150 Alhambra Circle
Coral Gables, Florida 33134
Fax: (305) 446-8128
Incorporated: 1866 was Willcox & Gibbs Sewing Machine Co.
Sales: $1.12 billion (1995)
Stock Exchanges: New York
SICs: 5063 Electronic Apparatus and Equipment, Wiring Supplies and Construction Materials; 5065 Electronic Parts and Equipment, Not Elsewhere Classified; 5085 Industrial Supplies
Rexel, Inc. is the fifth largest distributor of electric parts and supplies in the United States, with most of its business in the South and Southwest. For more than a century Rexel was a manufacturer and distributor of industrial sewing machines named Willcox & Gibbs. It began to diversify in 1958 and eventually came to concentrate its efforts on the wholesale distribution of electrical parts and supplies. During the early 1990s the world’s largest company in this field, a French firm named Rexel, S.A., bought a controlling interest in Willcox & Gibbs, disposed of its remaining links to the apparel industry, and renamed the company Rexel, Inc.
A Century in the Sewing-Machine Trade
Established in 1859, Willcox & Gibbs Sewing Machine Co. was incorporated in New York seven years later. It was engaged in the sale of sewing machines and accessories for industrial applications, manufactured by others under contract. The company had assets of $2.6 million in 1923, of which $1.4 million consisted of inventories. There were 128 employees in 1930 and 218 stockholders in 1931. Dividends were paid consistently for many years, dating back to at least 1927. During the Great Depression, however, inventories were reduced and no dividends were paid during much of that time.
Willcox & Gibbs purchased Metropolitan Sewing Machine Corp. in 1935 and opened an English subsidiary in 1937. The company did not disclose annual income until 1939, when it reported net income of only $28,960, followed by $12,466 in 1940. In 1941 Willcox & Gibbs opened its first manufacturing plant, in Nyack, New York. Its net income varied during the decade from $74,125 in 1945 to $286,867 in 1948. In 1950 the company had 545 employees, 299 holders of its common stock, and net income of $259,748.
Willcox & Gibbs first reported its sales total in 1952, when it earned $149,709 on net sales of $4,861,135, a figure not surpassed until 1957. It ran a deficit in 1953 and ceased, except during 1956-57, to pay dividends on common stock until 1985. Seeking to end its dependence on the low-profit sewing-machine business, it acquired, in 1958, Thermatron Co., which produced and sold electronic equipment for heat sealing and welding of soft plastic products. In 1960 Willcox & Gibbs opened a plant in Orangeburg, New York, and also added a Swiss subsidiary. That year it earned $ 161,036 on sales of more than $8.4 million and had 548 employees and 526 stockholders.
Diversified Manufacturers in the 1960s
Willcox & Gibbs grew by acquisition and diversification during the 1960s. In 1960 it acquired the European and U.S. rights to the automatic doffing machine, developed to supplant the manual operation of removing full bobbins of yarn and replacing them with empty plastic or paper tubes on the spindles of the spinning frame. It sold the North American rights to this machine to the Draper Corp. in 1961 for a share of the receipts from its sale or lease. The company acquired Raybond Electronics, a manufacturer and distributor of high-frequency wood-gluing and laminating equipment, in 1966. During the same year it acquired Faratron, a manufacturer of high-frequency sealing and curing equipment, the manufacturing and distributing rights to a sealing machine used to package such items as phonograph records, toys, and candy, and the U.S. manufacturing and distributing rights to a British technique electronically joining the uppers of shoes.
Willcox & Gibbs dropped “sewing machine” from its name in 1967, the year its net sales reached $17 million and its net income $675,000. Also in 1967, the company acquired Stanelco Industrial Services, manufacturer and distributor of high-frequency plastic-welding and induction-heating equipment, and Tele-Sonic, designer and manufacturer of bag-opening and -filling machinery, bag sealers, and overwrap machinery. In January 1968 the company acquired the rights to a new moldless process of fusing polystyrene beads directly inside a shipping container.
In 1968 sewing machines for industrial use accounted for about half of company income. This included not only the machines manufactured by Willcox & Gibbs and its U.K. subsidiary, but also distribution of the machines manufactured by G.M. Pfaff A.G. of West Germany. The Thermatron division was manufacturing equipment joining soft plastic products and other materials through the dielectric-heating process. Stanelco-Thermatron Ltd., a U.K. subsidiary, was producing induction-heating equipment for metals and plastic welding equipment. Raybond, also a subsidiary, was making equipment for the bonding of wood, such as furniture or flooring. Tele-Sonic and other divisions were engaged in making packaging equipment. Four divisions were involved in the manufacture of high-frequency heat-sealing, curing, and drying machinery, making the company the nation’s foremost producer in this field.
In 1969, the first year Willcox & Gibbs stock was listed on the American Stock Exchange, it acquired two companies making swatch cards and sample books for the wall-covering, textile, garment, carpeting, upholstery, and drapery industries, making this division the largest operation of its kind in the United States. A third acquired company manufactured and imported trimmings and decorative buttons. The following year Willcox & Gibbs acquired Sunbrand Corp., which became a subsidiary selling some 50,000 items for the apparel industry. After losing $1.7 million in 1969, Willcox & Gibbs recovered the following year, earning $338,912 on net sales of $26.7 million. The company had four plants in New York, two in California, one in Atlanta, and two in England.
Bankruptcy in the 1970s
Willcox & Gibbs continued to acquire small companies in related businesses through the early 1970s while, in 1972, selling its Dielectric Division, which included Stanelco-Ther-matron, for cash, notes, and stock. Sales rose each year, but in 1974 the company lost $1.5 million on net income of $40.5 million. The following January, John K. Ziegler, the company’s vice-president for finance, moved up to president and chief executive officer, but that year Willcox & Gibbs lost $11.4 million on net income of $48.8 million. This outcome was attributed mainly to abnormally low profit margins on sales of industrial sewing equipment.
In June 1976, soon after the American Stock Exchange suspended trading in its shares, Willcox & Gibbs borrowed $28.2 million to consolidate its debts. When the company’s creditors refused to accept a delay in payments, however, it filed for reorganization in November 1976 under Chapter 11 of the federal bankruptcy act. A new $10 million loan allowed the company to continue business without interruption, but it owed $38 million and had negative net worth of $27 million.
During the following years Willcox & Gibbs persuaded its creditors to settle for what turned out to be only 20 cents on the dollar, paid in cash, preferred stock, and warrants. Trading of the company’s stock on the American Stock Exchange resumed in June 1979. For 1978 Willcox & Gibbs reported net income (after an extraordinary credit) of $1.3 million on net sales of $63.8 million, followed in 1979 by net income of $2.1 million on net sales of $69.7 million. In 1980 its properties included plants in Atlanta, Brooklyn, Dallas, El Paso, Los Angeles, Miami, and Pittsburgh, as well as in Fall River, Massachusetts, and Inwood, New York. Overseas, the company had properties in Paris, London, and High Wycombe, England.
Electrical Parts Distribution in the 1980s
In 1982 Willcox & Gibbs sold its domestic sewing-machine operations to a new Japanese-owned company, Pfaff-Pegasus of U.S.A. Inc., for about $2.5 million and a 29 percent interest. It also sold, in the same year, almost all of its operations in England and France to G.M. Pfaff of West Germany for $2.1 million in cash and notes. These divestitures reduced its debt by $8.3 million. However, in 1983 the firm purchased Regal Manufacturing Co., the leading producer of covered elastic yarn, chiefly for pantyhose, for $3.2 million in cash and a promise of added payments over seven years. Later that year it paid $20 million in cash and notes, plus payments contingent on profits, for Consolidated Electric Supply Inc. and its affiliates, a major wholesale distributor of electrical components and supplies to building contractors in southern California and southern Florida.
The addition of Regal, and especially Consolidated, which had annual sales larger than the prior Willcox & Gibbs, hiked the revenues of the amalgamated company from $74.9 million in 1983 to $207.8 million in 1984 at a total cost of only $29 million. Net income, excluding extraordinary credits, rose from $1.3 million to $5.1 million. In addition to its acquisitions and its manufacture of cards and books for the textile, apparel, and wall-covering industries by the Reliance Sample Card division, the company now consisted of its Sunbrand division, which continued to distribute sewing machines and parts, serving as exclusive U.S. distributor for Pfaff and Pfaff-Pegasus and also marketing a wide range of other products to the apparel and related industries, including pressing and cutting equipment; the Unity Sewing Supply division, a wholesale distributor of sewing-equipment replacement parts; and the Montrose Supply & Equipment division, distributing parts and equipment to the textile and apparel industries, mainly to companies engaged in knitting operations.
Willcox & Gibbs continued to expand in 1984 by acquiring Inter-City Wholesale Electric Inc., another distributor in the thriving housing market of southern California, and Eildon Electronics Ltd., a Scottish company producing hardware and software for automated apparel manufacturing. In 1985 it acquired Leadtec Systems, Inc., another supplier of computer-based automation equipment for the apparel industry, and its stock moved up to the New York Stock Exchange. For the year net income, excluding an extraordinary credit, came to $6 million on net sales of $224.7 million. Of this total, distributing electrical products accounted for about 60 percent, distributing apparel equipment for about 20 percent, and manufacturing for about 20 percent.
In 1986 Willcox & Gibbs acquired Rubyco, Inc., the largest Canadian manufacturer of covered yarn, for about $6.4 million and thus became the world’s largest manufacturer of this product. The following year it purchased three electrical-supply companies in the South. Clark Consolidated Industries, Inc., a big Ohio electrical-parts distributor, was bought in January 1989 for about $17.3 million. Willcox & Gibbs introduced Satellite Plus, its automated system for monitoring employee productivity in the apparel industry, in 1987. For the seventh straight year, sales rose, in 1989, to a record level, $547.7 million; net income came to a record $17.9 million.
Electrical Supplies Focus in the 1990s
In the company’s most expensive acquisition yet, Willcox & Gibbs purchased Filiz Lastex, S.A. of Troyes, France, a producer of covered yarn, in 1990 for $44.9 million. In 1992, however, the company spun off its covered-yarn subsidiary, Worldtex Inc., into a separate company. Willcox & Gibbs shareholders received one share of Worldtex for each share of the parent company’s stock in a tax-free transaction. That year, following a meager 1991 in which the company earned only $248,000, Willcox & Gibbs lost $4.9 million on net sales of $359 million.
Willcox & Gibbs returned to the black in 1993, reporting net income of $9.1 million on net sales of $521.5 million. In April 1993 it paid $13.6 million for Sacks Electrical Supply Co., and in December acquired another distributor of electrical parts and supplies, Summers Group Inc., for $91 million in cash and notes. To finance the purchase, Willcox & Gibbs sold 3.5 million shares of newly issued common stock to a French firm, Rexel, S.A., for $31.4 million in cash and agreed to allow Rexel to appoint five of the company’s nine directors. In March 1994 Ziegler resigned as chairman, president, and chief executive officer, turning over the presidency to Alain Viry, a former Rexel executive.
By acquiring a controlling interest in Willcox & Gibbs, Rexel, the world’s largest distributor of electrical parts, was taking dead aim at the $40-billion U.S. market. (It had first bought 27 percent of the company in 1992, paying with $9.9 million in cash and all its stock in Southern Electric Supply Co.) Viry told International Business in 1994 that his goal was to free Willcox & Gibbs’s assets by reducing the receivables cycle to a maximum of 45 days and decreasing inventory. He also said he planned to improve the purchasing system and to find better ways to invest the additional cash he expected to generate.
Since Rexel was not interested in serving the apparel industry, it sold this segment of Willcox & Gibbs’s business to WG, Inc. for about $44 million in cash, stock, and warrants and moved the company’s headquarters from Manhattan’s garment district to Coral Gables, Florida. In 1995 Rexel, S.A. raised its stake in Willcox & Gibbs to 44 percent and changed the name of the company to Rexel Inc. Net sales rose to $1.07 billion and $1.12 billion in 1994 and 1995, respectively. Net income jumped from $8.9 million in 1994 to a record $19.8 million in 1995. The company’s long-term debt was reduced from $112 million to $50 million during the year. By October 1995 Rexel, S.A. had raised its stake in Rexel, Inc. to about 47 percent. Rexel, S.A. was a subsidiary of France’s Pinault-Printemps-Redoute group.
By the end of 1994 the company, renamed Rexel, Inc., was engaged only in the wholesale distribution of electrical parts and supplies, operating 171 electrical-distribution locations in 19 states and the Bahamas. During that year substantially all of the company’s operating subsidiaries were merged into Southern Electric Supply Co., a unit in the eastern region, and Summers Group Inc., a unit in the western region.
Each of the company’s locations served an average of 400 customers in an area of approximately 50 miles in radius and carried about 15,000 items. Its clientele consisted of electrical contractors engaged in construction work and industrial customers who needed materials for the manufacture of equipment and for maintenance and repairs. The product line included electrical fixtures, cable, cords, boxes, covers, wiring devices, conduit, raceway duct, safety switches, motor controls, breakers, panels, lamps, fuses, and related supplies and accessories. It also included materials and special cables for computers and advanced communications systems.
In addition, the company had two divisions focused on specialty markets. The DataCom division distributed products used to interconnect voice, data, and video systems. The Cummins division distributed supplies to the utility industry. These two divisions were responsible for about eight percent of the company’s sales in 1994.
Calcon Electric Supply, Inc.; C.E.S. Industries, Inc.; Clark Consolidated Industries, Inc.; Consolidated Electric Supply, Inc.; Consolidated Electric Supply (Bahamas) Ltd.; Duellman Electric Supply Co.; Elgee Electric Supply Co.; Engineered Apparel Concepts, Inc.; Rawlinson Electric Co.; Robin Service Corp.; Rogers Lighting Co.; Seaco Electrical Supplies, Inc.; Southern Electric Supply Co., Inc.; Spindletop Electrical Distributing Co.; Summers Electric Co.; Summers Group, Inc.; The Sacks Electrical Supply Co.; W & G Export Corp.; Willcox & Gibbs of Alabama, Inc.; Willcox & Gibbs DN, Inc.; Willcox & Gibbs DS, Inc.
Consolidated Electric Supply; DataCom; Midwest Division; Southern Electric Supply; Cummins Utility Supply; Summers Group.
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Slutsker, Gary, “The Joys of Bankruptcy,” Forbes, July 28, 1986, pp.136, 139.
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_____, “New Direction,” Barron’s, June 24, 1985, pp. 49, 51.
_____, “Skein of Profits,” Barron’s, September 15, 1986, p. 47.
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