few family ties and less of a social utopian bent. Before World War II, new members of Oneida’s management knew that they would never become wealthy at the company, but would gain personal satisfaction through the successes of the company. But with the arrival of more and more “outsiders,” increasing competition for quality personnel, and increasing segregation of Oneida from the Community, management salaries slowly grew to meet prevailing wages in the industry.

World War II brought about other changes at Oneida as well. The company’s contribution to the war effort included production of silverware for the Army and Navy and surgical instruments for military hospitals. Oneida also produced products for the battlefield: rifle sights, parachute releases, hand grenades, shells, survival guns, bayonets, aircraft fuel tanks, and chemical bombs, among other things. The company even purchased a separate factory in Canastota, New York, that produced army trucks, aircraft survival kits, and jet engine parts. That plant stayed in operation for several years after the war.

Although the Oneida of the 1950s had accepted the wage scales of the outside world, it continued to operate by Noyes’s principle that management should take salary cuts in tough financial times. However, the employees of the 1950s had changed along with the times, and a 1957 cut in directors’ salaries was perceived by employees not as a demonstration of management’s vested interest in the welfare of the company, but as a drastic measure indicating impending financial disaster.

The directors restored their pay, but Oneida’s financial problems continued until 1960, when the company posted its first annual deficit. That same year Pierrepont Trowbridge (“Pete”) Noyes replaced his father as president of Oneida. Oneida had trouble adjusting to the loss of government orders that had supplemented silverware sales during World War II and the Korean War. The work force declined from a high of 3,800 in 1949 to 2,000 in 1960. Oneida responded by developing new lines with new products, reorganizing production, and introducing new advertising and marketing strategies. By the end of the decade, the work force had grown to more than 3,000 employees.

In 1977 Oneida moved to diversify its interests through the purchase of the Camden Wire Co., Inc. Camden Wire was one of the principal U.S. manufacturers of industrial wire products. One year later Oneida acquired Rena-Ware, a cookware manufacturer with operations in 34 countries and the majority of sales outside the United States. That year the company also got a new president, John Marcellus, Jr., who had joined Oneida in 1946. Pete Noyes continued as chairman until 1981, when Marcellus also assumed that position.

By 1983 the company sold over half of all flatware purchased in the United States. The company sought to purchase other companies in order to infiltrate the total tableware market. Oneida purchased Buffalo China Inc., one of the nation’s largest volume producers of commercial chinaware, and Webster-Wilcox, a producer of expensive hollow ware (silver serving platters). In 1984 the company acquired D. J. Tableware, maker of high quality flatware, hollowware, and china for the food service industry. Oneida also began to market a line of crystal stemware and gift ware in the mid-1980s.

The company’s marketing campaigns were similar to its earliest promotional efforts. Spare but elegant advertisements in Brides and Vogue featured single items, and were so popular that Oneida sold some of the ads as posters. The recession of the early 1980s, however, saw Oneida’s earnings plummet 65 percent in 1982. As primarily a consumer products company (industrial wire sales only constituted 24 percent of Oneida’s profits in the mid-1980s and less than 30 percent in 1991), Oneida suffered more than expected. The company’s problems were exacerbated when Japanese and other importers flooded American housewares departments with inexpensive flatware.

Oneida attempted to compete by taking the high road—emphasizing the superiority of its products and leaving the low-end manufacturers to fight among themselves. The strategy was unsuccessful, and Oneida’s market share plummeted to 39 percent in 1986. The company laid off workers and lost more than $1 million between 1985 and 1986.

In 1986 the board of directors moved to revive Oneida using a new strategy, based not on marketing and new products, but on thrifty production. John Marcellus resigned, and the company named William Matthews as chairman and CEO and Samuel Lanzafame, formerly of the Camden Wire subsidiary, as president. Lanzafame had made Camden Wire Oneida’s most profitable division, and the board hoped that he could do the same with the parent company. Lanzafame worked to enhance Oneida’s economies of scale—when he became president, the company’s two flatware plants operated at only 60 percent to 70 percent of capacity because they were concentrating on expensive flatware alone. The company began importing more inexpensive flatware to market under its name until it could bring its own factories up to speed on production of lower-quality (but higher volume) merchandise.

Matthews, the new chairman of the board, sold off the company’s fleet of limousines and its corporate jet, then trimmed the management staff by 15 percent. He encouraged worker loyalty by offering an Employee Stock Option Plan in 1987 that put 15 percent of the company’s stock in the employees’ hands. Late in the decade, he oversaw the investment of more than $26 million into plant improvements, including computer design and manufacturing systems, plant consolidation, and machinery upgrades. By the end of the 1980s, Oneida had regained its 52 percent share of the flatware market. Lanzafame resigned as president in 1989. Gary Moreau was named president in 1991, joining Matthews at the helm of the company.

Throughout the economic, social, and political changes that Oneida has seen during its 150-year history, the company’s reputation for excellence and brand recognition have remained unshakable. In 1992 an independent national consumer study revealed that 87 percent of consumers name Oneida as the first company they think of when asked about stainless steel flatware—and there was no close second.

Principal Subsidiaries

Camden Wire Co., Inc.; Oneida Canada Limited; Oneida Mexicana, S.A.; Kenwood Silver Company, Inc.; Oneida Distribution Services, Inc.; Buffalo China, Inc.; D.J. Tableware, Inc.; Oneida International, Inc. (70%); sant’Andrea S.r.L; Oneida, S.A.