Oneida Ltd. Business Information, Profile, and History

Company Perspectives:

Our goal is to profitably and ethically satisfy our customers' needs in a manner that enhances the welfare of our stockholders, our employees, and the communities in which we reside.

History of Oneida Ltd.

Oneida Ltd. is the world's largest stainless steel and silver-plated flatware maker, serving both the consumer and food service markets. Its operations in the United States, Canada, Mexico, the United Kingdom, and Italy manufacture and market sterling, silver-plated, and stainless flatware, as well as china dinnerware and hollowware (coffee sets and trays). Oneida also markets crystal products and gift items and licenses its name to makers of linens, cookware, and utensils. Under its wholly owned subsidiary, Kenwood Silver Company, Inc., Oneida runs more than 60 Oneida Factory Stores. Established as a utopian community in the mid-19th century, the company has maintained a strong reputation for quality.

Company Roots in a Utopian Community

The Oneida Community was founded by John Humphrey Noyes in upstate New York in 1848. The Community practiced Noyes's theology of Perfectionism--a form of Christianity rooted in the two basic tenets of self-perfection and communalism. In addition to abolishing private property, the Oneida Community raised children communally and espoused 'complex marriage,' in which monogamous marriages were discouraged.

This communal child care system enabled the Oneida women, as well as the men, to take part in the Community's manufacturing of animal traps, chains, silk items, and silver knives, forks, and spoons, which it sold to the outside world to sustain itself. Soon the Oneida Community developed a reputation not just for the unconventional lifestyle of its members, but also for the quality of its goods. For instance, the Newhouse trap was invented by a founding member of the Community and was known around the world.

The Oneida Community survived longer than most other 19th century utopian societies, in part because of the solvency of its businesses. Indeed, Oneida members continued to live and work together until the late 1870s. But prosperity did not shield the organization from conflict, and in 1879 the Community split into two factions. Unable to resolve their differences, the members voted to transform the group's businesses into a joint stock company, the Oneida Community, Limited, which would be owned and operated by former members of the society. The Community was valued at $600,000 and shares were distributed according to each member's original contribution and length of service. The stock was divided among 226 men, women, and children, the majority of whom received shares worth between $2,000 and $4,999. The progressive nature of the new company was reflected in, among other things, the selection of a woman (Harriet Joslyn) to be superintendent of the silk mill and a member of the board of directors.

During the 15 years following Oneida's reorganization, the company's financial standing deteriorated. A severe depression in the 1890s, inadequate leadership, and emigration from the community plagued the new company. Some have speculated that the failure of the utopian community contributed to demoralization of the worker/stockholders, further eroding the company's prospects for success.

Oneida Enters the Industrial Age

But in January 1894, Pierrepont Burt (P.B.) Noyes, the son of Oneida's charismatic founder, rejoined the company after working as an Oneida wholesaler in 'The World,' as many Oneidans referred to the broader society outside their community. At only 23 years old, Noyes replaced an uncle on Oneida's board of directors. His experience outside the Community enabled him to see and criticize weaknesses that threatened the company's viability. Within two months Noyes led a proxy fight to oust directors who clung to old-fashioned business strategies. Nearly 24,000 shares were voted, and Noyes's side won by just 16 shares. Noyes was offered the position of superintendent at Oneida's Niagara Falls Plant and soon raised the operation's standards of quality to their former high levels. In 1899 the company announced what were then the largest profits in its history and paid its stockholders a dividend of seven percent.

By the time he reached the age of 30, Noyes had attained de facto control of Oneida. The board nominated him to the newly created post of general manager with authority to oversee all of the company's divisions--canning and manufacturing of tableware, traps, chains, and silk thread. Noyes's rise to prominence at Oneida helped bring the company into the industrial world of the 20th century. Previously, Oneida had relied on its managers' creativity, thrift, and diligence, as well as the excellent reputation of its products, to succeed in the competitive marketplace. Noyes introduced the new production methods, competitive strategies, large-scale distribution methods, and promotional efforts that were beginning to typify American industry. In 1904 Oneida began to place heavy emphasis on marketing and brand recognition, increasing its promotion budget from $5,000 to $30,000 per year. Noyes financed this move by diverting profits from the trap business (that would otherwise have been used to expand trap manufacturing), which he saw as a dying enterprise.

From that time on, even during the Great Depression, advertising remained an essential aspect of Oneida's operations. Early marketing campaigns established many of the features that would characterize Oneida's advertising for decades to come. The print ads typically appeared in widely circulated women's magazines. Rather than describe all of its tableware at length, Oneida used most of its advertising space for a picture of one or two pieces of silver plate, which it often associated visually with someone or something attractive. Oneida was also one of the first companies to employ celebrity spokespeople to promote its products. Ten years before the practice was widely accepted, Oneida commissioned Irene Castle--a famous dancer and fashion plate&mdashø promote the Community's wares.

Despite Noyes's aggressive efforts to gain control of Oneida, he still sought to preserve the communal harmony and idealism on which the Community was founded. Managers who lost positions on the board of directors retained positions within the company, and many grew to respect the new management. In addition, a private community built around the company (called Kenwood) gave Oneida a sense of family that remained strong through the early decades of the 20th century; well into the 1920s, descendants of the original Oneidans held almost 90 percent of company stock. Noyes sought to make Oneida and the community of Kenwood 'modern utopias' by increasing wages, improving work conditions, providing welfare and recreational benefits, and improving the physical environs of Kenwood.

By appealing to their sense of ambition, Noyes attracted children of Oneidans who had left the Community in favor of college education and careers in 'The World.' Instead of touting the Community's old doctrine of Perfectionism, Noyes advocated a 'modern utopia' based on intellectual challenge, reasonable pay, and self-improvement. The company's inventiveness and cooperation between labor and management have distinguished Oneida throughout its history. Indeed, the company's silverware operations have yet to suffer a work stoppage due to a labor dispute.

The company's enlightened attitude was reflected in other ways as well. In 1904 Noyes proposed voluntary salary reductions for management when the company encountered financial difficulties. In 1914 all salaried personnel took a ten percent pay cut, which remained in effect until early 1916. In 1921 larger cuts were necessary--Noyes reduced his own salary by half, the directors took 33 percent cuts, and other officials took smaller cuts corresponding to their salaries. The Great Depression necessitated similar sacrifices.

In a further effort to strengthen its financial position, Oneida sold its chain business in 1912, liquidated its silk industry holdings the following year, when man-made substitutes for silk were invented. The company's canning business was discontinued in 1915 because it was unable to compete with large-scale modern production methods. But the consolidations enabled Oneida to open its first international factory, in Niagara Falls, Ontario, in 1916.

Changes from World War I to World War II

Noyes resigned from the general managership in 1917 to let a younger generation into Oneida's management. Three months after he resigned, the United States entered World War I. Oneida assisted the war effort by producing ammunition clips, lead-plated gas shells, and combat knives. The company also served as the principal source of a wide range of surgical instruments used in military hospitals. In 1919 Noyes returned briefly to Oneida after working with the U.S. government's Fuel Administration. He later played a role in the post-World War I Peace Conference and the Rhineland Commission, which decided the particulars of the Allied occupation of Germany.

Amid financial crisis in 1921, Noyes resumed the general managership of Oneida. After steering the company through that predicament, he bequeathed the position of general manager to his son-in-law, Miles E. Robertson, in 1926. But Noyes retained both the post of president and de facto control of the company. Oneida's trap business was sold in 1925, which left the company entirely dependent on its silverware business.

In 1935 the company's name was changed to Oneida Ltd. to differentiate tableware produced by Oneida from that of lower quality subsidiaries of the company, such as Wm. A. Rogers. The name change also signaled a new era at Oneida. Noyes ceded control of the company to Miles Robertson, although he did not formally hand over the presidency until 1950. Robertson was known for his 'toughness': despite the rigors of the Great Depression, Oneida made a profit in 1933, when no other company in the silverware industry could. By this time, Oneida had subsidiaries in Canada and Great Britain.

Beginning in the 1930s, Oneida became less community-oriented and more like a typical corporation with few family ties and less of a social-utopian bent. By 1930, 33 percent of the board of directors were not from the Community. Robertson aggressively began to recruit new employees from 'The World.' Even Noyes's ideological influence gave way to more worldly viewpoints in the late 1930s. Whereas Oneida's management had once sought personal satisfaction over personal wealth, the arrival of greater numbers of 'outsiders' inevitably altered these values. As competition for quality personnel escalated and the company grew more segregated from the Community, management salaries increased to match prevailing wages in the industry.

World War II brought about other changes at Oneida as well. The company's contribution to the war effort included production of silverware for the Army and Navy and surgical instruments for military hospitals. Oneida also manufactured products for the battlefield, including rifle sights, parachute releases, hand grenades, shells, survival guns, bayonets, aircraft fuel tanks, and chemical bombs. The company even purchased a separate factory in Canastota, New York, which produced army trucks, aircraft survival kits, and jet engine parts. That plant stayed in operation for several years after the war.

The 1950s and 1960s

Although the Oneida of the 1950s had accepted the wage scales of the outside world, it continued to operate by Noyes's principle that management should take salary cuts during difficult financial periods. The employees of the 1950s had changed along with the times, however, and a 1957 cut in directors' salaries was perceived by employees not as a demonstration of management's vested interest in the welfare of the company, but as a drastic measure indicating impending financial disaster.

The directors restored their pay, but Oneida continued to be plagued by financial problems through 1960, when the company posted its first annual deficit. That same year Pierrepont Trowbridge ('Pete') Noyes replaced his father as company president. Oneida had trouble adjusting to the loss of government orders that had supplemented silverware sales during World War II and the Korean War. The work force declined from a high of 3,800 in 1949 to 2,000 in 1960. Oneida responded by developing additional product lines, reorganizing production, and introducing new advertising and marketing strategies. By the end of the decade, the work force had grown to more than 3,000 employees.

During the 1960s, Oneida began to focus more on stainless steel flatware, instead of on the more expensive and prestigious silver-plated and sterling flatware that had previously been its hallmark. Technological breakthroughs in the late 1960s allowed Oneida to introduce the first ornate stainless flatware that had a decorative pierced pattern similar to sterling and silver plate. With these more attractive and formal patterns, stainless flatware gained a place in the silver departments of fine department stores. Because stainless was easier to care for and was far less expensive than sterling and silver plate, this new flatware sold briskly, sparking a recovery that led Oneida into a new era of growth.

Efforts To Expand in the 1970s and 1980s

In 1977 Oneida moved to diversify its interests through the purchase of the Camden Wire Co., Inc.--one of the principal U.S. manufacturers of industrial wire products. One year later Oneida acquired Rena-Ware, a cookware manufacturer that operated in 34 countries and generated the majority of sales outside the United States. That year the company also got a new president, John Marcellus, Jr., who had joined Oneida in 1946. Pete Noyes continued as chairman until 1981, when Marcellus assumed that position as well.

By 1983, the company sold more than half of all flatware purchased in the United States. To broaden its penetration of the overall tableware market, Oneida purchased other companies, such as Buffalo China Inc., one of the nation's largest volume producers of commercial chinaware, and Webster-Wilcox, a producer of expensive hollowware. In 1984 the company bought D.J. Tableware, which manufactured high-quality flatware, hollowware, and china for the food service industry. Oneida also began to market a line of crystal stemware and gift ware in the mid-1980s.

Tough Times for Oneida During the Early 1980s

The recession of the early 1980s, however, eroded Oneida's profits. Primarily a consumer products company (industrial wire sales only constituted 24 percent of Oneida's profits in the mid-1980s and less than 30 percent in 1991), Oneida suffered more than expected. In 1982 alone, the company's earnings plummeted 65 percent. The company's problems were exacerbated when Japanese and other importers flooded American housewares departments with inexpensive flatware. Although it initially attempted to ignore this new threat by touting the superiority of its merchandise, Oneida's market share dropped precipitously to 39 percent in 1986. Between 1985 and 1986, the company laid off workers and lost more than $1 million.

In the late 1980s, Oneida instituted sweeping changes to both its management and its business strategies in a bid to return the company to its former preeminence. John Marcellus retired in 1986 and William Matthews was named chairman and CEO. Samuel Lanzafame, the former head of the Camden Wire subsidiary, was appointed president. Because Lanzafame had made Camden Wire Oneida's most profitable division, the board hoped that he could do the same with the parent company.

Oneida strove to recapture the market for lower-end, less expensive flatware that it had lost to import competition. Lanzafame worked to enhance Oneida's economies of scale and placed a renewed emphasis on the company's high-volume lines. He also sought to boost the capacity of Oneida's two flatware plants. The company began importing more inexpensive flatware to market under its name until it could bring its own factories up to speed to produce lower-quality (but higher-volume) merchandise.

Matthews, the new chairman of the board, undertook cost-cutting measures as well. He sold off the company's fleet of limousines and its corporate jet, and then trimmed the management staff by 15 percent. He also encouraged worker loyalty by offering an Employee Stock Option Plan in 1987 that put 15 percent of the company's stock in the employees' hands. Late in the decade, he oversaw the investment of more than $26 million for plant improvements, including computer design and manufacturing systems, plant consolidation, and machinery upgrades. By the end of the 1980s, Oneida had regained its 52 percent share of the flatware market. Lanzafame resigned as president in 1989, and Gary Moreau became president in 1991, holding that position until his 1995 resignation. In 1996 Peter Kallet was named president and chief operating officer, joining Matthews at the helm of the company. Kallet had a strong background in sales, marketing, product, and purchasing departments.

Becoming a Tableware Powerhouse in the 1990s

During the mid-1990s, Oneida revamped its strategy once more and attempted to build itself into a complete tableware products company. In 1997 Oneida sold off its Camden Wire subsidiary, which no longer conformed to the company's focus. Oneida also made a number of acquisitions that were intended to increase the company's scope. In 1996, following a year of record sales, Oneida purchased THC Systems, Inc., the parent company of Rego China. 'This truly rounds out the selection of food service china we can offer, giving us a great array of products,' Matthews told the Buffalo News. The following year, Oneida acquired Encore Promotions, a marketer of grocery store redemption programs, which the company hoped to use to market flatware, dinnerware, cookware, cutlery, towels, and linen. Also in 1997, Oneida gained exclusive rights to distribute Schott-Zwiesel crystal. In 1998 the company bolstered its international presence in the tableware market when it purchased the Italian manufacturer of flatware and hollowware, Table Top Engineering and Design, as well as two Australian tableware leaders, Stanley Rogers & Son and Westminster China. That same year, Oneida entered into an agreement to become the exclusive marketer and distributor of products from CALP, an Italian crystal producer.

Oneida's spate of acquisitions pushed corporate earnings down 31 percent in 1998, forcing the company to shed 95 jobs. The additional costs Oneida incurred in introducing its new lines were only made worse by the collapse of Asian economies and the overall weakness of the U.S. dollar. In 1999 Oneida closed its original factory in Niagara Falls, Ontario, and planned to cut more jobs. In April 1999, Libbey Inc., a leading glassware manufacturer, made an unsolicited bid to acquire Oneida. Oneida successfully rebuffed the offer and sought to restructure its operations to reduce expenses.

In 1999 the company's sales and profits rose, indicating that the difficult cuts had paid off. Oneida's future looked bright, as the company enjoyed an unparalleled brand reputation in the housewares industry. A 1995 survey had revealed that consumers thought first of Oneida when queried about stainless steel flatware. Throughout the economic, social, and political changes that Oneida endured during its 150-year history, its reputation for excellence remained untarnished.

Principal Subsidiaries: Oneida Canada Limited; Oneida Mexicana, S.A.; Kenwood Silver Company, Inc.; Buffalo China, Inc.; D.J. Tableware, Inc.; Oneida International, Inc. (88%); Sant' Andrea S.r.l.; Oneida Silversmiths, U.K.; THC Systems, Inc. (Dba Rego China); Encore Promotions, Inc.

Principal Competitors: Mikasa, Inc.; Reed & Barton Silversmiths; Waterford Wedgwood plc; Brown-Forman Corporation; Corning Incorporated.

Chronology

• Key Dates:

• 1848: John Humphrey Noyes founds the Oneida Community.
• 1880: Oneida Community, Limited is incorporated.
• 1894: Pierrepont Burt Noyes joins Oneida's board of directors and institutes major changes.
• 1904: Oneida dedicates greater attention to marketing and brand recognition.
• 1935: Company's name is changed to Oneida Ltd.
• 1977: Oneida acquires Camden Wire Co., Inc in an effort to diversify.
• 1998: Oneida sells Camden Wire and seeks to become a complete tableware company. Oneida also purchases a number of tableware companies to augment its existing products.
• 1999: Oneida successfully avoids an unsolicited buyout from Libbey Inc.