York International Corp.
York International Corp.
631 S. Richland Avenue
P.O. Box 1592-364M
York, Pennsylvania 17405-1592
Fax: (717) 771-7440
Incorporated: 1895 as York Manufacturing Co.
Sales: $2.42 billion
Stock Exchanges: New York
SICs: 3433 Heating Equipment, Except Heating and Warm Air Furnaces; 3564 Industrial and Commercial Fans and Blowers and Air Purification Equipment; 3585 Refrigeration and Heating Equipment
York International Corp. is a global manufacturer of heating, ventilating, air-conditioning, and refrigeration products. It manufactures heating, air-conditioning, and thermal-storage equipment for factories, stores, hospitals, universities, office buildings, shopping malls, airports, marine vessels, and residences. It also manufactures refrigeration and gas-compression equipment for industries processing food, beverages, chemicals, and petrochemicals. In 1993, the company’s products were in use in such diverse locations as the British Houses of Parliament, the World Trade Centers of both New York and Tokyo, NASA’s Vehicle Assembly Building at Cape Canaveral, Florida, the Los Angeles International Airport, the Sydney Opera House, the Hong Kong Exposition Centre, and the English Channel Tunnel.
The York Manufacturing Co. was founded in York, Pennsylvania, in the fall of 1874 by six men. It became a partnership in 1885, the year that the company built its first ice machine for a customer in Mississippi. During the winter, people in the North were generally content with ice harvested and stored from frozen rivers and lakes, but York persevered in developing various ways to make and store ice. In 1897 ice making and refrigeration comprised York’s product lines; all other product lines were sold or discontinued.
York’s first link between refrigeration and industrial air conditioning came in 1903, when the company installed a large system for dehumidifying blast-furnace air in a factory operated by Carnegie Steel Co. Its first public venture in air-conditioning was in 1914, when it air conditioned the Empire Theatre in Montgomery, Alabama. York’s first air-conditioning for an office building was in 1923, for the San Joaquin Light and Power Co. in Fresno, California. By that time, the company’s facilities consisted of 154 buildings on about 17 acres in York. Although York had sold products overseas in Japan as far back as 1898, it did not open its first foreign office in Europe until 1923, in London. Soon after, York created a refrigeration system for an English dairy which then grew to be the largest in the world and helped make milk pasteurization a reality.
In 1927 the company was reincorporated in Delaware, with nine affiliated companies, and was renamed the York Ice Machinery Corp. During the mid-1920s, York built its first single-room air conditioner, which weighed 600 pounds. Since there was little residential market for such a behemoth, the company concentrated on installing air conditioners in commercial establishments through its Yorkaire line. These units included highspeed lightweight compressors using freon or ammonia. During the late 1920s, York made the St. Anthony Hotel in San Antonio the first completely air-conditioned hotel in the United States.
York’s sales grew from nearly $2.2 million in fiscal 1915 to $8 million in fiscal 1920 and to a peak of $17.5 million in fiscal 1929. In the depths of the Great Depression, business slumped to $7.4 million in fiscal 1933, and deficits were recorded in 1933, 1934, and 1935. Yet the company had grown significantly during the early 1930s. By the mid-1930s there was a second plant, adjacent to York, and offices in 64 U.S. cities and 21 foreign cities. In 1937, sales rebounded to the 1929 peak of $17.5 million. Significant successes included more than 1,000 York air-conditioning installations functioning in France by 1940, as well as complete cooling systems for the first fully air-conditioned train and for the Capitol in Washington.
During World War II, York installed air-conditioning and refrigeration equipment aboard the ships of six countries and at military sites ranging from headquarters operations to strategic outposts and the front lines. The company’s naval-training school graduated 1,200 petty officers trained to operate and maintain refrigeration and air-conditioning machinery aboard ships. The water used to cool the nuclear reactor at Hanford, Washington (which produced the plutonium for one of the two atomic bombs dropped on Japan) passed through a York refrigeration plant. Net sales of the company, which was renamed the York Corp. in 1942, grew to a wartime peak of $38.4 million in 1945.
York’s business continued to boom with new innovations in the late 1940s and early 1950s. Its first automatic ice makers for hotels, restaurants, and hospitals, were introduced in 1948. Hermetically-sealed cooling circuits for room air conditioners were brought to market in 1950 as were improved heat pumps for year-round comfort in the early 1950s. York also introduced a residential air-conditioning unit to sell for under $1,000, installed, in 1950. This unit was designed to cool the average five-room house. The first single-stage, high-speed centrifugal refrigeration compressor made its debut in 1954, the year in which net sales reached a record $93.3 million and net income reached a record $2.9 million. Manufacturing facilities were located in several other U.S. cities, and in Nottingham, England. Borg-Warner Corp., a diversified Chicago-based manufacturing company known best for its automotive parts, acquired York in 1956. York shareholders received a half-share of Borg-Warner common stock and $2 in cash for each share of York common stock. York became a Borg-Warner division.
Business boomed in the late 1950s and throughout the 1960s as both individuals and companies increasingly relied on “man-made weather.” Installed gas-powered cooling equipment, for example, doubled between 1958 and 1960, and York was one of three firms producing the major share of such larger equipment. Although the division concentrated more on industrial and commercial business than it did on residential sales, one of its fastest-selling new products in 1961 was the Sunline rooftop air conditioner, which took up no interior space and was almost invisible from the ground because of its low-silhouette design. York installed the world’s largest water-cooled air-conditioning system at the World Trade Center in New York City in 1968, weighing 49,600 tons.
In 1966 York’s air-conditioning sales were running 15 percent above a year earlier, with new orders jumping 48 percent.
An independent 1970 market-projection report had more good news: air-conditioning sales were said to be rising even faster than the industry annual growth rate of 10 to 15 percent, and there was a record order backlog. In October 1972, work began on a $12-million air-conditioning plant in Madisonville, Kentucky. A new York heat pump was in production in 1977. Expected to improve the division’s sales in residential housing, this pump, besides removing the heat from within a house in summer, acted to warm the house in the winter months.
By 1981, York was the second-largest maker of air-conditioning and related equipment in the United States, having in that year acquired Westinghouse Electric Corp.’s air-conditioning division. However, by 1985, Borg-Warner was considering selling its air-conditioning unit (now called Borg-Warner Environment). Its operating profit of $6.5 million in 1984 was only two percent of Borg-Warner’s total, while its debt of $60 million was 17 percent of the parent company’s total. It lost $1.2 million in 1985.
After failing to make a profitable deal, Borg-Warner spun off the unit in 1986 to shareholders by distributing one share for every ten shares of Borg-Warner held by investors. (A “spin-off” is a form of company divestiture that results in a subsidiary or division becoming an independent company.) A former helicopter designer, Stanley Killer, Jr., took over management at the head of a group investing $2 million in the new York International Corp., which became the largest independent publicly traded firm in the heating and air-conditioning field. “The company’s been on a self-destruct course for several years,” Killer told a Business Week reporter.
Despite York’s existing debt, Killer paid $37 million to buy Bristol Compressors Inc., a manufacturer of hermetic compressors, and also purchased Frick Industrial, Inc. and Frigid Coil/ Frick, designers of industrial refrigeration machinery and heat-transfer equipment. Killer envisioned great opportunities overseas, a higher degree of vertical integration, and more emphasis on new products and research and development. In a 1988 Wall Street Transcript interview, he disclosed that York’s debt had been refinanced in Europe and proclaimed the company to be “in an excellent financial position.”
York went private in 1988, when an investor group headed by Citicorp Capital Investors Ltd. paid shareholders $761.6 million in cash and $90.2 million in debentures. Citicorp and affiliates of Prudential Insurance Co. of America were the main investors, together holding nearly 70 percent of equity. In this reorganization, the company assumed a heavy burden of debt. It reported a 1991 loss of $4.3 million, despite a tripling of operating income over 1990’s total to $13 million, because of a charge of $17.3 million for debt restructuring.
In October 1991, York became a public company once more, offering more than 12 million shares at $23 a share. By March 1992, when 19.8 million of the 20.8 million remaining shares were offered at $31.75 a share, York stock was selling at $34 a share. The funds from this offering allowed the company to raise its credit standing to investment grade BBB and refinance $400 million of $650 million in bank debt at lower interest rates. York was described as the most profitable, fastest-growing company in its industry in 1993. Its stock hit a 32-month high of nearly $41 a share in August 1994. York’s long-term debt was $280.6 million at the end of 1994.
York signed a $750-million, five-year agreement in June 1992 to build a manufacturing plant for milk refrigeration units in Russia that would eliminate 80 percent of the annual milk spoilage in Russia, which was said to be about half of the total amount of milk produced. Other projects abroad included a cooling system for Saudi Arabia’s Jiddah Airport, a water-chilling system for the English Channel Tunnel, and Norway’s largest ammonia refrigeration plant, for the 1994 Winter Olympics. In 1994, York introduced the first-ever natural-gas heating and cooling system in the form of its Triathlon heat pump, powered by a revolutionary small Marathon engine. About 25,000 units were expected to be sold over the next three years, with at least three-quarters expected to be residential sales.
York also foresaw a big market in retrofitting existing industrial and commercial cooling systems to eliminate chlorofluorocarbons. Production of these chemicals was banned by 1996 in many countries because of their role in thinning the earth’s atmospheric ozone layer. York claimed to have the industry’s broadest line of equipment using alternative refrigerants.
York’s net income (excluding extraordinary items and accounting changes) soared to $69.3 million in 1992 from $13 million in 1991, while its sales rose from $1.65 billion to $1.94 billion. In 1993, sales passed $2 billion for the first time, and net income reached nearly $75.5 million. Sales passed $2.4 billion in 1994, and net income rose to nearly $89.8 million. Of the 1994 revenue total, commercial products accounted for nearly $1.16 billion, residential products for $795 million, and refrigeration products for $469 million. Repair and replacement business accounted for an estimated 50 percent of total sales in 1993. U.S. revenue accounted for 56 percent of the total and international operations for 44 percent in 1994. International operations were expected to comprise more than half of total revenue by 2000. The company entered 1995 with a backlog of $779 million in orders.
York had operations in more than 120 countries in 1994, including sales and service organizations. Residential products, which consisted of central air-conditioning and heat pumps, furnace units, and hermetic compressors, were being marketed under the York, Luxaire, Fraser-Johnston, Moncrief, Homeair, and Bristol trademarks. Commercial products, which included equipment for heating, air conditioning, process cooling, and thermal storage, were being marketed under the York, Luxaire, Fraser-Johnston, Miller-Picking, and Tempmaster trademarks. Refrigeration and gas-compression equipment designed for industry were being marketed under the York, York Food Systems, Frick, Frigid Coil, Imeco, Reco, and Recold trademarks.
A 71-acre site owned by the company in York, Pennsylvania, continued to be the site of its headquarters in 1994 and also the site of its largest manufacturing facility, occupying about 1.5 million square feet. York also owned 13 other manufacturing facilities: seven in the United States, two in Mexico, and one each in England, France, Australia, and Uruguay. In addition, the company leased for its own use six manufacturing facilities and about 90 facilities for sales and service offices and regional warehouses. York also was taking part in four joint ventures with companies in Egypt, Malaysia, and Taiwan.
Airchal Industries, S.A.; Codorus Acceptance Corp.; Frigid Coil/Frick Inc.; IMECO, Inc.; Miller-Picking, Inc.; Viron, Inc.; YIHC, Inc.; York Food Systems International Ltd.
“Borg-Warner Corp. Would Acquire York Corp. in Proposed Merger,” Wall Street Journal, April 6, 1956, p. 5.
Brennan, Robert J., “York International Sets New Offering That Undoes LBO,” Wall Street Journal, March 2, 1992, p. 5A.
Byrne, Harían S., “York International,” Barron’s, August 16, 1993, pp. 33–34.
Eklund, Christopher S., “Stan Killer Is Old-Fashioned: He Fixes Broken Companies,” Business Week, March 31, 1986, pp. 74–75.
Goodwin, William, “CIBC Leads Refinancing for York International,” American Banker, July 2, 1992, p. 14.
Weinberg, Neil, “York’s Hot Prospects,” Forbes, August 16, 1993, p. 138.
“York International Corporation,” Wall Street Transcript, February 8, 1988, p. 88358.