Keyes Fibre Company Business Information, Profile, and History

History of Keyes Fibre Company

Best known for its Chinet brand disposable dinnerware, the Keyes Fibre Company ranks among the United States's top 50 producers of wood products. The company's output focuses on products for food service and retail distribution. The Chinet line includes disposable plates of varying sizes and shapes made from paper pulp, paper napkins, dinner and luncheon size plastic flatware, and paper dinnerware in holiday themes. In addition to disposable dinnerware, Keyes manufactures egg and fruit packaging, cup carriers, fluorescent tube packaging, and over 400 other wood pulp products. Keyes (sounds like "eyes") was a family-run company from 1903 to 1927. As the company prepared for its centenary, its parent was Van Leer Holding, Inc.

The origins of the Keyes Fibre Company date back to the mid-nineteenth century, when inventor Martin Keyes was born in Lempster, New Hampshire. He started work at his father's saw and grist mill at a young age. His inventive capacity became evident in his youth, and led him to keep pencil and paper on hand in order to write or draw ideas at any time. The habit would prove invaluable to the creation of the Keyes Fibre Company. Keyes's entire career would involve the paper business, especially "papier-mache" (which in French means "chewed paper").

There are two corporate fables regarding the origins of the sturdy, yet disposable paper dishes that were the precursors to Chinet. One recounts that inventor Martin Keyes saw workers at a veneer plant in New York eating their lunches on pieces of maple veneer, and that their impromptu plates got him thinking about disposables. The other story recounts that Keyes' mother urged her enterprising son to improve upon the pressed wood pie plates that were available at the turn of the century. Before Keyes' invention, there were inexpensive plates stamped from a heavy paper stock, but these weak, absorbent disposables were unreliable. At first, Keyes tried to steam veneer into plates, but he later arrived at a plan to form wood pulp with a mold. Carrying out that plan took at least two years: the inventor had to develop a machine that would mash the pulp and mold, dry, and package the plates. Once he had done so, he ran into another problem.

When Keyes filed to patent his machine, he was notified that the process was already patented. Realizing that someone had stolen his idea, Keyes sued to prove that the paper plate machine originated with him. Although the original patent seemed unchallengeable at first, Keyes was able to enter his daily diary as evidence in the case. The journal unquestionably recounted the progression of the machine from concept to reality. Martin Keyes won the case on the strength of his diary and acquired the basic patent that provided the basis for the development of Chinet brand plates.

Keyes convinced a friend who owned an iron works to build a prototype of his invention in 1902, and rented space in a pulp mill in Shawmut, Maine for his first test run. His original plate machine was displayed for many years at Keyes Fibre's headquarters. Despite difficulties in finding a supplier who could sell him wood pulp of just the right consistency, Keyes was able to incorporate the Keyes Fibre Company in Shawmut, Maine to produce paper pie plates in 1903. The inventor's two brothers-in-law, William Brooks and E. H. Allyn, along with investors Albert B. Page, Edward Lawrence, William Brooks, and Nathan Heard were the original stockholders of the Keyes Fibre Company's initial capitalization of $150,000. Keyes received 1,000 of the company's first 1,500 shares in exchange for allocating his primary patent, three other pending patents, and any subsequent inventions having to do with the manufacture of articles from wood or other pulp, to the company. With the memory of the near-theft of his intellectual property still fresh in his mind, Keyes quickly employed a designer to create a logo for the new company. The star with a "K" inside was registered in 1904 and symbolized Keyes Fibre through the twentieth century.

Keyes fully expected his employees to live up to his own stringent work ethic, as evidenced by an anecdote recounting the construction of the first company-owned mill. The president's right-hand man, Bert Williamson, asked to have November 3, 1903 off so that he could get married. Knowing that construction of the new mill was scheduled to begin on November 4, Keyes gave Williamson one day of vacation, but required him to be back on the job at 7:00 A.M. on the fourth.

The company's first shipment of pie plates went out in the summer of 1904, but Keyes' mill was forced to close the following spring as a result of cost competition. As the founder had expected, Keyes Fibre's plates were indeed better than their predecessors, but they also cost twice as much as alternatives. Stock in the company fell from $100 per share to $10 per share. After cutting prices drastically and applying all his personal finances to the business, Keyes was able to resume production of his unique product late in 1905. Sales of the company's pie plates benefitted from a well-known tragedy, when an entire shipment was sold in San Francisco, where the earthquake and fire of 1906 had created high demand for disposable dishes.

When Keyes Fibre's pulp supplier was abruptly closed down in 1907, the president scrambled to find another site for his business. Martin Keyes considered sites in Massachusetts, New York, and Maine, finally settling on a location in Maine. Keyes's first consumer product, a "picnic package" with different sized plates, was introduced shortly after the Keyes Fibre Company was moved to Waterville, Maine in 1908. By 1910, the company's sales topped $160,000 and profits totaled almost $16,000.

From 1903 to 1911, Keyes Fibre's pie plates were sold through Charles Brown, a shareholder and distributor. Brown had promoted the products under his own trade name, but Keyes sought to publicize his own name and thereby establish a distinctive reputation. In 1911, Keyes Fibre started a 36-year relationship with the John M. Hart Company, a national sales agency, to distribute all of Keyes' products under the company trademark. The new arrangement immediately boosted sales to such a level that production could not keep pace.

When Martin Keyes died in 1914, his son-in-law, Dr. George G. Averill, succeeded him. Keyes had convinced Averill to leave his medical practice and join the company in 1911. Averill led the company for over a decade. In 1915, Keyes Fibre's daily capacity exceeded two million pieces, and a waterproof plate was developed. A four-for-one stock split highlighted the following year. Pulp shortages in the latter half of the decade threatened production and pricing, until 1920, when Keyes Fibre had its own mill built at the original corporate site in Shawmut, Maine. Sales began to decline in the mid-1920s, and Keyes' dissatisfaction with the Hart sales agency grew proportionately to its expanding product backlog.

Then, in 1926, Keyes Fibre's directors discovered that John Hart had secretly been cooperating with former employee Merle Chaplin to devise significant, patentable improvements on the original Keyes process. This new competition and the drop in sales coincided with the expiration of Keyes' original patents. The threat to the company was serious, and Dr. Averill employed several tactics to keep control of the company in the family. In March 1927, Hart and Chaplin offered their five new patents and other inventions in exchange for 3,000 Keyes shares. Averill negotiated to purchase enough shares to maintain his majority, then presented the deal to Keyes Fibre's shareholders, who rejected it. One month later, Averill offered Hart and Chaplin $200,000 for their patents, but the old-fashioned "corporate raiders" refused his offer.

Mid-year, Hart, Chaplin, and several investors formed the Rex Pulp Products Company to compete with Keyes. But after struggling to locate a plant, the competitors made Averill and the Keyes stockholders one last offer: $4.5 million to purchase the company outright. The stockholders agreed, and the deal was completed by the end of the year. Realizing the value of the Keyes name, the officers of the Rex Pulp Products Company assumed the historic name for the newly formed company. Walter Wyman, Maine's most prominent industrialist, was elected president and John Hart was second-in-command.

The new management pushed to diversify from Keyes's product line of varying sizes of pie plates and butter dishes, and by the end of the decade, ice cream dishes, drinking cups, and the smooth-finished line of paper dinnerware called Chinet were added. Chinet's smooth, moisture-resistant finish was devised by Walter Randall, who developed a distinctive drying process for the molded plates.

The business prospered until two years after Keyes's takeover reorganization. The stock market crash of October, 1929 signalled the onset of the United States's worst economic depression. With more than ten million workers unemployed nationwide, Keyes Fibre had trouble maintaining sales. By 1933, the company was over $850,000 in debt and made every effort to meet payroll and other crucial expenses. Keyes Fibre seemed destined to become a casualty of the Depression when, in 1934, the federal government amended the national bankruptcy act. The new provisions allowed companies that were solvent for the long run, but temporarily in distress, to petition a United States District Court for permission to reorganize without bankruptcy. Keyes became one of Maine's first corporations to utilize the new amendment, and emerged from the reorganization with Walter S. Wyman as president. Wyman served in that capacity until 1942, when he was succeeded by Dwight S. Brigham.

Keyes was able to develop several new products despite the depression and its effects. In 1930, the company introduced disposable cake circles, and in 1931, Keyes entered the highly competitive egg packaging field. The company's purchase of Australian, Belgium, Canadian, British, South African, and other patents for egg containers helped launch it into international licensing of Keyes Fibre patents and processes. The company first licensed Martin Keyes's patents for molded paper pulp items to companies in Canada, Denmark, Holland, and Finland in 1936.

Keyes contributed to the United States's World War II effort by taking advantage of its patented KYS-ITE fibrous plastics process, which was developed in the late 1930s. KYS-ITE was used primarily to manufacture plastic cafeteria-style serving trays, which were in high demand when war rationing limited the use of rubber and aluminum, traditional tray materials. The company also manufactured shell caps, pistol grips, and valve wheels during World War II. The company's plastics production would broaden to include salad bowls, cups and saucers, and tracks for window frames, before the plastics division of Keyes's business was sold in 1970. The company's hourly employees were unionized in 1942, when the Star Local 449 of the International Brotherhood of Pulp, Sulphite and Paper Mill Workers was established.

The war's end saw Keyes enjoying the United States' general prosperity: in 1945, the company built a new $1.3 million plant in Hammond, Indiana, and in 1947, Keyes purchased its long-time, closely related sales organization, the John M. Hart Company. Renamed Keyes Fibre Sales Corporation, the service was operated as a subsidiary until 1956, when it was absorbed by the parent.

Wallace Parsons, who had risen from assistant to the vice-president (1927) to general manager (1928) and then vice-president (1942), became president of Keyes Fibre in 1951. Just six years later, Ralph H. Cutting succeeded Parsons. Cutting had been a clerk in the engineering department in 1928, rose to purchasing agent in the following year, and was made assistant treasurer in 1942. By 1945 he had advanced to treasurer and general manager, in 1951 he became vice-president and general manager, then in 1957 he advanced to the presidency.

Keyes Fibre became much more directly involved in the international promotion and distribution of its products in 1962, when it acquired 50 percent of Canadian Keyes Fibre Company, Limited, of Nova Scotia. One year after that acquisition, Keyes commenced subsidiary Norwegian operations to serve markets in Scandinavian countries and the United Kingdom. Late in 1964, the parent company purchased the vast majority of Societe Vendeenne des Embalages, a French licensee. The acquisition doubled Keyes Fibre's capacity and broadened its product line. By 1975, Keyes Fibre had subsidiaries or affiliates in the Republic of Ireland, Mexico, Australia, Belgium, Venezuela, Italy, and Great Britain. There were licensees of the company in Argentina, North Ireland, New Zealand, and South Africa.

Keyes Fibre's domestic net sales and total net income doubled from 1964 to 1974, while the company's total number of employees only increased by nine percent. This efficiency encouraged the company to invest in geographic expansion, and by the mid-1970s, Keyes boasted six American plants in Maine, Indiana, California, Washington, and Louisiana. In 1975, Keyes purchased Huntsman Container, a manufacturer of polystyrene foam hinge-lid containers, food service "takeout boxes," and Tuff Stuff brand disposable dinnerware, which grew to become America's second-most-popular brand of foam plates.

But Keyes did not neglect its original brand of disposable dinnerware. In 1965, the company changed the Chinet trademark to script lettering when the product was moved into the consumer market. The company was able to claim that there was "virtually no comparable product on the market" as late as 1968. Chinet became very popular with institutional food service markets like hospitals, colleges, and industrial cafeterias because it promoted labor and equipment cost savings and eliminated breakage and pilferage losses. Skyrocketing labor costs in the 1960s and 1970s made disposables even more attractive.

When the United States' first wave of popular environmentalism swelled in the 1970s, Keyes responded by announcing that 33 percent of its fibre usage came from waste paper and cartons. The use of post-consumer content in food service products was prohibited by the Federal government, but Keyes was able to incorporate the reused fibre into packing materials for non-food applications. Keyes also showed its "greenness" by introducing Tree Start, a wood-fibre cup that provided a "complete growing medium" for tree seedlings.

Keyes was purchased for the second time in its history in 1978 by Arcata National Corp. in a transaction valued at $87 million. Based in Menlo Park, California, Arcata was a printing and redwood products concern. Under Arcata's leadership, Keyes opened a new Chinet plant in Alabama in 1979, and doubled its apple tray manufacturing capacity in Wenatchee, Washington, to 180 million trays per year at a cost of $3.2 million the next year. Just three years later, Keyes Fibre was sold again, this time to Royal Packaging Industries Van Leer B.V. and its American subsidiary, Van Leer Holding. Based in Amstelveen, Netherlands, the Van Leer group was a global manufacturer of industrial containers with operations in over 30 countries. By the third time it was purchased, Keyes boasted annual sales of almost $230 million.

Foreseeing tough times ahead for plastics, Keyes sold its Huntsman Container subsidiary and converted all of its production to recycled content in the 1980s. Even food service items, like Chinet, contained 100 percent pre-consumer recycled content. The supplies came primarily from milk carton plants, which sold their unusable stock to Keyes. The 1988 sale of Huntsman Container to Fripp Fibre, a Canadian concern, was particularly fortuitous. In the early 1990s, the Environmental Defense Fund convinced McDonalds Corp. to discontinue the use of polystyrene containers. Plastic food service items, which could not be burned or composted, lost favor with some consumers, and may come under fire from the federal government in the future. Concerns about disposal grew more pressing as consumers become more aware of the environmental impact of their purchases.

After Keyes became a subsidiary of Van Leer, its annual results were grouped with those of the parent company. In the late 1980s and early 1990s, Keyes has concentrated on international activities, especially on manufacturing and selling Keyes process machines to licensees around the world, and expanding its activities in Europe, where pressboard plates still dominate the disposable dinnerware market. The company has a foothold in these markets, where its rough-mold products have been in use since the 1930s.