100 First Stamford Place
Stamford, Connecticut 06902
Telephone: (203) 363-7300
Fax: (203) 363-7295
Incorporated: 1865 as Northwestern Manufacturing Company
Sales: $2.27 billion (1998)
Stock Exchanges: New York
Ticker Symbol: CR
NAIC: 32622 Rubber & Plastics Hoses & Belting Manufacturing; 326199 All Other Plastics Product Manufacturing; 332998 Enameled Iron & Metal Sanitary Ware Manufacturing; 332913 Plumbing Fixture Fitting & Trim Manufacturing; 332911 Industrial Valve Manufacturing; 332912 Fluid Power Valve & Hose Fitting Manufacturing; 332919 Other Metal Valve & Pipe Fitting Manufacturing; 333921 Elevator & Moving Stairway Manufacturing; 333923 Overhead Traveling Crane, Hoist, & Monorail System Manufacturing; 333911 Pump & Pumping Equipment Manufacturing; 333311 Automatic Vending Machine Manufacturing; 333319 Other Commercial & Service Industry Machinery Manufacturing; 334413 Semiconductor & Related Device Manufacturing; 334419 Other Electronic Component Manufacturing; 336413 Other Aircraft Parts & Auxiliary Equipment Manufacturing; 334513 Instruments & Related Product Manufacturing for Measuring, Displaying, & Controlling Industrial Process Variables; 334519 Other Measuring & Controlling Device Manufacturing; 42131 Lumber, Plywood, Millwork, & Wood Panel Wholesalers; 42172 Plumbing & Heating Equipment & Supplies Wholesalers
Our Credo: We strive for a dominant presence in niche markets. We generate solid rates of return on invested capital and high levels of cash flow. We use our cash flow effectively to grow and strengthen our existing businesses, and to acquire new businesses. We acquire businesses that fit with our existing businesses and strengthen our position in niche markets. We maintain an incentive compensation plan specifically designed to align the interests of management and shareholders. We do this with one goal in mind: To build shareholder value.
Crane Co. is a diversified manufacturer of engineered industrial products, serving niche markets in fluid handling, aerospace, recreational vehicles and trucks, controls, automated merchandising, and the construction industry. Crane's wholesale distribution business provides the building products markets and industrial customers with millwork, windows, doors and related products, plumbing supplies, valves and piping, and fittings. From its inception in 1855 as a crude bell and brass foundry run singlehandedly by its founder, Richard Teller Crane, the company grew into an S&P 500 firm with international subsidiaries that generate more than $2 billion of sales in fields ranging from heating to wastewater treatment to aerospace to vending machines.
Lightning Rod Beginnings
Crane Co.'s roots extend back to Richard Teller Crane's first effort to cast lightning rod tips and couplings in a foundry that he established in Chicago. Born in Patterson, New Jersey, in 1832, Richard Crane moved into the workforce at an early age. By the age of nine, he worked as a cotton mill operator; by 15 he learned brass and bell foundry and brass finishing trades as an apprentice in a Brooklyn foundry; by 21, he had gained further experience in a locomotive plant and several printing press machine shops. He migrated westward in 1855 to join his uncle, Martin Ryerson, who ran a successful lumber business in Chicago. Ryerson lent his young nephew a corner of the Ryerson lumberyard to launch the makeshift foundry that would become a multinational company over the ensuing century.
Richard Crane built a 14-by-24 foot wooden shed and secured patterns and brass for couplings and copper for lightning rod tips. The sand that he had turned up excavating the furnace served as raw material for molding. After nearly a year as the sole employee--molder, furnace tender, metal pourer, casting cleaner, and salesman--Crane hired two experts from Brooklyn and started a partnership with his brother, Charles, changing the shop name to R.T. Crane and Brother. Markets quickly expanded beyond Chicago to Wisconsin, Kentucky, and Iowa.
The first substantial order came from P.W. Gates & Co., a Chicago manufacturer of mill equipment and freight cars. Gates's supplier had run out of copper and could not fill an urgent order for journal boxes, the metal containers installed on railroad cars to lubricate axles. After delivering the castings on schedule, Crane won the confidence of Gates & Co. and eventually received all future orders for brass castings.
Following their first big order, the Crane brothers moved to rapidly expand operations and diversify product lines. After building a three-story structure and upgrading production facilities, they began production of engine parts for the emerging railroad business, as well as plumbing and fixtures for new developments in steam power, called "steam warming" at the time. In order to fill a $6,000 contract to supply the new Cook County Court House in Chicago with steam heating, Crane designed and manufactured a wide variety of globe and check valves, pipe fittings, steam cocks, branch tees, and hook plates. Their success won the company a similar contract for the newly constructed Illinois State Penitentiary in Joliet, Illinois, which, in turn, won them further credibility and sustained business in the provision of steam heating supplies. With the onset of the Civil War, the company also became a major government supplier of fittings for saddlery, brass fittings, plates, knobs, spurs, and wagon equipment.
By 1865 the Crane brothers completed construction of an industrial-size factory on Jefferson Street, which enabled them to expand all facets of business operations and manufacture a full line of valves in materials ranging from cast iron to malleable iron and brass. That same year, the company was incorporated and renamed the Northwestern Manufacturing Company, reflecting its broadening interests.
In 1866 the company printed its first catalog, which contained products as diverse as fire hydrants, ventilating fans, machine tools, water pumps, bung bushings for beer barrels, and steam engines. The advent of the Bessemer smelting process for iron brought low-cost steel to the United States, further assisting Crane in his development of diverse and durable products.
Crane's entry into the elevator business began in 1867, when the company designed an engine with a safety valve to control elevator speed with heavy loads. From the 1870s until the mid-1890s, Crane provided 95 percent of the hoists used in U.S. blast furnaces. In addition, the company established a presence in passenger elevator manufacturing in 1872, spinning off a separate subsidiary called the Crane Elevator Company that remained a major competitor in the field for over three decades. With increased focus on industrial manufacturing, it sold its elevator division in 1895 to a joint venture that eventually became the Otis Elevator Company.
The year 1871 literally brought a blaze of change, as the company survived the Chicago fire and helped save the city by providing large steam pumps to displace river water to city mains. That same year, Charles Crane retired from the business and sold his share to Richard, making the original founder sole proprietor once again. To emphasize the family heritage after his brother's departure, Richard changed the name to Crane Brothers Manufacturing Company in 1872.
Late 19th-Century Innovations and Growth
In the late 1880s Richard T. Crane contributed to the rise of industrial automation. He pioneered line production in foundries and invented numerous mechanized systems to increase industrial efficiency in its plants. The company developed a steam-powered conveyor system for moving molds and pouring metal. It also fine-tuned the use of multiple-purpose machines, such as a machine that simultaneously bored cylinders, crosshead guides, and crankshaft bearings for steam elevator engines. Other innovations included oil pumps for the lubrication of engine-driven cylinders, an alarm to signal low water levels in steam boilers, a pipe lap joint that set new standards in the industry, and state-of-the art ceiling plates and pipe hangers.
With increased innovation and business volume, the company expanded rapidly. In 1884 a branch operation was opened in Omaha that proved so successful that another was established in Los Angeles, California, in 1886. Within a few years, branch operations became standard company practice, sprouting up wherever Crane products were in demand. In 1870 a four-story extension was added to the Jefferson Street plant, and in 1881, a second large pipe mill was constructed. By 1880 Crane operated four production facilities employing more than 1,500 workers.
In 1890 the company officially adopted the name Crane Co. Though its name was shortened, Crane's business continued to grow rapidly. A new age of increasingly taller buildings demanded greater numbers of pipes, valves, and fittings for water and steam systems with higher performance standards. In addition, commercial electricity depended on massive steam engines, which in turn required stronger and cheaper fluid control equipment. Anticipating the need for new materials and innovative solutions to remain competitive, Richard T. Crane established a chemical laboratory in 1888. The company developed iron castings of uniform tensile strength, a notable achievement for the period. Before long, the rise of large steam power plants outdated even uniform fittings in cast iron, forcing the company to innovate in steel production. In 1907 Crane negotiated for a German steel innovator, Zenzes, to join its staff and supply his coveted patents. By 1910 Crane was producing valves and fittings with minimum tensile strength of 60,000 psi.
During the first decades of the 20th century, Crane invested in metallurgical research that paid off for the company and the industry at large. Experiments designed to test the effects of high temperatures on various metals culminated in a series of papers published in 1912 that became engineering classics. In addition, a number of Crane quality control procedures became industry standards. Crane's inspection of pipe threads using gauges was adopted by the American Society for Testing Materials, and Crane's practice of tapping and gauging steel flanges eventually served the whole industry as the Pipe Thread Standard.
Crane expanded to East Coast markets with the 1903 acquisition of the Eaton, Cole & Burnham Company in Bridgeport, Connecticut. The company continued to expand its production line, introducing a complete line of air brake equipment, pop safety valves, and drainage fittings, among other products. A 160-acre, electrically powered plant was constructed in Chicago in 1909. After Richard Crane's death in January 1912, his role as president was briefly passed on to the eldest son, Charles R. Crane, and then more permanently transferred to Richard T. Crane, Jr., in 1914.
Among the ventures introduced by the new president was an extensive line of practical, decorative bathroom ensembles supported by acquisitions of sizable pottery and enamelware operations and by unprecedented marketing efforts. The copy for a 1925 advertisement in National Geographic Magazine began, "Your personal taste and appreciation of beauty in form and color can be reflected in the appointments of your bathroom." Among other initiatives to corner the rising bathroom market, Crane retained industrial designer Henry Dreyfuss to conceive an entire fixture line.
International Expansion Following World War I
In the years following World War I, Crane established its first operations outside the United States. In 1918 Canadian operations were incorporated as a separate company, Crane Limited, which grew to include Canadian Potteries Ltd., Warden King Ltd., and Crane Steelware Ltd. over the ensuing 20 years. Distribution also expanded to Europe, with the first branch houses established in France in 1918 and in England in 1919. Manufacturing operations were established in those countries in 1925 and 1929, respectively.
While losses during the Great Depression years strained operations, they also prompted replanning and increased efficiency, and served to usher the company into World War II as a reliable and flexible supplier. Although Crane reported its first operating loss in 1931, it rebounded within two years to offer shares on the New York Stock Exchange in 1934. After sustained growth during the next decade, the company was ready to supply the U.S. Navy with valves and fittings for the war effort. From a prewar steel valve production capacity of 6,000 tons per year, Crane increased its capacity to an annual rate of 25,000 tons by mid-1942. By supplying the Navy, the Atomic Energy Commission, and new manufacturers of high-octane fuel using catalytic cracking techniques, Crane gained ample experience in designing and manufacturing a wide range of metal-alloy valves and fittings resistant to corrosion, high temperatures, and extreme strain.
Following the war, Crane was able to transfer its war efforts to the peace dividend, meeting increased demands in the petrochemical, chemical, and atomic power industries. With the 1951 acquisition of Hydro-Aire Incorporated, Crane entered the business of precision aircraft products and flow control equipment, supplying filters and valves to all manufacturers of turbine type aircraft engines. In 1953 Crane developed a household hydronic heating system; it ranked as one of the country's largest manufacturers of residential heating by 1956. In the late 1950s the company shareholders elected a new chairman and chief executive officer, Thomas Mellon Evans, whose strategy was to streamline the distribution network and broaden the industrial product base. A major consolidation of distribution houses and the reorganization of a separate "profit center" resulted in the creation of Crane Supply Company. The October 1959 acquisition of the Chapman Valve Manufacturing Company of Indian Orchard, Massachusetts, significantly expanded domestic valve operations, especially on the East Coast. The following year, acquisition of the 97-year-old Cochrane Corporation in Philadelphia, Pennsylvania, extended Crane's fluid control line to include steam boilers and water, steam, and wastewater treatment equipment. The Cochrane Division became the nucleus of Crane's growing involvement in the business of pollution control.
By the 1960s, Hydro-Aire catered to the space program with production of life-support and coolant pumps. It also expanded its role in the realm of aerospace by taking the lead in antiskid braking systems, fuel and hydraulic pumps, valves and regulators, actuators, and solid-state components.
Expansion continued through the 1960s. In 1961 the Deming Company, a manufacturer of residential and industrial pumps and water systems, was acquired. Four years later, Crane acquired a highly specialized fluid control company, the Chempump Division of Fostoria Corporation, which specialized in leakproof, trouble-free pump systems for exotic or dangerous fluids.
By the mid~1960s Crane had extended its international operations to Italy, with Crane-Orion, Italy; the Netherlands, with Crane Nederland, N.V.; Spain, with the acquisition of that country's largest valve manufacturer, Fundiciones Ituarte, S.A. and the formation of Crane-FISA, S.A.; Australia, with the new valve plant, Crane Australia Pty., Ltd.; and Mexico. Crane Canada Ltd. and Crane U.K. also made significant acquisitions in 1964 and 1966. Through rising space-age technology, Crane expanded beyond terrestrial boundaries, collaborating with the U.S. Space Team and the Brookhaven National Laboratory's test studies of solar energy, among other projects.
Short-Lived Diversifications into Steel and Cement
In an effort to improve its position in the area of building products, Crane acquired Huttig Sash & Door Company in 1968, adding milled wood products, windows, and doors to its line. The 1969 acquisition of CF&I Steel Corporation, a vertically integrated steel company, marked an unprecedented diversification into a major industry beyond its existing areas. CF&I provided everything from iron ore, coal, and limestone to carbon and alloy steel. It represented the largest acquisition in Crane's history and, by 1975, represented the company's single largest business interest. The 1979 acquisition of Medusa Corporation, a cement and aggregates company, added yet another basic materials industry to Crane's list.
In 1980 Crane began a shift in business strategy away from cyclical basic materials businesses toward a diversified mix that would earn higher returns for shareholders. In February 1984, T.M. Evans resigned as chairman and director of the company, leaving his post to the newly elected Richard Sheldon Evans--son of T. M.--who ushered in a major restructuring effort. On July 13 of that year, the company sold its U.S. plumbing division for approximately $9.5 million. One year later, Crane spun off CF&I Steel to its shareholders, and in 1988 shares in Medusa Corporation were made available to its shareholders as well.
While Crane's restructuring involved substantial paring down, it also called for new acquisitions in light-to-medium manufacturing. In 1985 the company acquired UniDynamics Corporation, expanding diversification in numerous areas: defense and aerospace contracting, fluid controls, vending machines and coin validators, automation equipment, fiberglass-reinforced polyester and laminated panels, and electronic components.
The late 1980s and early 1990s were marked by management efforts to fine-tune the UniDynamics acquisition; several divisions deemed incompatible with the restructuring plan were sold and appropriate acquisitions were made. In February 1987, 12 Crane Supply plumbing, heating, and air conditioning wholesale distribution branches in southern regions of the United States were sold. Substantial additions were made to the company's U.S. valve line, including valve maintenance and value-added services. In April 1992 Crane's Canadian subsidiary, Crane Canada, Inc., acquired certain assets of Jenkins Canada, Inc., a manufacturer of bronze and iron valves, for approximately $4 million.
The Ferguson Machine Co., the largest supplier of intermittent motion control systems in the world, was established as a division of the Defense and Specialty Systems Group of Crane, and in August 1986 Ferguson acquired PickOmatic Systems of Detroit, a leader in cam-activated mechanical parts handling equipment. Crane's Cochrane Environment Systems division acquired Chicago Heater Company, Inc., a designer, manufacturer, and servicer of deaerators and surface condensers, reinforcing Cochrane's market leadership. Additionally, Huttig Sash & Door Company expanded to become the third largest distributor of wood building products in the industry. Pozzi-Renati Millwork Products, Inc. was acquired in February 1988, providing Crane with a strong initial entry into the East Coast market; Palmer G. Lewis Co., a distributor of building material, was acquired in June 1988; and Rondel's, Inc., a distributor of doors, windows, and molding, was acquired in April 1993.
The Crane Co.'s Hydro-Aire Division was augmented in 1990 by the $40 million acquisition of Lear Romec Corp., a manufacturer of pumps for the aerospace industry. In September of that year the diaphragm pump line of the Crown Pump Company was added to Crane's Deming pump line, increasing Crane's share of the industrial pump market. That same year, a Crane attempt to acquire Milton Roy Co., a manufacturer of metering pumps, was halted by an antitrust suit in which Milton accused Crane of a "greenmail" scheme to manipulate the market in order to acquire Milton stock. Milton repurchased all shares held by Crane for $8.2 million.
Surviving Recession: Early 1990s
Downturns in residential construction, in defense spending, and in the aerospace industry, paired with weak economies worldwide, strained key Crane divisions in the early 1990s. Hydro-Aire, the leader in electronically controlled antiskid brakes for the aerospace industry, saw declines in profitability of 13 percent and 18 percent in 1991 and 1992, respectively. The April 1993 sale of the precision ordnance business of Unidynamics/Phoenix to Pacific Scientific Company reflected further reduction in Crane's declining defense business. These losses, however, were offset in part by strong increases in revenues at National Vendors for automated merchandising equipment; at Huttig, which served the residential construction industry; and at Kemlite and CorTec, Crane's suppliers of fiberglass-reinforced panels to the transportation industry. R.S. Evans, Crane's chairman and CEO, noted in the 1992 annual report that "one benefit of a diversified business mix is that a recession rarely cuts across all units with equal impact."
Despite the recessionary trends of the early 1990s, Crane was able to increase total operating profit for 1992 by seven percent and improve productivity, on a sales-per-employee basis, by six percent. During 1992 Moody's upgraded the company's senior debt rating from Baa2 to Baa1, while Standard & Poor's reconfirmed the company's A~ credit rating on the $100 million senior notes.
Mid-1990s Acquisition Spree
From the fall of 1993 through the spring of 1994 Crane spent $335 million to make five acquisitions. In October 1993 the company spent $25 million for Jonesboro, Arkansas-based Filon, a fiberglass manufacturer which was integrated into the Kemlite unit. Two months later Crane paid $70 million for Burks Pumps Inc. of Piqua, Ohio, a manufacturer of engineered pumps that complemented Crane's Chempump and Deming pump businesses. Added in March 1994 at a price of $77 million in cash and assumed debt of $17 million was ELDEC Corporation, a Lynnwood, Washington-based maker of aerospace components, including proximity switches and sensing systems, power conversion equipment, fuel flow measurement systems, and integrated modular systems. Crane next won a takeover battle with Tyco International Ltd. for Mark Controls Corporation, a manufacturer of automatic and manually operated valves, specialized electronic and mechanical instruments and controls, regulators, and pneumatic and electronic controllers. Crane acquired Mark Controls in April 1994 for $95 million in cash plus assumed debt of $40 million. The following month Crane, through Huttig Sash & Door, acquired American Moulding and Millwork, of Prineville, Oregon, for $11 million. This acquisition spree increased the company's revenues by 20 percent but also more than doubled its debt, from 27 percent to 60 percent of total capital. Crane's credit rating fell to the bottom of investment grade, Baa3/BBB.
Acquisitions were subsequently put on hold for the remainder of 1994, and only $9.4 million was spent in 1995 to make three minor purchases. Concentrating on consolidating the acquisitions of the previous two years, Crane was able to reduce its debt to total capital ratio to 44 percent by the end of 1995. That year the company posted record net sales of $1.78 billion and net income of $76.3 million.
During the late 1990s Crane continued to perform admirably, with net sales increasing steadily to $2.27 billion by 1998 and net income nearly doubling, reaching $138.4 million by that year. During these boom years in the United States, Crane slowly increased its pace of acquisition, continuing all the while to concentrate on smaller, complementary purchases and to manage the newly acquired companies in a largely hands-off manner. During 1996 Crane completed two acquisitions, the more significant being Interpoint Corporation, a designer and manufacturer of high-density power converters with applications in the aerospace and medical technology industries. Spending $82 million to make five acquisitions in 1997, Crane picked up Sequentia, Inc.'s transportation products business, which produced fiberglass-reinforced plastic panels for the truck body, trailer, and container market--an operation that was integrated into Kemlite; Polyvend Inc., a maker of snack and food vending machines, which was merged into National Vendors; the nuclear valve business of ITI MOVATS, purchased from Westinghouse; MALLCO Lumber & Building Materials Inc., a leading wholesale distributor of lumber, doors, and engineered wood products which was purchased by Huttig; and Stockham Valves & Fittings, Inc., the largest of the 1997 acquisitions.
Crane picked up the acquisition pace in 1998, completing six acquisitions at a total cost of $224 million. Added to the Crane fold were Environmental Products USA, Inc., a maker of membrane-based water treatment systems; Number One Supply and Consolidated Lumber Company, both of which were integrated into Huttig Building Products; Sequentia Holdings, Inc., maker of fiberglass-reinforced plastic panels for the construction and building products markets; Liberty Technologies, Inc., manufacturer of monitoring products and related services for the nuclear power generation and industrial process markets; and Dow Chemical Company's Plastic-Lined Piping Products division.
Beginning in late 1998 and continuing into mid-1999 Crane fought a losing battle to block B.F. Goodrich Co.'s bid to take over Coltec Industries Inc., a maker of aircraft landing gear that Crane itself wished to acquire. Crane attempted to block the takeover through an antitrust lawsuit but eventually reached an out-of-court settlement that left it without possession of Coltec.
At the end of the 1990s Crane continued to find success in its strategy of seeking to dominate selected niche markets. With the company's core businesses lying in manufacturing, Crane's distribution operations seemed increasingly out of place. Huttig Building Products in particular was perhaps a distracting or even detrimental presence in the company's portfolio of businesses as that unit had grown steadily in sales--from about $140 million in the mid~1980s to about $700 million in 1998 (about 31 percent of overall revenues)--but had lower profit margins than the manufacturing lines. Evans told the Wall Street Journal in June 1999 that "as Huttig becomes a bigger part of Crane, I think it is holding Crane's overall results down." It was with this in mind that Crane announced that it was considering the spinoff of Huttig into a separate publicly traded company. Such an occurrence would surely lead to another round of acquisitions, and a further bolstering of Crane's impressive collection of niche manufacturers.
Principal Subsidiaries: FLUID HANDLING: Crane Valves; Crane Nuclear, Inc.; Crane Ltd. (U.K.); Crane Australia Pty., Ltd.; Stockham Valves, Ltd. (U.K.); Stockham Australia Pty., Ltd.; Westad Industri A/S (Norway); Crane Pumps & Systems, Inc.; Cochrane Inc. AEROSPACE: ELDEC Corporation; Hydro-Aire, Inc.; Lear Romac; Interpoint. ENGINEERED MATERIALS: Kemlite Company, Inc.; Sequentia, Inc.; CorTec; Resistoflex; Plastic-Lined Piping Products; Crane Plumbing; Polyflon. CONTROL: Barksdale, Inc.; Powers Process Controls; Dynalco Controls; Azonix Corporation; Ferguson. MERCHANDISING SYSTEMS: National Vendors; National Rejectors, Inc. GmbH (Germany). WHOLESALE DISTRIBUTION: Huttig Building Products; Crane Supply. OTHER: Crane Defense.
"Crane Announces Stock Incentive Plan Vesting," PR Newswire, June 11, 1990.
"Crane Co. Acquires Jenkins Canada," Crane Co., April 1, 1992.
"Crane Co. Announces Acquisition and Divestiture," Business Wire, April 2, 1993.
"Crane Co. Purchases PickOmatic Systems," PR Newswire, August 11, 1986.
"Crane Co. Subsidiary Expands Distribution Network," PR Newswire, February 16, 1988.
"Crane Purchases Chicago Heater," PR Newswire, June 18, 1987.
"Crane Sells Its U.S. Crane Supply Operation," PR Newswire, February 27, 1987.
Goldstein, Alan, "Dateline: Milton Roy Co. Repurchases Crane Co. Shares," St. Petersburg Times, February 13, 1990.
Hart, Margaret A., and Alan H. Oshiki, "A Horse of a Different Color," Chief Executive, January/February 1998, p. 19.
Jaffe, Thomas, "The Apple Fell Far from the Tree," Forbes, September 25, 1995, pp. 73+.
----, "Daddy Dearest," Forbes, September 25, 1995, p. 76.
Lipin, Steven, and Paul M. Sherer, "Crane, Seeking to Stop Goodrich Deal, Offers Richer Price for Coltec Industries," Wall Street Journal, December 15, 1998, p. A3.
Vanac, Mary, "Rivals' Moves to Block B.F. Goodrich's Bid for Coltec Were Atypical," Akron Beacon Journal, July 18, 1999.
Velocci, Anthony L., Jr., "BFGoodrich, Crane Square Off in Battle to Acquire Coltec," Aviation Week & Space Technology, January 11, 1999, p. 447.
Voorhees, Rich, "Crane Takes M&A to the Max," CFO, September 1994, p. 31.
Source: International Directory of Company Histories, Vol. 30. St. James Press, 2000.