SPS Technologies, Inc.
SPS Technologies, Inc.
Incorporated: 1903 as the Standard Pressed Steel Company
Sales: $716.6 million (1998)
Stock Exchanges: New York
Ticker Symbol: ST
NAIC: 332722 Bolt, Nut, Screw, Rivet, & Washer Manufacturing
SPS Technologies, Inc. is a leading international company producing both stock and specialty fasteners and fastening systems for automotive, aerospace, and industrial sectors. It also makes precision tools such as thread roll dies, drills, and metal cutting tools. For airplanes, helicopters, and satellites, SPS designs and manufactures instrument and distribution panels, armament controls, turbine lockplates, and other items. The firm’s Specialty Materials and Alloys Group provides superalloys and ceramic cores used in gas turbines, medical pros-theses, and other products. SPS is also the leading U.S. manufacturer of magnetic materials used for a wide range of applications, including assemblies for cars, aircraft, power supplies, electrical components, and telecommunications. After numerous acquisitions in the 1990s, SPS operates facilities in Pennsylvania, Utah, California, Ohio, Michigan, Tennessee, Illinois, Nebraska, and New York. Its overseas plants are located in England, Ireland, China, Canada, India, Brazil, Australia, Mexico, and Singapore.
Early Years: 1900–45
An industrial accident in Philadelphia resulted in Howard T. Hallowell starting a new company. In 1900 an overhead shaft hangar made of brittle cast iron broke at the American Pulley Company where the young draftsman worked. Hallowell designed a better hangar made from pressed steel, which was patented in 1901. In 1903 Hallowell and Harald F. Gade, a Norwegian engineer, along with their friends and relatives, started the Standard Pressed Steel Company in a rented Philadelphia plant to make the improved hangars.
In 1906 the firm began making socket set screws and soon a new plant was added just for the many screws, bolts, and other threaded items needed for the company’s products. In these early days skilled craftsmen did the best they could with calipers and scales to make precision parts, but it was the increased demand from World War I that caused the firm to greatly improve the accuracy of its manufactured items. During the war, the company operated three plants close to each other in Philadelphia.
In 1920 the Standard Pressed Steel Company moved its operations to one site in Jenkintown, a Philadelphia suburb that remained the firm’s headquarters in the decades ahead. Workers at the plant needed many work benches, so the company started making not only work benches but also other shop equipment, such as shelves and cabinets, that were sold to other companies. Thus was born the new line of SPS products. Also in the 1920s, the firm’s Unbrako Socket Screws were used by many manufacturers, and the company strengthened its distributor network.
The company in the 1930s slowed down due to the general business decline but learned some valuable lessons. For example, to meet the needs of radio manufacturers that wanted low inventory, Standard Pressed Steel learned how to operate on a strict schedule to make sure its customers received the parts they needed just in time to start production lines.
Other developments in the Great Depression included purchasing the Steel Factory Stool and Chair Business from Philadelphia’s Metal Products Company. The company also redesigned its Unbrako Socket Head Cap Screws so their outer surfaces were rougher. That simple change made it easier for workers with greasy hands to handle the screws.
The firm in 1930 started selling its Unbrako Screws to customers in England. In 1937 the firm began making those screws in Coventry, England, which led to the founding of Unbrako Socket Screw Company Ltd. By the late 1930s the busy firm destroyed its older buildings in Jenkintown and built a modern plant, a good move that prepared them for the demands of World War II.
The call for military parts and supplies helped SPS grow during World War II. In fact, SPS established a new company, The Pennsylvania Manufacturing Company, to meet the government’s demands for building complex machinery that was sent to the Picatinny Arsenal during the war years. Meanwhile, SPS facilities in Jenkintown ran 24 hours a day and employment peaked at over 3,000 workers. It made 30-caliber and 50-caliber armor-piercing bullet cores and also airframe bolts and other aircraft parts as the nation increased its production of war-planes. In 1941 the firm set up the nation’s first commercial machinery to test the fatigue of its fasteners. That led to more dependable bolts and screws and other threaded products.
Post-World War II Expansion
Following the 1949 recession, growth of the nation’s economy brought more orders to the firm, especially after the Korean War started in 1950. Sales grew from $14 million in 1949 to $34.7 million in 1951, the year Howard T. Hallowell became the chairman of the board, while his son H. Thomas Hallowell, Jr., took his place as president.
In the 1950s the firm acquired the Cooper Precision Products Company of Los Angeles; the Cleveland Cap Screw Company; the Columbia Steel Equipment Company in Fort Washington, Pennsylvania; the Nutt-Shell Company; The Detroit Diamond Company that made special kinds of nuts; and International Electronic Industries in Nashville, Tennessee.
Also in the 1950s the company bought 46 acres in Santa Ana, California, and built a modern 260,000-square-foot facility that was quite similar to the Jenkintown plant. To produce metric products for the growing European market, the company in 1959 organized Unbrako Schrauben in Koblenz, Germany; full production began the following year. By the early 1960s it had other overseas production or distribution facilities in Mexico City; Melbourne, Australia; Japan; and Shannon, Ireland. In 1962 company sales topped $100 million from selling its products in 52 countries. It employed a total of over 7,500 men and women in seven nations.
Much of this growth came as firms like Boeing, McDonnell Douglas, and Lockheed built more military and commercial planes in the postwar era. For example, each Boeing 747 frame required about 500,000 stock fasteners.
In 1978 the company changed its name to SPS Technologies, about the same time new opportunities arose with NASA and the space shuttle program. The firm created high-strength bolts, nuts, and shear pins used in the shuttle’s boosters and fuel tanks. Because of the extremes in space flight, the company designed its shuttle fasteners from special nickel and cobalt alloys that could withstand temperatures from—423 degrees to 750 degrees Fahrenheit and had tensile strength of 260,000 pounds per square inch. Since each shuttle needed hundreds of SPS bolts and some shuttle bolts cost up to $600, the shuttle program from the 1970s to the 1990s provided SPS with new and lucrative markets.
In the early 1980s SPS sales and earnings dropped, in part from fewer aircraft orders and the general recession. In 1983 sales declined to $212 million from a record $341 million in 1981. Earnings dropped to just $313,000 in the recession year of 1982.
According to a 1984 Forbes article, “To break the cyclical nature of its business, SPS diversified its way out of trouble, with only mixed success.” One useful new product was the SPS Joint Control System that featured hand operated wrenches with sensors and a microcomputer that gave users a warning when the tension limit neared, thus saving customers money by preventing broken nuts.
In 1979 SPS acquired an automated materials handling firm. For the next five years, however, it lost money on that diversification attempt. Yet, it was not hurt as much as expected by advanced adhesives that some used instead of fasteners. In fact, adhesives sometimes were used to coat fasteners and thus enhance their usefulness.
In any case, employment in the fastener industry by 1984 had declined to 52,000 workers from its peak in the mid-1960s of 68,000 workers. Foreign competition from inexpensive Asian products hurt this U.S. industry, but it was also part of a general decline in the number of Americans employed in manufacturing.
Business in the 1990s
In the late 20th century fewer and fewer people worked in manufacturing industries that relied on automation and high-tech solutions to improve their productivity. An SPS Hi-Life Tools plant in Shannon, Ireland, illustrated the process. With new software supporting a workforce reorganization, the plant in the early 1990s became much more efficient. Before the change, the plant often failed to get orders because typically it took 14 weeks from receiving an order to dispatch. By 1993 the firm was able to “engineer, manufacture and deliver a part to the U.S. in 10 days, and even faster for specials,” according to an article in Computer Weekly. With that kind of performance, SPS Hi-Life Tools sent 70 percent of its orders to the United States. Such improvements in the early 1990s helped transform the United Kingdom’s manufacturing sector that seemed doomed in the 1980s.
SPS Technologies has earned its world class reputation through its ability to provide products and services that offer a superior level of quality and performance.
After a loss of $800,000 on net sales of $319.1 million in 1993, the firm’s finances improved during the rest of the decade. Sales grew steadily, reaching $485.9 million in 1996, $588.6 million in 1997, and $716.6 million in 1998. Net earnings likewise increased, from $22.3 million in 1996 to $32.5 million in 1997 and $44.6 million in 1998.
Numerous acquisitions fueled SPS’s growth in the late 1990s. For example, in 1996 SPS acquired all or most of the outstanding stock of three firms: Flexmag Industries of Marietta, Ohio, that manufactured flexible bonded magnets; Swift Levick Magnets of Derbyshire, England, another magnet manufacturer; and Mecair Aerospace Industries based in Pointe Claire, Quebec, Canada, a firm that produced fasteners and other parts for aircraft and power generating systems.
SPS acquisitions in 1997 included the following firms that strengthened the SPS fastener segment: Postkey, Ltd. in Nuneaton, England, a supplier of tooling services; Greer Stop Nut, Inc., a manufacturer of nylon locking nuts located in Nashville, Tennessee; and Mohawk Europa Limited, a Shannon, Ireland firm that made cutting tools for the metalworking, automotive, and aerospace industries. In addition, SPS gained three companies that aided its materials business: RJF International Corporation’s Bonded Magnet Business in Cincinnati and Marietta, Ohio; Lake Erie Design Company in Wickliffe, Ohio, which made ceramic cores used in gas turbines and medical prosthesis products; and Magnetic Technologies Corporation, a firm based in Rochester, New York, and Rochester, England, that made subassemblies for photocopiers and printers.
In 1998 SPS acquired the following five firms. Greenville Metals, Inc., in Transfer, Pennsylvania, manufactured master alloy ingot and shot, foundry additive products, and a variety of induction alloys. It also converted and refined scrap for different customers. In Waterford, Michigan, Terry Machine Company made specialty fasteners for the auto industry. Ho well Penncraft in Howell, Michigan, produced high-speed tool steel and carbide products used for metal forming. The fourth firm, Nevada Bolt & Manufacturing Company, based in Las Vegas, made nonstandard bolts and nuts from steel and special alloys. Chevron Aerospace Limited in Nottingham, England, was acquired for $54.9 million. It produced various aircraft parts, such as structural assemblies, avionic panels, and turbine lockplates.
In 1999 independent testing demonstrated the high quality of an SPS Technologies product. Minnesota-based Polaris Industries Inc. requested an engine fastening system that could endure high levels of vibration and stress. Unbrako Engineered Fasteners, part of SPS Technologies, provided its products that were sent to an independent lab for fatigue testing. The SPS fastener outlasted a competitor’s product by at least 500 percent. “There was just a phenomenal amount of difference between the lives of the two studs,” said Polaris’s Steve Weinzierl in the May 6, 1999 Machine Design. The bottom line was that the SPS item saved Polaris about $8.2 million on warranty expenses. That was the kind of high quality product that SPS Technologies relied on to ensure its success as it approached its centennial in 2003.
Terry Machine Company; Chevron Aerospace Group Ltd. (England); Postkey, Ltd.; Mohawk Europa Limited; Howell Penncraft, Inc.; Cannon-Muskegon Corporation; Lake Erie Design Co., Inc.; Greenville Metals, Inc.; Arnold Engineering; Flexmag Industries; Swift Levick Magnets; Magnetic Technologies Corporation; National-Arnold Magnetics; Greer Stop Nut, Inc.; JADE Magnetics Limited (China); Mecair Aerospace Industries, Inc. (Canada); Metalac S.A. Industria e Comercio (Brazil); Nevada Bolt & Mfg. Co.; Standco Canada Ltd.; Unbrako Mexicana, S.A. de C.V. (Mexico); Unbrako Products Pte., Ltd. (Singapore); Unbrako Pty. Limited (Australia); S.P.S. International Limited (Ireland); SPS Technologies Limited (England); SPS/Unbrako K.K. (Japan); Precision Fasteners Limited (India); Shanghai SPS Biao Wu Fasteners Company Limited.
Principal Operating Units
Aerospace Fasteners Group; Automotive Fasteners Group; Industrial Fasteners Group; Chevron Aerospace Group; Precision Tool Group; Specialty Materials and Alloys Group; Magnetic Materials Group.
“Fasteners Join in Harsh Environments,” Machine Design, May 6, 1999, pp. 93–94.
Green-Armytage, Jonathan, “Reaping Success,” Computer Weekly, December 9, 1993, p. 32.
Hallowell, H. Thomas Jr., SPS—Its First Sixty Years: A Brief History of Standard Pressed Steel Company, New York: Newcomen Society in North America, 1963.
“Staying Alive,” Forbes, April 9, 1984, p. 145.
—David M. Walden