Ogden Corporation Business Information, Profile, and History

History of Ogden Corporation

Ogden Corporation is one of the largest service corporations in the world. R. Richard Ablon, president and chief executive officer, summarized the corporation's role in 1992: 'Our strategy is to build underlying value by creating a unique global services company. We plan to offer those service capabilities most in demand by our current and future service markets and target key market-share positions in large-volume, high-transaction areas.'

Ogden provides a wide range of services to government and private clients around the world. The company may be best known for the activities of its subsidiary Ogden Projects, Incorporated, a leader in operating waste-to-energy facilities in the United States. Ogden's other main subsidiary is Ogden Services Corporation, a complex of comprehensive service companies. Ogden Aviation Services is the largest independent company providing service to airlines, and numbers 180 airlines at 80 airports among its clients. Ogden Entertainment Services provides facility management, promotion, and consulting services for sports arenas and entertainment complexes around the world, while Ogden Industrial Services offers facility management for corporate clients. In 1991, Ogden received contracts worth $160 million to manage buildings for IBM. Ogden Government Services is a major supplier of building management services for the United States government. Ogden Technology Services and Ogden Environmental and Energy Services provide advanced testing and research facilities for their government and corporate clients.

The original activities of Ogden Corporation bore little resemblance to the company that exists today. In its first half-century of existence, Ogden Corporation was, successively, a public utility holding company, an investment company, a manufacturing company operating through diverse subsidiaries, and, most recently, a major service company. Ogden Corporation began its history as a public utility holding company in 1939. In 1948 the company registered with the Securities and Exchange Commission (SEC) as an investment company. Ogden acquired W. A. Case & Son Manufacturing Company in 1952, an action that decisively altered the status of the corporation, as the SEC ruled that Ogden had ceased to be an investment company. Thereafter, Ogden operated as a manufacturing company, and followed the emerging trend to create conglomerates. In the following decades, Ogden became what one observer called a miniconglomerate, accumulating such diverse holdings as the Suffolk Downs Race Track, Better Built Machinery, and Wilson Foods.

The most significant corporate acquisition may have been the purchase of Luria Brothers, a scrap processor, in 1955. This transaction brought Ralph E. Ablon into the employ of Ogden Corporation. Ablon had begun his career with Luria Brothers in 1939. In 1948 he was named executive vice president; he became president of Luria Brothers after its purchase in 1955. Seven years later, Ablon became chairman and chief executive officer of Ogden Corporation. He presided over the company during decades of expansion as a conglomerate, and then re-structured the company in its present incarnation. His son Richard succeeded him as chief executive officer in 1991, although the senior Ablon remained chairman.

The weaknesses of the conglomerate as a form of business organization had become apparent by the end of the 1970s. Large corporations had accumulated more businesses than they could understand or effectively manage. The 1980s saw widespread reorganizations in American corporations as managers sought to regain a clear sense of identity and a coherent strategy for the future. Ralph Ablon believed that the economy would shift toward a service orientation, and in 1981 he set forth plans for a major reorganization of Ogden Corporation that would fully embrace the service economy. As he later explained, 'We looked at what kind of world we would live in and the ideal company for the balance of the century. We discovered that everything we had didn't fit and we had almost nothing we needed to become a total services company.' Ablon began the transformation of Ogden with the purchase of Allied Maintenance Corporation, a well-established firm that provided Ogden with a firm base for its expansion into the service sector. Between 1981 and 1987, Ogden virtually re-created itself: in 1987 only five percent of income came from businesses that Ogden had owned in 1981. By 1989 Ogden enjoyed annual sales of more than $1 billion.

Ogden's restructuring eliminated many capital-intensive operations that could damage the company in slow economic times. Its new service orientation provided a measure of security even in uncertain economic situations. In the wake of the Wall Street crash of 1987, one financial analyst praised Ogden for its management and stability. 'They represent the highest quality in terms of balance sheet, market liquidity, cash availability and earnings stability.' Ogden continued to benefit from that stability during the recession of the early 1990s.

Ogden's decision to focus on the service sector still provided an enormous range of action. Ogden Entertainment provides a good example of the diversity of Ogden activity, providing any combination of 'concession food service, merchandise, maintenance, janitorial [service], security, parking, total facility management services and concert promotions' to its customers. Ogden Entertainment Services now counts among its clients dozens of stadiums, convention centers, and other entertainment venues in North and South America. Clients include Rich Stadium in Buffalo, New York, the Capital Centre Arena in Landover, Maryland, the Rosemont Horizon, near Chicago, Illinois, the Anaheim Stadium in Anaheim, California, and the Sports Palace in Mexico City. In addition, in 1991 Ogden Entertainment was awarded a contract to manage a soccer stadium in London.

Ogden Industrial Services offers a variety of personnel, maintenance, and warehouse services to clients that include many Fortune 500 companies such as IBM, Exxon, and Dow Chemical. The company also works in conjunction with Ogden projects to provide services to its waste-to-energy plants. Ogden Industrial, like other Ogden subsidiaries, benefits from the desire of other companies to cut overhead expenses, and makes its profit by providing services more cheaply than companies can afford to provide those services for themselves. Among other enterprises, Ogden employees, for example, have run a waste-acid treatment plant for Kemira, Inc. As an independent contractor, Ogden could develop procedures that were not restricted by work rules stipulated in union contracts with Kemira. For example, a lower-paid maintenance employee could perform minor plumbing or mechanical repairs without calling in a more expensive tradesman. While contracting saves money for the customer and provides an additional source of income for Ogden, it causes unease among union members who fear the threat to high-paying jobs and the possibility that contracting can become a tool to weaken unions. Responding to such concerns in 1987, an Ogden spokesman observed that contracting 'is going to become even more widespread, because it is the only solution to saving what is left of America's smokestack industries.'

Ogden Projects, through the activities of its subsidiary Ogden Martin Services, has emerged as a leader in the waste-to-energy market. Ogden based its involvement on two developments of the 1970s: rising energy costs and the decreasing availability of landfill space. The Environmental Protection Agency calculated that in 1971 the United States generated 113 megatons of municipal solid waste. Advocates of commercial re-use began to argue that waste should be viewed as an economic resource. Waste includes materials that can be burned for fuel or recycled. The process of utilizing these resources is known as resource recovery. Scarcity provided opportunity for investment and profit. Citing 'long term increases in refuse generation and disposal costs, decreased availability for all land uses, and greater demand for energy and material resources,' Lisa M. Bithell, writing in the Journal of Resource Management and Technology in 1983, predicted that 'centralized resource recovery will continue to play an important role in resource management and solid waste disposal.'

Interest in waste-to-energy facilities, however, developed slowly in the United States. After European companies had spent decades working on recovery systems, some American engineers began to experiment with new technologies. Klaus S. Feindler, then president of Beaumont Environmental, criticized American efforts in 1983. Writing in the Journal of Resource Management and Technology, he pointed out that the western European market neared saturation in waste recovery facilities. He calculated that one facility per million of population existed in western Europe while barely .2 facilities per million existed in the United States, noting that this combination of an open American market and experienced European companies provided an opportunity for both groups. American preoccupation with experimental systems indicated 'a lack of appreciation for the simpler and proven European technology, perhaps because of a preoccupation with space age technology.' Ogden, committed to approaches that contained costs, did not make that mistake. In 1983, Ogden acquired the North American rights to the Martin GmbH system of incineration, the most widely used technology.

Ogden Projects completed its first waste-to-energy plant in 1986. In 1992 the company operated 21 plants and had eight additional plants either under construction or awarded. Its 21 plants have the capacity to process 20,675 tons of waste per day. These figures include the acquisition of Blount Energy Resource Corporation, a transaction that brought two operational plants to Ogden. Ogden's rapid growth reflects its reputation for helping local governments address a pressing problem. Herbert Florsdorf, executive director of the Lancaster County (Pennsylvania) Solid Waste Management Authority, expressed relief when Ogden opened its Lancaster County facility in 1991. 'Last year,' he told Ogden officials, 'when we looked at our landfill, we saw 12 acres of potential environmental problems, a risk to our future. Now we see 12 acres of resources.' While the company is best known for waste-to-energy operations, Ogden offers a full range of waste disposal services, including recycling.

Not all of Ogden's new operations met with success. In 1986 Ogden began to market a new service to deal with hazardous waste. The group, Ogden Environmental Services, used mobile units to clean up hazardous wastes on-site. The company hoped to eliminate the expense and political controversy involved in programs that required extensive transportation of dangerous materials. The enterprise, which offered technology that was useful for a wide range of problems, drew an enthusiastic response from the investment community. John Kaweske, manager of the Financial Industrial Income Fund, told Barron's that prospects for the new technology were excellent. He rated this effort alongside the waste-to-energy business as a reason to look favorably on the long-term prospects of Ogden Corporation. Counter to all expectations, in 1990 the unit endured a loss of almost $4 million on revenues of $6 million. Ralph Ablon ruefully told Business Week in 1989: 'Companies with hazardous waste problems are disinclined to spend money, and they will find ways to avoid it.' In 1991 Ogden discontinued the on-site remediation business.

Ogden has renamed that troubled subsidiary, now called Ogden Waste Treatment Services, and has developed an approach closer to the model that has succeeded so well in its waste-to-energy operations. The new strategy will emphasize permanent facilities 'targeting permanent regional hazardous waste treatment and disposal facilities.' Such plants will encourage long-term relationships with municipalities. Ogden hopes to become identified as a valued problem solver in this field. The company is planning a large thermal treatment plant in Houston, and hopes that the new effort will allow this part of its business to prosper.

Ogden continues to strengthen its position in environmental services. In 1991 the Company acquired complete control over ERC Environmental and Energy Services, now Ogden Environmental and Energy Services. This purchase was one of the first important actions taken by R. Richard Ablon after he became chief executive officer. The acquisition of this successful consulting and engineering concern supported the position of Ogden's waste-to-energy operations, and paved the way for further expansion. In 1991 Ogden Environmental and Energy Services undertook a major environmental testing operation for the Department of Defense, analyzing conditions at naval bases in the Pacific. Ogden hoped that this contract would lead to further business in the Pacific.

Prospects for Ogden remain good. While some of its subsidiaries, such as Ogden Aviation Services, are dependent on a single industry for their success, the ability to offer a wide range of essential services allows Ogden Services Corporation to provide a stable base for corporate planning. The future of Ogden Projects depends in part on the development of environmental legislation in the United States. Ogden has paid close attention to environmental concerns, and the research expertise of Ogden Environmental and Energy Services means that Ogden is well positioned to anticipate future environmental needs and business opportunities.

Principal Subsidiaries: Ogden Services Corporation, Ogden Environmental and Energy Services, Ogden Projects, Incorporated (85.6%)