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ArvinMeritor, Inc.

 


Address:
2135 W. Maple Rd.
Troy, Michigan 48084-7186
U.S.A.

Telephone: (248) 435-1000
Fax: (248) 435-1393
http://www.arvinmeritor.com

Statistics:
Public Company
Incorporated: 1921 as Indianapolis Pump and Tube Company
Employees: 33,000
Sales: $6.9 billion (2002)
Stock Exchanges: New York
Ticker Symbol: ARM
NAIC: 421120 Motor Vehicle Supplies and New Parts Wholesalers; 332812 Metal Coating, Engraving (Except Jewelry and Silverware), and Allied Services to Manufacturers


Company Perspectives:
As a global provider of integrated automotive systems, modules and components, we deliver advanced technological solutions for light vehicle, commercial truck, trailer and specialty original equipment manufacturers (OEMs) and related aftermarkets. By leveraging our resources, we can apply leading technology across our complementary mix of products and services.


Key Dates:
1919: Quintin G. Noblitt founds the Indianapolis Air Pump Company.
1920: Arvin Heater Company is formed.
1921: Indianapolis Air Pump is incorporated as Indianapolis Pump and Tube Company.
1927: Indianapolis Pump and Tube becomes Noblitt-Sparks Industries.
1950: Noblitt-Sparks becomes Arvin Industries Inc.
1961: Arvin Industries opens manufacturing plant in Tennessee.
1976: Arvin debuts ARVEX method of manufacturing thermoplastic parts.
1992: Arvin enters into joint venture, Schmitz & Brill GmbH, to manufacture exhaust systems in Germany.
2000: Arvin Industries is acquired by Meritor Automotive to form a new company, ArvinMeritor, Inc.


Company History:

ArvinMeritor, Inc. is an international manufacturing company supplying automotive parts and related products and services in more than 100 countries. ArvinMeritor is the world's leading independent producer of automotive exhaust systems and catalytic converters, as well as a major manufacturer of ride control products and drivetrain systems. The company also produces tire valves, pressure gauges, and related products.

The Rise of a Major Automobile Parts Manufacturer: 1919-30

Arvin traces its roots to an Indiana partnership formed in 1919 to produce tire pumps. After a frustrating experience fixing a flat tire, Quintin G. Noblitt, a mechanical engineer and inventor, told a former business colleague, Frank H. Sparks, that he could make a reliable tire pump if Sparks could sell it. Sparks said he could, and the Indianapolis Air Pump Company--the earliest predecessor of Arvin Industries--was born.

Noblitt recruited a third partner, Albert G. Redmond, to oversee the company's production of tire pumps, and the three partners each agreed to contribute $1,000 in initial capital. The company then rented an empty grocery store room for $10 a month, supplying a makeshift factory with second-hand machinery. By the end of its first year, the partnership showed a profit of more than $10,000.

The company's eventual name arose from its brief relationship with Richard Hood Arvin, a former arms and ammunition salesman who had invented a heating device for Ford automobiles. In 1920 Arvin, who had applied for patents for his heater but lacked the capital to manufacture it, offered his product to Indianapolis Air Pump. Arvin granted the young company exclusive marketing rights for his heater, and in return, Indianapolis Air Pump agreed to manufacture it. As a result, the Arvin Heater Company was formed in 1920 with Arvin, Noblitt, Sparks, and Redmond becoming sole stockholders.

In 1921 Indianapolis Air Pump leaped into the national arena when Sparks secured a contract to produce tire pumps for Ford Motor Company. That same year the company began experimenting with a tube manufacturing process that led to a company name change in December 1921, when the partnership was incorporated as the Indianapolis Pump and Tube Company. Noblitt was named president, and Sparks was appointed secretary of the new corporation, which established headquarters in Indianapolis.

In the spring of 1922 Ford Motor Company informed Sparks that it was planning to manufacture its own tire pumps, and soon afterward Redmond sold his interest in Indianapolis Pump and Tube to his two partners. Arvin sold his stake in Arvin Heater Company to Noblitt and Sparks, and the heater company was consolidated into Indianapolis Pump and Tube. That same year the company secured a contract to provide tire pumps for Chevrolet, and Ford, after a short-lived attempt to manufacture its own tire pumps, returned its business to Indianapolis Pump & Tube. With sales expanding, in 1923 the company constructed its first new factory in Greenwood, Indiana, and closed its manufacturing facilities in Indianapolis. As more gas stations began offering free air during the early 1920s, the company's tire pump business began to suffer. In response, it began diversification efforts and in 1924 introduced a new foot accelerator pedal for automobiles and a cast-iron heater for Ford, Chevrolet, and Dodge vehicles.

Also that year, Indianapolis Pump and Tube purchased the Dan Patch Novelty Company of Connerville, Indiana, producers of a line of wheeled toys. Noblitt quickly developed a new ball bearing wheel for the Dan Patch coaster wagon, while production of most other toy products was discontinued. In 1925 the company separated its heater business from its tube operations and established a plant in Columbus to produce metal heaters, cast-iron manifold heaters, and a new product, automobile jacks. Tire pumps and tubing production were isolated in Greenwood, while coaster wagon production remained at Connerville until the company purchased a building in Seymour, Indiana, and moved its toy manufacturing operations there.

In 1927 the Indianapolis Pump and Tube's name was changed to Noblitt-Sparks Industries, Inc. By that time Arvin hot-air heaters were being manufactured for every make of car on the market. In 1928 Noblitt-Sparks installed its first nickel-plating units in its Columbus plant and began producing additional automotive parts, including brake levers, hub caps, and bent steel tubing. With annual sales soaring towards $3 million, in the spring of 1928 the company went public and was listed on the Chicago Stock Exchange.

In 1929 Noblitt-Sparks began manufacturing a muffler for Studebaker and Ford. Other new automotive products that year included a rear-vision mirror and the first Arvin hot-water automobile heater. The company's line of toys was also expanded to include wheelbarrows and scooters. The stock market crash of October 1929 had little initial effect on the company's sales, which swelled to nearly $5 million by the end of that year. As the company entered the 1930s, hot-air heater sales were falling, while hot-water automobile heaters were rising in popularity. Capitalizing on its work with heaters, in 1930 the company developed a fan-forced electric room heater and moved into the arena of household products.

Consolidation and Diversification: 1930s-40s

By 1931 Noblitt-Sparks began to feel the effects of the Great Depression. In a series of retrenchment moves that year, the company discontinued production of toys, closed its Seymour plant, and moved its corporate headquarters from Indianapolis to Columbus, Indiana. Those cost-cutting steps did little to keep sales from plummeting, though, and in 1931 the company suffered its first deficit, losing $100,000. Losses were trimmed slightly in 1932, the last unprofitable year in the company's history.

In 1933 Noblitt-Sparks entered the car radio field, and two years later the first Arvin home radio was introduced. In 1934 the company purchased facilities in Franklin, Indiana, and the following year began manufacturing automobile parts there. During the mid-1930s the muffler became the company's number one automotive product, helping to propel profits to more than $1 million for the first time.

Sparks left the company in 1937 to devote his time to a career in education and public administration. He went on to become president of Wabash College, governor of the New York Stock Exchange, and president of the Council for Financial Aid to Education. By the time of the company's 1937 introduction of its three-way car heater--with heater, foot warmer, and defroster--Noblitt-Sparks Industries was regarded as the largest manufacturer of trade-name car heaters in the field. The company had also expanded its home radio offerings to include 33 models. With product lines expanding, total annual sales topped the $10 million mark for the first time in 1937.

In 1938 recessionary conditions developed, and Noblitt-Sparks reduced its line of radios to nine popular table models. The following year economic conditions improved, and the company added carburetor silencers to its automotive product line. Before the decade closed, Noblitt-Sparks was listed on the New York Stock Exchange. In 1940 Noblitt-Sparks opened a new factory in Columbus, where it began manufacturing metal outdoor furniture and dinette sets. That same year, the company introduced an under-seat automobile heater and a motor-driven defroster unit. In 1940 the company also began supplying Sears, Roebuck & Co. with home radios.

In 1941 Noblitt-Sparks began producing its first private-brand merchandise. Such production was brought to a quick halt after the United States entered World War II late that year, and by 1942 all production efforts were geared toward the war effort. During the war Noblitt-Sparks produced a wide range of military products, including chemical and incendiary bombs, rocket-launching tubes, steel containers, fire extinguishers, anti-tank mine parts, radio communications equipment, and parts for military vehicles. In 1944 the company purchased a former furniture plant in North Vernon, Indiana, and began producing boxes for the bombs being made at its Columbus plant.

In December 1945, Quintin Noblitt became the company's first chairman, and Glenn W. Thompson became president. To facilitate its re-entry into civilian markets, in 1946 Noblitt-Sparks began a three-year factory expansion program. At the same time the company also began focusing on the development of consumer products and electrical appliances. Some of these new products included electric irons and metal ironing tables, record changers, waffle cookers, laundry tubs, AM/FM radios, and electric room heaters. Late in 1949 Noblitt-Sparks began production of its first television set.

The 1950s: Birth of Arvin Industries

In 1950 the company changed its name to Arvin Industries, Inc., in order to take advantage of the "Arvin" name, which by that time was on numerous company products. In 1954 Q.G. Noblitt died, having watched his company grow from a one-room tire pump business into a national corporation with better than $50 million in annual sales. Thompson succeeded Noblitt as chairman while remaining president. Arvin introduced a color television set in 1954, but a year later the company bowed out of the television business after deciding there was too little profit margin in the field. In 1955 Arvin established a research and engineering department to foster the development of new products. One year later the company began marketing its patented Arvinyl, a vinyl-to-metal sheet laminate; by 1960 the company was the largest laminator in the country.

During the 1950s Arvin introduced dozens of new non-automotive products, including numerous electrical appliances, a broad range of indoor and outdoor furniture, and a line of home fans and heater products. In 1959 Arvin entered the primary home electric heat field, introducing a line of baseboard, cable, and panel heating units. In a major step to boost automotive sales, in 1959 Arvin also entered the exhaust system replacement market.

Acquisitions at Home and Abroad: The 1960s and 1970s

In 1960 Eldo H. Stonecipher became president, while Thompson remained chairman. Under the Stonecipher-Thompson reign Arvin began an acquisitions and plant expansion program and in 1961 purchased Lok-Products Company, a leading manufacturer of suspended ceiling systems. That same year the company established its first plant outside of Indiana--an automotive parts factory in Tennessee. During the remainder of the decade Arvin Industries established automotive manufacturing facilities in Tennessee, Alabama, and Kentucky, and electronics plants in Hong Kong and Taipei, Taiwan.

In 1962 Arvin entered the advance electronics field by acquiring Westgate Laboratory, Inc. (renamed Arvin Systems, Inc.), an original design and development corporation specializing in electronics, optics, and communications. In 1963, with built-in heaters becoming standard equipment for most cars, the company ceased production of its Arvin heater. Arvin Industries moved into the international arena in 1963, when it acquired half interests in Waller K.K., a Tokyo corporation producing radio components, and Arvin-Standard Ltd., an auto exhaust system manufacturing plant in Canada.

Laminating operations were expanded in 1966, when Arvin Industries acquired Roll Coater, Inc.; the company gave Arvin the capability of coating materials in coil as well as sheet form. The following year Arvin acquired Federal Tool Engineering Company (renamed Arvin Automation, Inc.), a producer of automated welding equipment and machinery, semiconductor components, and reed switches. Thompson retired at the end of the decade and was succeeded as chairman by Stonecipher, while Eugene I. Anderson became president.

During the first half of the 1970s Arvin continued its drive to internationalize and expand its manufacturing and distribution facilities. In 1970 a national distribution center for automotive replacement parts was constructed in Indianapolis, and between 1972 and 1974 Arvin completed several other new facilities, including automotive parts plants in Arkansas and Missouri, a coil-coating facility in Indiana, and an electric housewares plant in Mississippi. In 1973 the company also sold its Hong Kong production facility and consolidated radio manufacturing operations in Taiwan.

Acquisitions during the early 1970s included the 1971 purchase of Data Magnetics Corporation, a prominent producer of magnetic recording heads and video recording devices. In 1972 Arvin bought General Tubes Limited of Toronto (later renamed Arvin North American Automotive of Canada), a manufacturer of automotive tubing and aftermarket exhaust pipes. During the next few years General Tubes' operations were converted to produce original exhaust pipe equipment. In 1973 Arvin expanded into South America with the formation of Arvin do Brazil S.A., a joint venture designed to produce exhaust system parts for the South American market. In 1973 Arvin also acquired Diamond Electronics, a leading producer of electronic process control monitoring equipment.

In 1974 Stonecipher resigned as chairman and was succeeded by Anderson, who continued as president. That same year Arvin sold Lok-Products and acquired Echo Science Corporation, a producer of magnetic videotape systems and digital magnetic tape recorders. After 15 years of engineering work in the area of automobile emission controls, Arvin produced its first catalytic converter in 1974.

During the latter half of the 1970s Arvin's activities were increasingly focused on research and product development. In 1976 Arvin debuted ARVEX, a new process for fabricating fiberglass-reinforced thermoplastic parts on traditional metalworking presses. Two years later Arvin completed an exhaust products testing and development center in Walesboro, Indiana. The company also acquired Calspan Corporation of Buffalo, New York, a well-known research and development company specializing in avionics, acoustics, electronics, thermal research, ground transportation systems, and energy systems. In 1980 Arvin's Calspan won a three-year, $95.6 million U.S. Air Force contract to manage wind tunnel facilities in Tennessee.

Innovation and Expansion in the 1980s

In 1981 James K. Baker became president and chief executive officer of Arvin Industries. That same year Echo Science Corporation was sold. In 1982 Arvin began production of stainless steel tubular manifolds and acquired the nation's largest manufacturer of evaporative coolers, McGraw Edison Company's International Metals Products Division (renamed ArvinAir). Arvin's sales in 1982 exceeded the half-billion dollar mark for the first time.

Between 1983 and 1984 Arvin's Calspan Corporation was awarded a number of government contracts, including a management contract for the wind tunnel facilities at Ames Research Center in California. In addition, a joint venture between Calspan and Dynalectron Corporation during this period was awarded a service contract for the U.S. Army's White Sands Missile Range in New Mexico.

During the mid-1980s Baker began guiding the company into global markets through joint ventures and acquisitions designed to enhance Arvin's international sales of automotive products. In 1984 Arvin and Bosal International of Germany formed the joint venture Bosal Industries, GmbH to supply catalytic converters and tubular products to the European market. That same year Arvin's joint venture in Brazil was restructured with a new parts supplier, COFAP, and Arvin also purchased Ap de Mexico, S.A. de C.V., a manufacturer of exhaust systems for the Mexican auto industry.

In 1985 Arvin began consolidating operations and moved all of its automotive aftermarket parts production and distribution activities to a new Kentucky facility. Consumer housewares activities were consolidated that year into ArvinAir's operations. In 1986 Anderson retired as chairman and was succeeded by Baker, who quickly stepped up Arvin's international strategy with an increased focus on acquisitions. In 1986 Arvin purchased Maremont Corporation, a leading producer of original and replacement shock absorbers and exhaust systems with nearly $500 million in annual sales. That same year Arvin acquired the Canadian-based Schrader Automotive, the world's largest producer of tire valves. Looking to capitalize on the growing number of Japanese automakers with operations in the United States, Arvin also formed a joint venture with Sango Co., Ltd., to produce exhaust systems for foreign-turned-domestic North American automobile manufacturers.

In 1987 Loren K. Evans was elected president of Arvin. That same year the company acquired Systems Research Laboratories, Inc., a leading applied research and development services company specializing in aero-systems. Sales in 1987 jumped to $1.3 billion as profits climbed to $47.6 million. In March 1988 Arvin announced plans to restructure its American automotive business and consolidate exhaust system operations into Maremont, which had became a subsidiary.

In 1988 Maremont purchased Amortext, a French manufacturer of shock absorbers, and Arvin acquired Cheswick, Ltd., and Bainbridge Silencers, Ltd., two leading European producers of original and replacement exhaust systems with facilities in the United Kingdom, the Netherlands, and Spain. Arvin's tire valve product line was also expanded in 1988 when Schrader Automotive and Neotech Industries, Inc. (renamed Sentronics Ltd.) agreed to jointly develop and distribute electronic pressure measurement devices.

Arvin continued to implement the game plan announced in 1987, a key element of which was to establish automotive operations in all major assembly capitals of the world. Furthering that end, in 1989 Arvin acquired a 75 percent stake in AP Amortiguadores, S.A. (APA), a leading European manufacturer of shock absorbers and MacPherson struts, located in Spain. Arvin also continued to restructure its U.S. operations, closing two exhaust plants in 1989 and selling Arvin Electronics. Efforts to make labor costs competitive helped pay dividends for Arvin and by 1989 union employees at all of Arvin's U.S. original equipment exhaust plants had agreed to wage reductions. In 1989 the company's sales surpassed the $1.5 billion mark for the first time, having grown nearly fourfold during the course of the decade.

In 1990 Baker was named chairman of the U.S. Chamber of Commerce for 1990-91. Arvin itself entered the 1990s continuing its push to globalize. In 1990 Arvin-Tubemakers Pty. Ltd. was formed to expand production of original equipment exhaust systems in Australia. To strengthen its original equipment auto parts business in Europe, Arvin purchased the French engine-manifold and exhaust-tube production business of Tubauto S.A. (renamed Cheswick France S.A.). A ride control research and development center in Pamplona, Spain, was also completed in 1990.

The Move Toward Globalization: The 1990s

In 1991 ArvinAir was sold, and after nearly a decade of revamping and expanding its business, Arvin provided only auto-related products. Evans was named vice-chairman that year, and Bryon O. Pond became president. In 1991 Arvin began assembly of catalytic converters in Born, Holland, and completed a new research and development center for exhaust systems in Warton, England. A two-year strike at Arvin's North Vernon site was resolved in 1991, with employees agreeing to accept wage cuts.

In 1992 Arvin and Schmitz & Brill, a German automotive exhaust systems parts manufacturer, formed a joint venture to serve European automakers. That same year Arvin's Calspan and Space Industries International, Inc., a Houston-based commercial space research company, reached an agreement, which was completed in July 1993, to merge their operations into a new company, with Arvin holding approximately 70 percent of the new venture.

As Arvin entered 1993, its exhaust systems and ride controls systems business held strong positions in the North American and European markets. Arvin planned to continue establishing operations in major assembly capitals of the world and, as a leading independent producer of catalytic converters, to capitalize on the need for converters to meet new European Community air quality standards and emission regulations. The company also continued research and development activities on electronic muffler systems, electronic ride control products, and on-dash tire pressure gauges.

By the mid-1990s, however, Arvin's future success began to depend on its ability to establish a broader global presence. As more automobile manufacturers began to enter emerging markets abroad, particularly in Eastern Europe and Asia, it became clear that suppliers with extensive international operations would have a competitive advantage.

In order to finance global expansion, however, Arvin saw a need to restructure its business model at home. To this end, the company launched its Total Quality Production System, or ATQPS, in 1992. Aiming to increase manufacturing efficiency while reducing overall product inventory, ATQPS was already demonstrating significant cost reductions by 1994, when 89 of the company's 212 production teams were operating under the new system. With turnover time reduced by 84 percent in the certified facilities, and labor costs reduced by 39 percent, Arvin was able to significantly streamline its manufacturing process. The new program also helped increase sales, with Arvin's overall earnings rising 10 percent between 1993 and 1994. By 1996 the company was able to boast a 150 percent increase in profits from the previous year. During this period the company also entered the replacement parts business, where profits were nearly double that of original parts manufacturing. The move proved lucrative, as replacement parts accounted for 30 percent of the company's total revenues in 1998.

With its operations in the U.S. and Europe running at a higher level of efficiency, Arvin set its sights on expansion in other foreign markets. One area that was especially attractive to the company was China, and in April 1996 Arvin entered into an agreement with Shanghai Xian Hua, an automotive exhaust systems manufacturer. While Arvin brought its international marketing abilities and technological expertise into the joint venture, Shanghai Xian Hua offered the advantages of local production facilities and management teams, giving the Indiana-based company an important foothold in the burgeoning Chinese automobile industry, regarded to be one of the most potentially lucrative markets in the world.

After forging the alliance in China, Arvin turned its attention to new opportunities in Europe. In November 1996, it purchased a 40 percent stake in a joint venture with Kayaba Co. Ltd. of Japan to begin manufacturing power steering pumps at a facility in Pamplona, Spain. Named Kayaba Arvin S.A., the combined company planned to launch production in 1997. In late 1998 Arvin acquired a 49 percent stake in German parts supplier Zeuna Starker GmbH & Co., and in August 1999, it established operations in Eastern Europe with the formation of Arvin Exhaust s.r.o. in the Czech Republic. A joint venture with Czech exhaust systems manufacturer KARIST, s.r.o., the deal gave Arvin a 66 percent share of the combined entity. In the late 1990s Arvin also forged alliances with Opel, the European subsidiary of General Motors, and Ford of Europe. By January 2000 Arvin's share of the world exhaust system market had reached 35 percent.

By this time, however, Arvin's rapid growth had attracted the attention of another major automobile parts manufacturer, and in April 2000, Meritor Automotive Inc. announced its acquisition of Arvin Industries in a friendly takeover. The combined company, ArvinMeritor Inc., boasted $7.6 billion in annual revenues and a market value of $1.6 billion and formed the 11th largest automobile parts supplier in the world. Unfortunately, the merger took place in the midst of an industry-wide slump, wherein overall demand for automobile parts fell and the new company suffered a loss in its first year of business. However, the global reach and production capacity of ArvinMeritor promised to make it a major player in the automobile parts industry for years to come.

Principal Subsidiaries: AVM Industries; Roller Coater, Inc.; Purolator Products Corporation; Merwil Products Corporation.

Principal Competitors: American Axle & Manufacturing Holdings, Inc.; Dana Corporation; Metaldyne Corporation.





Further Reading:


  • Amberg-Vajdic, Melinda, "Arvin Profits Are Testament to Company's Keen Strategy," Indianapolis Business Journal, November 2, 1992, sec. 1, p. 4.

  • Barrett, Amy, "Beating the Odds: How Beleaguered Arvin Industries Learned to Play the Game," Financial World, December 11, 1990, pp. 30-32.

  • Burt, Tim, "Arvin Sees an Opportunity in Automotive Malaise: The Exhaust System Manufacturer Wants to Rebuild Investor Confidence Following a Protracted Fall in Its Share Price," Financial Times (London), January 25, 2000, p. 32.

  • Byrne, Harlan S., "Arvin Industries Inc.: It Pushes an Overhaul of Its Auto-Parts Business," Barron's, September 18, 1989, pp. 62-63.

  • Coons, Coke, Arvin ... The First Seventy Years, Columbus, Ind.: Arvin Industries, Inc., 1989.

  • Dobie, Maureen, "Acquisition Fever: Arvin Makes Quick Transition Towards Replacement Parts Market," Indianapolis Business Journal, September 22, 1986, sec. 1, p. 12.

  • Holzinger, Albert G., "A Strategy for Growth," Nation's Business, June, 1990, pp. 38-40.

  • Johnston, Phil, "Arvin Industries: Stockholders Applaud," Indiana Business, November 1987, p. 50.

  • Koenig, Bill, "Indiana-Based Ball Corp. Sees Earnings Fall; Arvin Industries Sees Rise," Indianapolis Star, July 18, 1996.

  • Maturi, Richard J., "Acquiring for Growth: Contributions by Newcomers Could Help Arvin Earn $2.80 a Share," Barron's, April 27, 1987, pp. 53-54.

  • Nulty, Peter, "Arvin Industries: A Quick Course in Going Global," Fortune, January 13, 1992, p. 64.

  • Parent, Tawn, "Fortune 500s Share Secrets of the Far East," Indianapolis Business Journal, November 30, 1992, p. 1A.

  • Strong, Michael, "Sluggish Industry Makes Life After Merger Difficult for ArvinMeritor," Crain's Detroit Business, June 11, 2001, p. 4.

Source: International Directory of Company Histories, Vol. 54. St. James Press, 2003.




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