Peterson American Corporation Business Information, Profile, and History

Company Perspectives:

The mission of Peterson American Corporation is to work with our customers to provide the best products available to the world market. Drawing on our worldwide resources, we will improve the quality and reduce the cost of our products and services through the application of practical, innovative thinking. We will maintain an equitable relationship with our customers, employees, shareholders, and communities.

History of Peterson American Corporation

Peterson American Corporation (PAC) is a leading manufacturer of springs and related products. More than two-thirds of the firm's output is sold to the auto industry, with the rest used in appliances, agricultural equipment, and other products like motorcycles and trampolines. PAC operates more than a dozen manufacturing plants in the United States, Canada, Mexico, and the United Kingdom. The company is owned by the Peterson family and run by fourth-generation descendants of its founder.

Origins

The story of Peterson American Corporation begins with August Christian Peterson, who was born in Norway in 1864. Apprenticed as a blacksmith at a young age, he emigrated in the 1880s to the United States and settled in Chicago. Once there, Peterson began working for the William D. Gibson Company, the largest spring manufacturer in the Midwest. At this time many springs were made by blacksmiths, who wound red-hot metal around a bar to form them.

While working for Gibson, Peterson became an experienced spring maker, and in 1904 he was persuaded to move to Monessen, Pennsylvania to run the spring manufacturing operations of a new steel plant that was being built there. Peterson's 14-year-old son Alfred also was hired as a night watchman to look after the company's furnaces. When this firm went out of business several years later, the family moved to Kenova, West Virginia to work for another spring producer. That company also folded, however, and the Petersons subsequently moved to Springfield, Ohio.

There, in 1912, August Peterson started his own spring manufacturing company, which was funded by the sale of stock to citizens of the town. The new firm was soon busy supplying the International Harvester company with springs, but this contract proved to be its undoing when the client put pressure on Peterson's investors to sell out. They soon did, and despite a generous offer of $1,000 a month to manage the plant, August Peterson decided to pull up stakes and move again. After considering Toledo, Ohio, he chose to settle in Detroit, an hour's drive north and the home of many of the country's future major automakers.

In 1914 Peterson founded his second company, General Spring and Wire. It was the first mechanical spring manufacturer in Detroit and was soon busy supplying items like valve springs to Continental Motors, who sold engines to a number of carmakers. As had happened in Springfield, the company was doomed ultimately by its reliance on outside investors, who were enticed to sell out by wire and spring maker L.A. Young. Although the Petersons were again offered jobs, they refused and decided to form yet another company, Peterson Spring, which also was located in Detroit. Once again it would be co-owned by the Petersons and a group of investors. Among these were the company's employees, many of whom had followed the family north from Ohio.

This company was successful and soon began to grow, but as had happened twice before a larger firm took notice and stepped in with an offer to buy. This time Eaton Corporation talked the majority of shareholders into selling out, just before the stock market crash of 1929. Alfred Peterson also was forced to sign a noncompetition agreement that forbade him from opening a spring factory for two years. Nonetheless, his three younger brothers Sigurd, Conrad, and Harold formed their own spring making firm, which they called Peterson Brothers. In 1932 that company was absorbed by Precision Spring Corporation, which Alfred had formed upon the completion of his two-year noncompete agreement. This time the Petersons were majority stockholders, assuring that the company would never again be sold to outsiders.

Growth During the Depression

The early 1930s was a difficult time for business in the United States, but there were also opportunities to be found. For someone willing to invest in expansion, there was an abundance of inexpensive used equipment available from companies that had downsized or gone bankrupt. The Petersons took advantage of this and bought two boxcar loads of spring-making machines in New York, renting space for them on Federal Avenue in Detroit. Other equipment for the operation was designed and built by Sigurd Peterson, a talented engineer. Many of the Petersons' employees who had moved to Detroit from Springfield signed on once again to work for the new company, giving it an abundance of pretrained workers.

In 1936 Precision Spring moved into a newly constructed plant on Woodrow Wilson Avenue, which occupied three acres of land. The firm employed more than 300 in the facility, which was considered one of the most modern in the Midwest. Key to the company's success was family involvement, and younger members of the Peterson clan were encouraged to enter the business. One example was Alfred's daughter Thelma, who in 1937 became the first woman to graduate from the University of Michigan's Mechanical Engineering program.

The company's sales grew year by year and, with the exception of a decline in 1938, continued on an upward trend until the start of U.S. involvement in World War II. At that time, with the conversion of auto plants to make vehicles for the war effort, Precision Spring directed its efforts toward this purpose as well.

Following the war the company experienced a surge in demand as the economy boomed and sales of luxury goods and automobiles skyrocketed. The plant was soon operating at full capacity and it became apparent that the firm would need to expand. After looking at sites in nearby Windsor, Ontario and in California, company head Alfred Peterson, Sr., decided to build a plant in Three Rivers, Michigan, about two hours' drive from Detroit and close enough to serve the firm's customers in the auto industry.

Opening a Second Plant in 1951

The facility in Three Rivers was finished in the spring of 1951, and production began there in the summer. Eight key staff members, including plant manager Alfred "Bud" Peterson, Jr., moved to Three Rivers to run the new operation, while Al Peterson, Sr., maintained an office there for monthly visits. Within a few years the new unit began to be seen as a competitor of the Detroit operation, and in 1957 it was spun off to become a separate corporation known as Peterson Spring. Also in 1957 the company constructed two other plants--Kalamazoo Spring, which was an offshoot of the Three Rivers unit, and Resortes y Productos Metalicos, located in Mexico.

Expansion continued with the acquisition of Lock Rings of Toledo, Ohio in 1962 from the Harper Co. and the opening of Georgia Spring, located in Athens, Georgia, in 1963. That year Alfred Peterson, Sr., passed away and Bud Peterson moved from Three Rivers back to Detroit to help his sister Thelma run the growing group of companies.

Further growth took place after the change of leadership, with Kalamazoo Spring offshoot Greenville Spring and Schoolcraft, Michigan-based Spring Tools opening in 1965. The company entered Europe in 1968 with formation of a joint venture, CIMA Precision Spring Europa of Italy, in conjunction with the Bellazzi family. Also in 1968 Precision Spring of Canada, Ltd. was formed in Kingsville, Ontario. In 1969 the firm purchased a 40 percent stake in a Spanish firm, Industrias Berry.

In 1970 Precision Spring helped form a Japanese joint venture, K.P. Products, with Kato Hatsujo Kaisha. The following year the company bought a firm called Commonwealth Spring and added a plastics division to Precision Spring of Canada. The year 1971 also saw a corporate realignment with the creation of Precision American, a joint venture holding company equally owned by Precision Spring, which was controlled by Thelma and Phyllis Peterson, and Peterson Spring, controlled by Bud Peterson and his children. In 1972 Precision American purchased a company named Spring Products, and in 1975 the firm's Industrias Berry joint venture formed Muvasa, a subsidiary of its own.

On January 1, 1978 Precision American split into two roughly equal halves, with Bud Peterson keeping the former Precision Spring companies, which were renamed Peterson American Corporation (or PAC), and his brother and two sisters taking the remainder, which included Peterson Spring of Canada, Greenville Spring, and an Australian firm, John While. In 1978 as well the company purchased office space in Southfield, Michigan for use as PAC's headquarters, and formed an English subsidiary, Heath Spring. Sales for the year reached $20.8 million.

More growth followed in 1979 when PAC bought California Spring from Ametek and formed joint ventures with Japanese companies to create Muskegon Wire and K.P. American, which would sell Itaya spring machinery in the United States. In 1981 PAC acquired Greenville Spring from Precision Spring.

In 1982 PAC opened Dreison Technic Spring in Detroit and Larmex in Mexico, which was 40 percent owned by the firm. The company also acquired Precision Spring's 26 percent ownership of Resortes of Mexico. An additional 4 percent acquired the next year increased PAC's stake in that company to 80 percent.

Growth continued in the mid-1980s with formation of PAC Fasteners for development of the PAC-Nut, a washer spring nut that was resistant to loosening and could be used in a variety of applications. Other activities included acquisition of the remaining 50 percent of the firm's Muskegon wire mill and the K.P. American unit from PAC's partners; formation of Mattoon Spring in Mattoon, Illinois; acquisition of United Spring Corp. of Munith, Michigan; and the opening of a new valve spring plant in Windsor, Ontario. The company later moved all of its engine valve spring manufacturing to the latter facility from Three Rivers to reduce costs.

In 1986 Peterson Spring Corporation was merged into PAC, Muskegon Wire was sold, and United Spring was closed. The company also opened a distribution and packaging arm in Three Rivers and made several changes to its international subsidiaries. The firm was now seeing annual revenues of $56 million, nearly triple the figure of a decade earlier.

In 1988 PAC acquired Precision Spring's Kingsville, Ontario plant, bought out the Bellazzi family's stake in CIMA Precision Corp., opened a fastener division in Madison Heights, Michigan to take over production of PAC-Nuts, formed joint venture Norma Products in Canada to make hose clamps, and expanded the company's headquarters in Southfield. The following year a joint venture was formed in Richmond, Indiana, called Sanko Peterson Corporation, to make mass collar rings and other products. PAC would own 45 percent of the operation.

A slowdown in the economy and the increasing market share gains of Japanese automakers were now affecting the company, for whom the auto industry accounted for 70 percent of sales. In 1990 PAC's revenues dropped by 5.1 percent, and the firm closed its Mattoon Spring and California Spring operations. A further decline occurred the following year, which led to the closing of the Kalamazoo plant. The rival Precision Spring was suffering even more, and its last assets were sold to PAC in 1991.

The firm's sales rebounded in 1992, growing by 13 percent to $78.8 million. During the year the company sold its 50 percent stake in CIMA Precision Spring Europa to Gigi Bellazzi. In 1994 the company's PAC-Nut business also was sold to California Industrial Products.

Sales continued to rise during the mid-1990s, and in 1996 topped $100 million for the first time. During that year the firm sold its K.P. American unit to Itaya Engineering at the latter company's request. PAC also sold its 50 percent interest in K.P. Products to Piolax in 1997. In 1999 the firm's English operations were expanded with the acquisition of A-P Springs of Birmingham.

PAC maintained a research and development laboratory at its headquarters in Southfield, which was becoming more and more sophisticated through the purchase and in-house development of new testing tools. One such item was the Spintron, bought in 1999, which simulated the effects of spring use in high-performance racing engines. Peterson engineers could use it to accurately predict the effects of 500 laps of racing on a set of valve springs, for example, helping the company create springs such as those used by the winner of the 1999 Indianapolis 500. Many years earlier, August Peterson's handmade valve springs had helped Barney Oldfield win one of the first races in that series.

Into the 21st century PAC continued to do the majority of its work for the auto industry, which accounted for more than two thirds of total sales. Less than half of that amount was now attributed to the Big Three American automakers. The remainder of springs produced by the company were used in such products as agricultural equipment, refrigerators, garage doors, lawnmowers, snow blowers, motorcycles, trampolines, and bicycles. PAC was now in the hands of the fourth generation of Petersons, with Bud Peterson's children Alfred "Pete" Peterson III serving as CEO and chairman, and Eric "Rick" Peterson as president. Their sister Gail Lauzzana was vice-president for communications and community relations and corporate secretary, and another sibling, Kristin Peterson, ran the firm's Three Rivers packaging and distribution operations. In early 2002 PAC closed its Three Rivers plant, diverting some of the work done there to other facilities. The Three Rivers packaging and distribution and CIMA Corp. operations were not affected.

After more than 70 years, Peterson American Corporation was a leading maker of springs for the auto industry as well as for a variety of other customers. The firm had plants around the United States and in Mexico, Canada, and the United Kingdom. After four generations of Peterson family stewardship, PAC continued to grow and prosper.

Principal Subsidiaries: Peterson Spring of Canada, Ltd.; Peterson Spring UK Ltd.; Peterson Spring Mexico; Sanko Peterson Corporation.

Principal Competitors: Barnes Group Inc.; Matthew Warren; Grand Rapids Spring & Stamping; Newcomb Spring; Twist, Inc.

Chronology

• Key Dates:
• 1932: Precision Spring is founded in Detroit by Alfred Peterson, Sr.
• 1936: The move to a new plant boosts capacity.
• 1951: A new Three Rivers, Michigan facility is opened.
• 1957: Plants open in Kalamazoo, Michigan and Mexico; the Three Rivers operation is spun off.
• 1962: The company purchases Lock Rings of Toledo, Ohio.
• 1963: Alfred "Bud" Peterson, Jr., takes control of the firm after the death of Alfred Peterson, Sr.
• 1978: The company is split in two halves: Peterson American Corp. (PAC) and Precision Spring.
• 1991: PAC buys the assets of the half of the company that had split off in 1978.
• 1996: Sales top $100 million for the first time.
• 2002: The Three Rivers plant is closed.