101 Prospect Avenue, Northwest
Cleveland, Ohio 44115-1075
Telephone: (216) 5662000
Fax: (216) 5663310
Sales: $3.1 billion
Stock Exchanges: New York
SICs: 2851 Paints & Allied Products; 5231 Paint, Glass & Wallpaper Stores
The Sherwin-Williams Company, "America's Paint Company," is the largest producer of paints, varnishes, and specialty coatings in the United States. It also produces related home improvement items, motor vehicle finishes, and refinish products, as well as industrial finishes for original equipment manufacturers of metal, plastic, and wood products. Its products are sold through 2,046 company-operated stores, as well as mass merchants, independent paint and hardware stores, and a direct sales staff.
The story of The Sherwin-Williams Company began in 1866, when Henry Sherwin used his life savings of $2,000 to buy a partnership in the Truman Dunham Company of Ohio. The firm was a distributor of pigments, painting supplies, oils, and glass. In four years, this original partnership was dissolved, and Sherwin organized a paint business with new partners, Edward P. Williams and A. T. Osborn. The new business was called Sherwin-Williams & Company. In 1873 the company purchased its first factory, on the Cuyahoga River in Cleveland, Ohio. The factory manufactured paste paints, oil colors, and putty. The company's first manufactured product, Guaranteed Strictly Pure Raw Umber in Oil, came off the line in that year.
In the paint industry in the 1870s, painters had to buy the ingredients and mix their own paint each day. At this time prepared paints--paints that were ready-mixed--were concocted and sold by individual dealers who mixed a few popular colors. These premixed paints were available only during the busy spring painting season. Moreover, in those days, oil and pigment had to be ground together into a paste. The paste was then thinned with more oil, thinners, and dryers. Customers brought their own containers to stores and filled them as needed. Paints had to be stirred continuously to prevent the pigment from sinking to the bottom of the container. In addition, the paint had to be used quickly or it dried out. For these reasons, paints were seldom shipped far from where they were made. The first patent for ready-mixed paint was taken out in 1867 by D.R. Averill of Newburg, Ohio, improving upon the existing mixing processes.
In 1877, Sherwin-Williams & Company developed the first patented reclosable paint can. This revolutionized the way paint could be used, and more importantly, reused over a period of time. During the 1880s the company continued to develop new products for the paint industry. At the beginning of the decade it improved its liquid paint formula. After two years of test marketing under the Osborn label, it introduced SWP--Sherwin-Williams Paint--the first mixed paint to receive considerable public acceptance.
In 1884 the partnership was dissolved and Sherwin and Williams incorporated as The Sherwin-Williams Company. In the same year, Inside Floor Paint was introduced. This new product encouraged the notion that specific paints should be used for specific purposes. During 1884, Percy Neyman was hired by Sherwin-Williams as the first paint chemist in the industry. Neyman contributed greatly to Sherwin-Williams research and development of new products for the paint industry.
Sherwin-Williams had always been committed to finding and developing new markets for paint products. In 1888, the company saw the possibility of marketing paints and coatings to the railroad industry. It opened a manufacturing facility in Chicago to serve the Pullman Company, and to better serve the farm-implement and carriage industries. In those days, Pullman required as many as 20 coats of highquality finishes for the elaborate interiors of the Pullman cars. Sherwin hired George A. Martin, an ambitious young man, to run the new facility. Martin later served as the third president of the company.
Marketing and advertising quickly became critical to the growing company. Seeing the need to make people aware of its products, in 1890 the company formed a department devoted exclusively to advertising and to publicizing Sherwin-Williams and its products. George Ford was hired to head the department. A year later, a sales agency was opened in Worcester, Massachusetts, which was the model for the company's successful concept of the "company store." In 1905, the "Cover the Earth" trademark was first introduced.
Walter H. Cottingham became the second president of the company in 1909. Sherwin then became chairman of the board of directors. Cottingham strove throughout his career to inspire his workers to attain their maximum potential. Cottingham was adept at launching successful sales campaigns. He was also known as a writer and orator and wrote a collection of "inspirational" editorials and papers on a variety of subjects.
In the early part of the 20th century Sherwin-Williams began acquiring other companies to meet the increasing demand for a variety of different paints and related products. In 1917, under Cottingham's guidance, the company bought the Martin-Senour Company, of Chicago. Three years later, in 1920, the company went public, selling $15 million in preferred stock. Proceeds from the sale were used to purchase the Acme Quality Paint Company, of Detroit; a new plant in Oakland, California; and to expand various existing facilities.
When Cottingham retired in 1922, Martin--who had become vice-president and general manager in 1920&mdashøok over the leadership of the company. During Martin's tenure as president, Sherwin-Williams developed nitro-cellulose lacquer and synthetic enamel. These products made possible the brilliant finishes that covered cars during the 1920s. Such products also reduced from 21 days to a few hours the drying time of newly painted cars.
George A. Martin, like Cottingham, believed in strong advertising for his company and its products. He sponsored the "Metropolitan Opera Auditions of the Air," a successful radio program that ran for years. Also during Martin's presidency, Sherwin-Williams bought several other high-quality, nationally known companies. Among them were The Lowe Brothers Company, of Dayton, Ohio, and The John Lucas Company, of Philadelphia. Both were innovative companies.
Martin's vision focused on finding ways to expand the company and increase its profits. He believed that Latin Americans would respond favorably to high-quality paint products. In 1929 Sherwin-Williams bought the Bredell Paint Company of Havana and enlarged it. Martin expanded the company's manufacturing facilities and established plants in Buenos Aires and Sao Paulo.
For Sherwin-Williams, the early 1940s brought an opportunity to participate heavily in America's World War II effort. Sherwin-Williams, along with other paint companies, supplied camouflage paints for the armed forces, and it was said that the U.S. invasion of North Africa was delayed while waiting for the delivery of camouflage paints with which to provide proper field cover. The company also received a commission to load shells, anti-tank mines, and aerial bombs. To meet this demand, the company constructed and managed a plant in Carbondale, Illinois.
In 1940, Arthur W. Steudel, a Cleveland native, succeeded Martin as president. Steudel worked his way up in the company through the dye, chemical, and color division. He had many visionary ideas about paint retailing and merchandising, and the company's profits increased under Steudel. He served as president until 1961, at which time he became chairman and chief executive officer.
Sherwin-Williams continued to introduce new products to the consumer during this time. Kem-Tone, the first emulsion-based, fast-drying paint for the do-it-yourself market was introduced in 1941 and met with remarkable success. Kem-Tone helped deal with the raw material shortage that the nation faced after the war. That same year, the company introduced the Roller-Koater, the first applicator that was not a brush and was later developed and refined into the paint roller commonly used today. Soon thereafter, the company introduced Kem-Glo, a porcelain-like enamel and Super Kem-Tone, a high-quality interior paint that had a synthetic rubber content. The prefix "Kem" indicated that the paints were "chemically involved materials." Product development, crucial to the expansion and success of the company, continued into the 1960s, as the company gained a new president, E. Colin Baldwin, and was listed for the first time on the New York Stock Exchange in 1964. In 1971 Sherwin-Williams introduced POLANE, a coating designed to efficiently cover metal surfaces but found to work exceedingly well on plastics as well.
In the 1970s, however, the company began to experience substantial losses. In 1977, on revenues of $1 billion, Sherwin-Williams reported a loss of $8.2 million. Dividends were suspended, and the company's borrowings increased dramatically during this time. In the period from 1967 through 1978, in fact, Sherwin-Williams's long-term debt increased from zero to $242 million. In addition, by 1978 Gulf & Western Industries held 13.47 percent of Sherwin-Williams' outstanding stock, and rumors of a takeover loomed.
Shifts in management also occurred. Walter O. Spencer, CEO since 1971, resigned in 1978 and was replaced, on an interim basis, by William C. Fine. The company found a new permanent leader in January 1979, when John G. Breen, formerly an executive vice-president for Gould Inc., a Minneapolis battery manufacturer, became president and CEO. In a short time, Breen managed to bring the company back to financial stability and avert the threatened Gulf & Western takeover. Breen first persuaded Gulf & Western Chairman Charles Bludhorn to sell his company's Sherwin-Williams shares, convincing Bludhorn that Gulf & Western's holdings were a liability and that Sherwin-Williams would be unable to recover financially while the threat of takeover loomed. Bludhorn was likely swayed to a greater extent by the fact that his Sherwin-Williams shares were no longer a sound investment. Next, Breen reshuffled Sherwin-Williams management, replacing several vice-presidents, decentralizing responsibility, and discontinuing about 1,000 slow-selling products. Breen also cut the company's long-term debt. In the first half of 1980, Breen's policies yielded a 57 percent improvement in earnings over the same period the year before. In 1979, Sherwin-Williams sales were $1.19 billion, and by 1985 they had reached $2.17 billion. Moreover, net income rose from six cents to $1.60 per share between 1978 and 1985. Breen served as president until 1986, when he became chairman, retaining the office of CEO. Thomas A. Commes became president.
Acquisitions in the 1980s included the popular Dutch Boy line of paints and its manufacturing facilities, as well as Dupli-Color Products Company, which specialized in automotive paints. In 1984, to reach markets outside the continental United States, the company entered into a partnership known as BAPCO with C-I-L, Inc. of Canada, a subsidiary of England's Imperial Chemical Industries PLC. The new concern was eventually acquired in its entirety by C-I-L, as Sherwin-Williams gradually divested its chemical operations.
During this time, sales of house paints decreased, due largely to the use of alternative surface finishes, such as pre-finished aluminum and plastic surfaces, in the construction of homes. Sherwin-Williams responded to this trend by going after market share and substantially increasing its advertising budget from $4 million in 1989 to $125 million in 1990. This strategy was well-timed, as increasingly popular discount and home decorating chains that catered to the do-it-yourself market preferred to rely on one or two major suppliers that sold national brands and provided national distribution, rather than hundreds of smaller, local paint companies.
Moreover, in 1990 Sherwin-Williams added the well-known Krylon and Illinois Bronze lines of aerosol paints to its holdings. And with the 1990 purchase of the architectural coatings business of DeSoto, Inc., Sherwin-Williams gained its biggest chunk of market share. It paid $67 million for the business, which traced its roots back to 1910 and eventually became as one of the largest paint manufacturers in the country, supplying private label paints for such chains as Sears and Home Depot. The addition of DeSoto made Sherwin-Williams the world's largest supplier of custom paints for the private-label market. The following year, the company purchased the Cuprinol brand name of premium stains, liquid sealers, and other coatings products from the Darworth Company of Connecticut, as well as two coatings business units from Cook Paint and Varnish Company.
The acquisitions paid off well for Sherwin-Williams. According to a 1992 article in Business Week, industry sales fell 0.2 percent in 1991, due to national economic recession, but revenues at Sherwin-Williams were up 2.9 percent, excluding acquisitions. For the first two quarters of 1991, in fact, the company's profits climbed 23 percent to $68 million on sales of $1.37 billion. As Sherwin-Williams celebrated its 125th anniversary that year, it had become one of only a few companies to lead its chosen industry for more than a century.
By 1993, Sherwin-Williams was reporting earnings of $165 million on sales of $2.9 billion, and its balance sheet was almost debt-free. Indeed, in the 15 years since Breen took over, revenues more than doubled, while profits increased almost tenfold. In new product development, the company introduced Ever-Clean, a premium latex interior wall paint with superior stain resistance and washability characteristics. The new paint was launched in 1994 as part of a national advertising campaign which was the largest in the company's history. Also that year, Sherwin-Williams acquired the assets of The Old Quaker Paint Company for an undisclosed amount. This purchase brought Sherwin-Williams into the residential construction market of southern California.
To support the company's growth and keep its operations running at top performance, Sherwin-Williams had a software designer help develop an automated control system for its distribution centers. Known as the Automated Warehouse Control System (AWCS), the system became fully operational in all its distribution centers in 1994. Using bar-code technology and portable radio frequency, it significantly improved the efficiency and accuracy of processing orders. For example, workers received electronic orders via a hand-held machine incorporating a radio, a computer terminal, and a scanner. The computer sent orders ranking each tasks priority and recalculated the list each time a task was completed. When trucks were unloading at the warehouse, the computer determined where to put the goods based on what space was free at that moment, eliminating the need to hold a particular slot empty until a truck was unloaded.
The early and mid-1990s saw a decline in new housing starts and thus proved challenging to the construction and building materials industries. Sherwin-Williams, along with most companies competing in that business sector, felt the effects in the form of reduced stock prices. Nevertheless, Sherwin-Williams remained in a strong financial position; having avoided long-term debt and gained market share, the company was able to respond effectively to the shifting economic environment and was still intent on serving as "America's Paint Company."
Principal Subsidiaries: Contract Transportation Systems Co.; Dupli-Color Products Company; Sherwin-Williams International Company; DIMC, Inc.; Interiors Guild, Inc.; MTM Development Corporation; Sherwin-Williams Acceptance Corporation; SWIMC, Inc.; Sherwin-Williams Canada, Inc.; 147926 Canada Inc.; The Sherwin-Williams Co. Resources Limited (Jamaica); Sherwin-Williams (Caribbean) N.V. (Curaç); Sherwin-Williams (West Indies) Ltd. (Jamaica); Sherwin-Williams Foreign Sales Corporation Limited (Virgin Islands); Sherwin-Williams do Brasil Industria e Comercio Ltda. (Brazil); Compañia Sherwin-Williams, S.A. de C.V. (Mexico); Sherwin-Williams Cayman Islands Ltd. (Grand Cayman).
Dyer, Davis and Kathleen McDermott, America's Paint Company: A History of Sherwin-Williams, Cambridge, Mass.: Winthrop Group, Inc., 1991, 109 p.
Feldman, Amy, "The House that Jack Rebuilt," Forbes, April 25, 1994, pp. 91--93.
Harrison, Kimberly P., "Sherwin-Williams to Stash $250MM for Acquisitions," Crain's Cleveland Business, September 27, 1993, p. 1.
Madigan, Kathleen, "Masters of the Game: CEOs Who Succeed in Business When Times are Really Trying," Business Week, October 12, 1992, pp. 110--16.
Schlenberg, Fred, "Cleveland, Part I: 'Not Just Great, But the Greatest'," American Paint & Coatings Journal, January 5, 1987.
------, "Cleveland, Part II: Sherwin, Williams ... and Fenn," American Paint & Coatings Journal, January 19, 1987.
------, "Cleveland, Part III: Era of the Empire Builders," American Paint & Coatings Journal, February 2, 1987.
"Sherwin-Williams Acquires Old Quaker Paint Co.," American Paint & Coatings Journal, September 12, 1994, p. 17.
Shingler, Dan, "Cash-Rich Sherwin Ripe for Deal-Making," Crain's Cleveland Business, May 29, 1995, p. 2.
Source: International Directory of Company Histories, Vol. 13. St. James Press, 1996.