Sealed Power Corporation

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Sealed Power Corporation

100 Terrace Plaza
Muskegon, Michigan 49443
(616) 724-5011

Public Company
Incorporated: 1912 as Piston Ring Company
Employees: 6,000
Sales: $666 million
Market value: $416 million
Stock Index: New York

This Fortune 500 company celebrated its 75th anniversary in 1986 with a record year, but as the president of Sealed Power, Robert D. Tuttle, has remarked, It would be less than candid to say that Sealed Power is a household name, although we are very well known and respected within the industries we serve. Sealed Power is the worlds largest supplier of automotive engine replacement parts, and has numerous other major businesses. The company is divided into four areas: replacement products, powered products, service products, and industrial products. Even though most U.S. consumers do not recognize the company name, they do a large amount of indirect business with Sealed Power.

While the automobile was gaining popularity in the United States around the turn of the century, an enterprising man named Charles E. Johnson was busy gaining experience in a wide range of occupations, including farming, woodworking, cabinetmaking, and toolmaking. He also designed camshafts and held a number of patents. But most importantly, Johnson had arrived at a new method for manufacturing piston rings. At that time, it was normal procedure to cut or slice off piston rings from a long cylinder of cast iron. Johnson suggested that piston rings should be cast individually, with proper tension precast. A small section of each ring would then be removed so that when a ring was placed and compressed against a perfectly round cylinder wall, it would make a perfect fit.

Johnson approached his friend, Paul R. Beardsley, a bookkeeper for a Muskegon, Michigan department store, and the two men formed a partnership and took their idea to Detroit. There they learned that most engine manufacturers made their own rings. Undaunted, Johnson and Beardsley combined their life savings of $3000 and borrowed additional capital to establish the Piston Ring Company. Working nights in their factory, while maintaining regular day employment in order to support their families, the two men made 200 sample piston rings. Beardsley strung some of the samples on his arm and walked across the street to show them to the purchasing agent at the Continental Motors Corporation. The agent had never heard of the Piston Ring Company, but Continental Motors tried the rings, like the quality and the price, and placed an order.

The growth of the Piston Ring Company was dramatic. Almost immediately the company needed larger quarters, and in its first year of operation1912it produced 348,000 rings. In 1913 a foundry was added to the main factory so that castings did not have to be purchased from an outside source. The company sold one million rings the following year, and by 1916 the foundry was doubled in size and a four-story machine shop was constructed. The company retooled its factory during World War I to manufacture piston rings for military trucks, airplanes, tanks, and naval vessels. Later, in 1921, the Piston Ring Company decided to enter the replacement parts market, one of the few expanding areas during the 1920-21 recession.

In 1925 the company created an Export Department and within a year 38 foreign countries were purchasing its products. The name Sealed Power Corporation was adopted in 1932 and an aggressive advertising campaign was launched. Salesmen began to call on auto parts suppliers, the company built a facility in Canada and a number of acquisitions were made. Sealed Power was now able to add pistons and heavy-duty cylinder sleeves to its products.

Facilities were expanded during World War II and new ones were created to handle the increase in military demand. Paul Beardsley died shortly after the war in 1947, and after Charles Johnson died in 1952, Johnsons son, Paul, assumed leadership of the company. Other significant events of the 1950s included the companys first public offering of common stock shares and the acquisition of the American Hammered Automotive Replacement Division of Koppers, one of the most respected names in the replacement parts business. But despite Sealed Powers expansion and diversification, engine rings continued to be the companys main product. The introduction of the SS-50, the first stainless steel oil ring in the industry, proved to be most successful and it has remained at the core of Sealed Powers replacement parts business.

The 1960s and 1970s were marked by diversification and internationalization. Sealed Power acquired facilities in the United States and Mexico which enabled the company to further expand its product lines with items such as automatic transmission filters, powered metal parts and components, hydraulic valve tappets, and zinc and aluminum die castings. Net sales rose from $82.2 million in 1971 to $141.9 million in 1975. During the same five year period, Sealed Powers net income rose from $4.9 million to $7 million.

Despite the early 1980s slump in the auto market, Sealed Power did not suffer badly. Once again, consumers tended to have their cars repaired rather than purchase new ones. While original equipment sales were down, the sales of replacement parts, especially for the popular compacts, kept the company profitable. Sealed Powers large distribution network of over 30 facilities throughout the United States and its team of more than 100 trained field salespeople also helped to give the company an advantage over its smaller rivals.

Anxious to ensure steady growth in the foreseeable future, and well aware of the uncertainties of its markets, the company management decided to expand beyond original equipment and replacement parts. In the past, the company logo identified Sealed Power as a piston ring company; a new logo was adopted to reflect not only Sealed Powers increased line of engine parts but also its new products. In 1982 the company acquired the KentMoore Corporation, a leader in special service tools. This was followed in 1985 by the acquisition of another large tool firm, Owatonna Tool Company, active in the automotive electronics field and a manufacturer of high pressure hydraulics and window and door hardware.

Today Sealed Power is organized into four major divisions. Replacement parts, the first division, still remains the largest segment, generating 38% of sales. These parts include engine components, transmission oil filters, chassis parts, and service tools. Powered products, the second division, accounts for 30% of sales, and includes Sealed Powers piston rings, transmission rings, valve tappets, cylinder sleeves, transmission filters, and a variety of die cast or powered metal parts. In the third division, service products, Sealed Power is a world leader in designing, engineering, manufacturing, and marketing special service tools and electronic diagnostic instruments. These products are primarily for the auto and heavy duty industrial markets, but also for agricultural, construction, and the refrigeration/air conditioning industries. Presently, the service division produces 18% of the companys income. The fourth segment, the industrial division, which contributes 14% of income, manufactures a wide range of products, including hardware, hydraulic pumps and rams, special purpose equipment for dispensing fluids, and threaded fasteners.

Sealed Power is growing steadily. Sales increased 7 percent between 1985 and 1986, up to $665 million from $625 million. Net income has risen from $9.9 million in 1976 to $29.9 million in 1986. However, it appears that the company has no intention of resting on its laurels. Current president Robert Tuttle recently said: Our major effort... is to provide quality by preventing mistakes. We are directing our efforts toward better training, toward reengineering the product where feasible, and toward redesigning the workplace.

Principal Subsidiaries

Sealed Power Corp. of Canada, Ltd. (40%); Sealed Power de Mexico, S.A. (40%); Cia Americana-Mexicana, S.A. (40%); Kent Moore Corp.; Owatonna Tool Co.; Truth, Inc.; Tri-Mark Corp.; Twin Tool, Inc.