Henkel Manco Inc. Business Information, Profile, and History

Company Perspectives:

Manco's mission is to build a consumer products company that offers products and services to our customers that will bring quality and care to their lives. Our backyard, the United States, is our foundation for growth, and we will strive always to build new buying and selling partnerships globally. Quality products and caring personal relationships will always be the formula used for delivering extraordinary value to our only boss, the Customer.

History of Henkel Manco Inc.

Headquartered in a suburb of Cleveland, Ohio, Henkel Manco Inc. sells more duct tape than any other company in America&mdash-ough to circle the Earth 15 times. In addition to its duct tape dominance, the company designs and markets a growing variety of branded products including mailing and shipping supplies, weather-stripping, craft products, and housewares. Manco was founded in 1950 and was privately owned from 1971, when Chairman and CEO John J. "Jack" Kahl bought the company, to late 1997. Kahl is the widely praised engineer of Manco's transformation from an $80,000 distributor into a multimillion-dollar entrepreneurial phenomenon. In 1997, the company announced that it would be acquired by Germany's Henkel KGaA, a diversified manufacturer with $10 billion in annual sales. Renamed Henkel Manco Inc., the Ohio company was expected to be merged into the German firm's $2.5 billion consumer adhesives business, encompassing products under the Loctite and LePage brands.

World War II Origins of Duct Tape and Manco

The company traces its roots to 1950, when it was founded by Melvin A. Anderson in Cleveland, Ohio. Anderson named the company after himself and set out to supply duct and electrical tape to area factories.

According to Manco and other sources, duct tape was among the many breakthrough products developed during World War II. Created by a subsidiary of Johnson & Johnson, the material featured a cloth base coated with rubberized adhesive on one side and an army green polymer coating on the other. The resulting tape was strong, but its cloth base made it easy to tear to size. Soldiers found the material indispensable, and used it to seal ammunition boxes and repair everything from jeeps to battleships. The duct tape moniker developed after the war, when the reinforced, waterproof adhesive was widely used to repair and connect duct work.

Kahl made his rendezvous with duct tape destiny in the early 1960s, when he made a sales call at Anderson's office. Whether or not he sold the founder a life insurance policy has become extraneous to the company folklore; what is important is that Anderson invited Kahl to join the duct tape firm as its only sales rep. When Kahl came on board, Anderson was generating just $80,000 in sales. By the advent of the 1970s, Kahl had been instrumental in increasing the company's sales tenfold and expanding its reach to five states. His reward? A meager bonus. Kahl resigned over inadequate compensation in 1971. Without his sales whiz, Anderson was forced to sell the company to none other than Kahl, who borrowed $192,000 and effected a mini-leveraged buyout. The new owner abbreviated the company name from Melvin A. Anderson Co. to Manco.

Turning from industrial sales to the retail market, Kahl more than tripled sales to $3 million by 1976, thereby enabling him to pay off his LBO debt. But it was an after-hours meeting with a buyer from Wal-Mart Stores, Inc. that would herald a period of fantastic growth for the duct tape marketer. Noting that the energy crisis and an especially cold winter could combine to boost demand for weather-stripping, Kahl decided to make his first product diversification in 1977. He launched the new product at a Dallas trade show that fall, and received an $88,000 order--Manco's largest to that point--from what would become America's biggest mass merchandiser, Wal-Mart. (Kahl would later count Wal-Mart founder Sam Walton among his many mentors.) Along the way, Kahl and company also picked up contracts with retail behemoths Kmart Corp. and Ace Hardware. Sales soared from about $4 million in 1977 to $11 million in 1980.

Harnessing the Power of the Brand in the 1980s

In 1984, Kahl decided to differentiate his product through packaging and brand identity. For more than 30 years, duct tape had been sold in large, sticky, anonymous stacks; the stuff was so strong, it was often hard to pry a single roll lose from its mates. Tiny Manco beat such tape industry giants as 3M, Scotch, and Mystic, becoming first to shrink-wrap individual rolls of lowly duct tape and plaster its green corporate logo on the package. The company also gathered up many of the different types of tape scattered throughout the store into a single "tape center" that took one-stop-shopping down to the product level.

Instead of trying to correct the many consumers who mispronounced and misspelled the name of his product, Kahl embraced "duck tape" and registered it as a trademark. An endearing, bright yellow cartoon duck--Manco T. Duck--soon personified the helpful nature of the company's products. Powered by the "webbed warrior," Manco's sales jumped from $25 million in 1982 to $32 million in 1985. This rapid growth spurred a move from Cleveland proper to a new, campus-like headquarters on 22 acres in the suburb of Westlake.

Kahl often said that his long-term goal for Manco was to make it a $1 billion company with a customer base of 100,000. Realizing that he would be very hard-pressed to sell a billion dollars' worth of duct tape--even given the apparently universal appeal of the product--Kahl embarked on a wide-ranging product diversification. Consultation with Wal-Mart resulted in the development of the CareMail line of about two dozen shipping and mailing products launched in 1986. Manco T. Duck donned a blue hat and mail pouch to promote the products. By the early 1990s, CareMail would encompass over 200 different items, including bubble wrap, labels, padded envelopes, and specially sized boxes.

Corporate Culture Considered a Key Element of Success

Jack Kahl's formative years were steeped in religion. He was educated in parochial schools and at John Carroll University, a Catholic institution, and was even said to have considered the priestly vocation. Kahl's business attitudes reflected his personal experiences. In 1995, he told Forbes's Dyan Machan that "There isn't much difference between religion and what we practice here. Religion is a set of beliefs. A company can have, or be, a religion." In fact, Manco's headquarters have had some church-like attributes, including bell-ringing to herald happy announcements, weekly meetings, and a "Temple of Quotes" featuring inspirational messages of employees' choosing. Even the company's promotional material took on an evangelical tone. Though (hopefully) tongue-in-cheek, Manco's web site extols "the Duck" as "a champion for those in need, and a shining example of a friendly and trusting spirit that can make a real difference in people's lives." Mindful of his own shoddy treatment at the hand of his previous boss, Kahl was generous with company perks. He created an employee stock option plan with 30 percent of Manco's equity; built on-site fitness facilities; and offered education reimbursement programs.

But while Kahl was devoted to his business, he did not take it or himself too seriously. Take for example "Duck Challenge Day." Corporate legend has it that this annual end-of-the-fiscal-year event got its start in 1990, when Kahl told sons John and Bill (both sales managers) that if they could boost sales from a projected $56 million to over $60 million, he would jump in the lake in front of Manco's suburban headquarters. It was no frivolous wager; Manco's fiscal year winds up at the end of September, meaning that Kahl would be taking his dip during the chill of October in Cleveland. Revenues ended up at $60.09 million that year--just enough for Kahl to take the plunge. The event expanded into a company-wide challenge as well as a media event, culminating in 1997's "Global Duck Tape Summit." That year, Kahl displayed "the World's Largest Roll of Duck Tape" (500 lbs.), had his headquarters city named "Duck Tape Capital of the World," and entertained such luminaries of the duct tape establishment as Jim Berg and Tim Nyberg, authors of two books on the wonder adhesive; PBS's Red Green, fictional antihero of the Red Green Show; and musician Terry Anderson, who has written and performed odes to duct tape.

The 1990s and Beyond

Manco continued to broaden its consumer products offerings in the new decade, adding 150 new items in 1990 alone. Kid'sCRAFT, a line of proprietary paints, glues, and stickers designed for children, was launched in 1993. In 1995, the company launched Easy Liner non-adhesive shelf and drawer liners. In 1997, the company debuted Softex, a new line of bath, shower, and sink mats that promised the non-skid and cushioning qualities of traditional rubber mats while offering enhanced mildew-resistance. That same year, Manco launched its Draft Busters brand window insulation kit with the company's first large-scale radio campaign.

New product launches helped push Manco's annual sales over the $100 million mark in September 1994, and revenues rose more than 50 percent in the ensuing two years to $167 million. As it had in the past, rapid growth propelled another corporate move, this time to a 200-acre site in Avon, Ohio, and an $8 million headquarters building. The new home base must not have featured a pond, because when Manco exceeded its profit goal in 1997, Jack Kahl had his head shaved instead of taking a ducky dip. That fall Jack Kahl's oldest son, John Kahl, Jr., was promoted to president, replacing Tom Corbo, who had served in that capacity since 1992.

In 1992, Jack Kahl told Chris Thompson of Crain's Cleveland Business that "People say, 'Everything is for sale.' No. This [Manco] is not for sale." That certainty evaporated five years later, when Kahl found a way to become the head of a multi-billion adhesive business: he sold Manco to Germany's Henkel Group for an undisclosed amount. Renamed Henkel Manco Inc., the Ohio company was expected to be merged into the German firm's $2.5 billion consumer adhesives business, encompassing products under the Loctite and LePage brands. Kahl, his sons, and the rest of Manco's management team were expected to keep their positions at the merged company.