P. H. Glatfelter Company

views updated

P. H. Glatfelter Company

228 South Main Street
Spring Grove, Pennsylvania 17362
U.S.A.
(717) 225-4711
Fax: (717) 225-6834

Public Company
Incorporated: 1906
Employees: 3,200
Sales: $540 million
Stock Exchanges: American
SICs: 2611 Pulp Mills; 2621 Paper Mills

P. H. Glatfelter Company, a producer of high-quality, specialty paper, was founded in 1864 in the rolling hills of south central Pennsylvania. Since the early 20th century it has been an industry leader of uncoated printing paper, used largely in hardback versions of novels and other trade books. Other Glatfelter products have included high-quality recycled paper for trade and reference books, and thin, flax paper for cigarettes as well as religious and financial publications. Guiding the company over the years has been an old-fashioned business philosophy emphasizing long-term goals and fiscal conservatism.

Spring Grove, the home of P. H. Glatfelter Company, was established in 1747 along the Codorus Creek some ten miles north of the Pennsylvania-Maryland border. To the west of the town were the Blue Ridge Mountains, and to the east, beyond the larger town of York, flowed the wide Susquehanna River. The town’s original name, Spring Forge, reflected its early industry, an iron forge, which during the American Revolution manufactured supplies for the Continental Army. The forge was in operation until 1851, when Jacob Hauer bought the buildings and converted them into a paper mill.

Some 20 miles southeast, near the Maryland town of Gunpowder Falls, another paper mill, called Loucks, Hoffman & Company, began operations in the 1850s. It was here in 1856 that 19-year-old Philip H. Glatfelter began his first job in the paper trade. Glatfelter—whose wife, Amanda, was the sister of Jacob Loucks—worked in the firm for seven years, and in 1863, at the height of the American Civil War, Glatfelter decided to go into business on his own.

By this time Hauer had died, and his Spring Paper Mill was being sold at an orphan’s (probate) court. A printed announcement of the sale mentioned a “tract of land containing about 101 acres … a large stone paper mill, a frame machine house, stone stock house, and four tenant houses.” The mill itself had two Burnham water wheels propelled by the Codorus Creek, four large-capacity engines, and a 62-inch cylinder paper machine. Glatfelter learned about the mill from Loucks, whose second wife, Mary, was the daughter of Jacob Hauer. On December 23, 1863—one month after President Lincoln’s famous speech at nearby Gettysberg—Glatfelter bought the property for $14,000.

Glatfelter’s new paper business, initially called Spring Forge Mill, began operations in July of 1864 with a daily capacity of 1,500 pounds. Its first product was newsprint, which Glatfelter made from a pulp of rye straw mixed with a smaller amount of straw and rags collected from various cotton gins along the region’s railway lines. This pulp material was retrieved in spacious railcars known as barns. Because at the time Spring Forge itself did not have a railway line, “barns” returning from the cotton gins could get no closer than Jefferson and York, some five and ten miles, respectively, from the mill. When the town changed its name in 1882 to Spring Grove, the company thus became the Spring Grove Mill.

For the first 25 years newsprint continued to be the company’s main product, and during this period it made impressive gains in production. From the initial capacity of 1,500 pounds per day, the mill was able to expand to 3,500 pounds in 1873, 60,000 in 1885, and 110,000 by 1895. This increased capacity was made possible by the company’s investment in new, modern facilities. In 1874, for example, the mill was moved farther north along the Codorus Creek, and next to it the company constructed a new building costing $200,000 and containing an 82-inch paper machine. Two years later Spring Forge celebrated the opening of its rail line, which ran through the mill’s new site.

In 1880 Glatfelter entered into an agreement with Pusey and Jones Company of Delaware to build a 102-inch fourdrinier machine, allowing the mill to produce a considerably wider roll of paper. Named after Henry and Sealy Fourdrinier, who patented an early form of the machine in England in 1806, the fourdrinier machine fed pulp onto a continuous wire belt, shook it to remove excess water, and then pressed and dried the pulp into paper. Glatfelter’s new fourdrinier machine was until 1887 the largest in the world, and the extremely wide paper rolls made by the machine helped him gain new customers. In 1887, when the Philadelphia Public Ledger began operating two 94-inch printing presses, Spring Grove Mill was the only business in the country that could supply the paper. The mill also produced paper for a variety of other newspapers in Pennsylvania and Maryland, including the Philadelphia Evening Telegraph.

Soon Glatfelter also changed his pulp-making methods, which would result in a better quality paper. Prior to 1881 the mill mechanically separated the fibers of the raw materials, probably with the use of a grinder. This process, acceptable for newsprint and other paper intended for temporary use, had a number of drawbacks. Mechanical separation tended to fragment and shorten the fibers, thus lessening their ability to bind and make strong paper. Moreover, fragmentation left considerable debris in the pulp, and various remaining chemical constituents caused the paper to grow yellow with age. Even when new, such paper did not have a “high whiteness” and was difficult to bleach.

As a result, Glatfelter began to take note of a new chemical method called the soda process, which enabled a high-quality paper to be made from wood fibers. It was developed in 1851 by Englishman Hugh Burgess, who a few years later immigrated to the United States to set up a paper mill in Pennsylvania. In the soda process, wood chips were boiled in a caustic alkali at a high temperature and pressure; afterward, the separated fibers were washed in water and then bleached. In 1881 Glatfelter built a giant soda-process mill, which was used to make pulp from jack pine, poplar wood, and straw. Straw, however, came to be used in decreasing quantities. By 1885 this new production helped the company surpass $500,000 in total sales, and four years later the number of employees reached 110. With its new pulp-processing method, the company in 1892 was able to make one of its most important changes—the suspension of newsprint production and the subsequent focus on high-quality paper for books, lithographs, and business forms. For this purpose, another soda-process pulp mill was installed in 1895, and by the turn of the century the company had become an industry leader of high-quality uncoated printing paper.

The founder’s son, William L. Glatfelter, entered the business in 1887 after graduating from Gettysburg College, and that year he began a long apprenticeship under the guidance of his father. He had already worked at the mill for 19 years when, in 1906, the business was incorporated as P. H. Glatfelter Company. The following year the founder died, and the reins to the company were handed to his son.

President of the company from 1907 to 1930, William Glatfelter oversaw a tremendous increase in production, as well as continued advances in chemically processed wood pulp. In 1918, in order to manage the mill’s growing need for wood, he established Glatfelter Wood Pulp Company, a wholly owned subsidiary, with more than 10,000 acres of timberland in southern Maryland. Additional timberland in Maryland and eastern Virginia would eventually boost the acreage to 107,000.

William Glatfelter was responsible for instituting a number of other major projects, many of which were completed in the early 1920s. A new basin for storing up to 50,000 tons of coal—the fuel used to fire the company’s high-pressured boilers—was constructed during this period, as was a large indoor loading room, where newly manufactured paper was placed on waiting railroad cars. A tachometer, which measured rotational speed, was attached to all of the company’s machines, thus providing a more accurate way to monitor production. Most spectacular was the new fourdrinier paper machine, installed in 1922, which was capable of making rolls of fine paper 170 inches wide. This giant paper machine, designed by Glatfelter engineers and housed in a new building, was the world’s first fourdrinier to have an easily replaceable wire belt. Perhaps reflecting these changes, Spring Grove’s Main Street, where the company’s office building was located, was first paved in 1922.

In 1928, just a year before the great stock market crash, annual production at P. H. Glatfelter Company had reached 50 million pounds, and the number of employees stood at 300. That year, in keeping with the company’s policy of “maintaining a modern, efficient mill,” P. H. Glatfelter II, William’s son, introduced a new, ten-year modernization program, which included the installation of an even larger, 190-inch fourdrinier machine. As a result, the outlook for the company seemed especially bright, but just two years later conditions noticeably changed for the worse. By 1930 the country was quickly falling into an economic crisis, and sales at P. H. Glatfelter Company and other paper concerns were plummeting. William Glatfelter, moreover, unexpectedly died in April. Unlike many other firms, P. H. Glatfelter Company managed to survive the Depression of the 1930s, and its new president, P. H. Glatfelter II, was even able to complete his modernization program, at a cost of some $2 million. As part of this program, one of the company’s pulp mills was refurbished, and its capacity was doubled. When the economy picked up again during World War II, P. H. Glatfelter Company added, among other improvements, new equipment for bleaching paper.

P. H. Glatfelter II, president until January 1, 1970, guided the company through the postwar economic boom and started a new effort at reforestation and environmental stewardship. In 1947 the company set aside 600 acres of land near Fairfield, Pennsylvania, to create the state’s first tree farm. Between 1950 and 1962 it spent $1.6 million to build a waste-water treatment plant, and a new 400-ton boiler was installed in 1963 to more efficiently burn a pulp by-product called black liquor. During this time there were also millions of dollars spent on capital improvements for increased production. For example, the company’s seventh and eighth paper machines were added in 1956 and 1965, respectively, and between 1964 and 1968 capital expenditures alone were nearly $40 million.

An especially ambitious project was the P. H. Glatfelter Dam, completed in 1965 along a stretch of the Codorus Creek about five miles south of Spring Grove. The dam created a 15-billiongallon reservoir called Lake Marburg, which was intended to guarantee a reliable water supply for the Glatfelter mill farther downstream. In addition, the reservoir was eventually surrounded by a newly created 3,326-acre Codorus State Park, which included a public swimming pool, and provided opportunities for camping, hiking, horseback riding, and boating. The project cost some $10 million, split equally between P. H. Glatfelter Company and the Pennsylvania Bureau of State Parks.

P. H. Glatfelter II retired in 1970 and his son, P. H. Glatfelter III, became president, a position he held for a decade. An early challenge for the new president was Hurricane Agnes, which hit the eastern seaboard in June of 1972 and created severe floods in Spring Grove. According to P. H. Glatfelter III, the flood “caused more damage and financial loss to the Company than any other single event.” Among other notable developments during his tenure was the 1973 decision by Glatfelter employees to join the United Paperworkers International Union, and in 1977 the company received the Isaac Walton League of America Clean Water Award. The company entered a new product line in 1979 with its purchase of Bergstrom Paper Company, a leading manufacturer of recycled printing paper, with mills in Neenah, Wisconsin, and West Carrollton, Ohio. The West Carrollton mill was sold in 1984, but during the 1980s the company rebuilt all three paper machines at the Neenah plant.

Thomas C. Norris, named president in 1980, was the first person outside the Glatfelter family to run the company. His experience with P. H. Glatfelter Company stretched back to 1958, when he took a part-time job in the paper mill at the age of 19. Like his predecessors, Norris oversaw a program of new capital expenditures, including the rebuilding of two paper machines at Spring Grove. Even more significant was the company’s 1987, $220-million purchase of Ecusta Corporation, located in Pisgah Forest, North Carolina, which made extremely thin flax paper for the tobacco industry. The purchase of Ecusta doubled the number of Glatfelter employees from 1,700 to 3,400 and provided, along with uncoated and recycled printing paper, the third major underpinning of the company’s sales. Uncoated printing paper, however, remained its core product, which by the early 1990s made up some 30 percent of all paper used in the United States for hardcover trade books. Among the many well-known books printed on Glatfelter paper were Norman Mailer’s Harlot’s Ghost (1992), Steven King’s Four Past Midnight (1990), and Alexandra Ripley’s Scarlett (1991), the sequel to Margaret Mitchell’s Gone With the Wind, which in 1936 used Glatfelter paper for the original printing. Great Books of the Western World, a multivolume publication of classics, was printed with recycled paper from the Neenah mill.

P. H. Glatfelter Company headed into the 1990s with an exceptionally strong financial base, secured by its remarkable lack of debt. Although P. H. Glatfelter Company has occasionally borrowed money—for example, $179 million in 1987 to complete its acquisition of Ecusta—even this loan was paid off in just two years. The company’s strength was also found in its emphasis on specialized, high-quality paper, which was much less affected by recurring business cycles than large-volume,“commodity” paper products. In 1988 Glatfelter’s chief financial officer, M. A. Johnson II, explained,“Our emphasis is on profit, not on volume. That’s why we continue to be a niche company, one that is competing in areas where we’re not banging heads with people who are commodity-oriented.” Since the mid-1980s the company has expressed considerable self-confidence in its financial strength by its repurchase of millions of outstanding shares of Glatfelter stock.

With its financial security and its emphasis on specialty products, P. H. Glatfelter Company was able to weather profitably the declining market conditions for paper, which, beginning in 1990, were spurred by industry overproduction. Glatfelter’s record sales of $569 million in 1988, $598 million in 1989, and $625 million in 1990 tumbled to $567 million and $540 million, respectively, in 1991 and 1992. Even so, the company still posted a respectable net profit of $56.5 million in 1992, down from a high of $92.9 million in 1989. The company’s good health was credited to its old-fashioned, conservative business philosophy, as well as to the able guidance of its president, chief executive officer, and chairman of the board, Thomas Norris, who in 1992 was one of only eleven corporate leaders given Financial World’s Silver Award for “superior business leadership and achievement.”