Newell Co. Business Information, Profile, and History
29 East Stephenson Street
Freeport, Illinois 61032-0943
History of Newell Co.
Originally founded near the turn of the century to make brass curtain rods, Newell Co. has evolved into a diversified company that manufactures and markets a variety of high-volume brand name consumer products, including hardware and home furnishings and houseware, office, and other products. Newell's hardware, houseware, and office products are sold primarily through mass merchandisers, including discount, variety, chain, and hardware stores, as well as hardware and houseware distributors, home improvement centers, office product superstores, and office product dealers and wholesalers. Each group of Newell's products is manufactured and marketed by a subsidiary or division devoted to a specific product area.
Newell Co. traces its roots to the short-lived W. F. Linton Company, an Ogdensburg, New York, firm incorporated in 1902 to make brass curtain rods. The Linton Company received $1,000 to move the company from Providence, Rhode Island, to Ogdensburg from the Ogdensburg Board of Trade, with the board's president, Edgar A. Newell, signing off on the loan. In 1903 the company went bankrupt and Newell took control of its operations, renaming the firm Newell Manufacturing Company, Inc.
Although he was familiar with sales, Newell had no understanding of manufacturing and, as a result, hired and subsequently fired several general managers between 1903 and 1907. Edgar Newell then hired his son Allan to run Newell Manufacturing and started a new company, Newell Manufacturing Company Ltd. (Newell Ltd.), in Prescott, Canada. Established to capitalize on Ogdensburg's location, which made shipments south costly and left Canadian distribution channels more financially attractive, Newell Ltd. purchased a small dockside building in Prescott.
Newell Manufacturing's initial product line was composed exclusively of brass curtain rods, created through a method of tube making that utilized a waterwheel; Newell's was powered by the nearby Oswegatchie River. In 1908 Newell began producing a greater variety of curtain rod shapes after adopting a new, faster, and more adaptable manufacturing process that used roll forming machines. By the end of the decade the Newell companies were employing about 20 people and generating annual sales of about $50,000.
Throughout Newell Manufacturing's second decade, increasing managerial authority was given to Allan Newell, although Edgar Newell retained all voting shares of both Newell companies. In 1912 the domestic company began construction of a new factory, which was completed a year later.
Although Ogdensburg operations were sailing smoothly, by 1912 Newell Ltd. found that curtain rods were not enough to keep its operations afloat. A new manager, Lawrence "Ben" Ferguson Cuthbert, was given a chance to bail out the Canadian plant in return for a 20 percent cut of its gross profits. Between 1912 and 1913 Newell Ltd. acquired the factory it had been leasing and expanded its plating department in order to produce a variety of products, including towel racks, stair nosings, ice picks, and other items requiring a finish of brass, zinc, or nickel. The expanded product line spurred additional sales, and Newell Ltd. soon became profitable.
As war spread across the globe, the cost of brass rose, and Newell hired the Baker Varnish Company to devise a new metal-coating method tailored to Newell's roll forming manufacturing process. By 1917 Newell's curtain rods were being coated with a nontarnishable lacquer. Not only were the new rods cheaper to produce than brass rods, but because they wouldn't tarnish, they were better suited to lace and ruffle curtains.
With its new curtain rod Newell courted and won the business of Woolworth stores, after agreeing to buy out Woolworth's on-hand stock of curtain rods. Newell's first buy-back deal soon paid dividends, boosting sales and helping to establish the company's first long-term relationship with a major national retailer.
In 1920 Edgar A. Newell died and, for the first time, stockholder changes were made at the company. Cuthbert called in his profit-stake from running Newell Ltd., and, after some subsequent legal jousting, the company's stock ownership was resolved. Allan Newell received a 64 percent share in Newell Ltd., and Cuthbert received 33 percent of Newell Manufacturing and 20 percent of Newell Ltd. Albert Newell, Edgar's other son, who had been helping with sales, received 66 percent of Newell Manufacturing and 16 percent of Newell Ltd. Allan Newell was named chairman and president of Newell Manufacturing but bowed out of active affairs with the company, opting for a political life that eventually led him to the New York State Assembly. Albert Newell was also reluctant to be involved with the family business, and management of both companies passed to Cuthbert, who moved to Ogdensburg.
In 1921 Cuthbert, the Newell brothers, and a former Ogdensburg employee named Harry Barnwell each put up $5,000 to start a new curtain rod factory in Freeport, Illinois. The new business, Western Newell Manufacturing Company, was designed to take advantage of local railroad transportation and serve as a western branch of Newell Manufacturing. Barnwell served a brief stint as Western Newell's president before selling his 25 percent stake in the operations to Cuthbert's cousin, Leonard Ferguson, who was recruited to manage the fledgling company. Like Newell Manufacturing, Western Newell began operations with ten employees and initially produced curtain rods in a red brick factory it rented. The company quickly became profitable, and in 1925 a new factory was erected. By 1928 Western Newell's sales had grown to $485,000, more than twice that of Newell Ltd. and about half that of Newell Manufacturing. At the time of the stock market crash in October 1929, Western Newell was producing a wide variety of drapery hardware, including extension curtain rods, ornamental drapery rods, and pinless curtain stretchers.
Despite a dramatic slide in sales that forced the companies to layoff workers and reduce workdays, the Newell companies made it through the Great Depression without dipping into red ink. The bottom of the Depression's well for Newell Manufacturing came in 1933 when that company logged only about one-half of its 1929 level of sales, or $425,000. With a small operational base and modest salaries, Western Newell fared the best of the two American companies during the Depression, and by 1933 the 12-year-old Western Newell, with sales figures 25 percent lower than Newell Manufacturing, had a net income 30 percent greater than the original company. In 1933 Western Newell earned $61,000 on sales of $320,000, whereas Newell Manufacturing earned $47,000 on sales of $425,000. By 1937 Western Newell, under the leadership of Ferguson, had surpassed Newell Manufacturing in both revenues and income, earning $126,000 on sales of $553,000, whereas Newell Manufacturing earned $70,000 on sales of $511,000.
At Cuthbert's suggestion, in the late 1930s the Newell brothers agreed to give Ferguson a small stake in Newell Manufacturing, effectively taking the founding company out of the hands of the Newell family, although the brothers retained rights to voting control through the late 1940s.
Between 1938 and 1939 Newell Manufacturing established a third domestic factory, this one in Los Angeles, and made its first acquisition--Drapery Hardware Ltd. of Monrovia, California (DRACO), a maker of wooden and heavy iron drapery fixtures that was eventually sold to S. H. Kress and other smaller customers. Before the 1930s drew to a close a number of officer changes were made: Cuthbert was named to succeed Allan Newell as president of Newell Manufacturing and Ferguson was named president of Western Newell, although Allan Newell remained president of Newell Ltd. and chairman of all three companies.
During World War II the Freeport factory won a coveted Army/Navy "E" Award for excellence in wartime production, churning out more than 230 million metallic belt links for machine guns within a two-year period. During the postwar decade the Newell companies enjoyed steady growth, although no new manufacturing plants were started or acquired. In 1954 the Newell family ceded further power over its namesake companies as complete operational control was given to Leonard Ferguson, who became president of all three Newell companies.
During the early 1960s Newell acquired the rights to additional drapery hardware brands and names, including Angevine and Silent Gliss. In 1963 Ferguson was named chairman and chief executive of the three Newell companies and two years later his son, Daniel C. Ferguson, became president of the companies. Under the leadership of the father and son team, in 1966 all Newell companies were consolidated into one Illinois corporation, Newell Manufacturing Company, with headquarters in Freeport. Under the guidance of Daniel Ferguson, the $14 million family business turned its focus from its products to its customers and initiated a multiproduct strategy designed to boost sales to its existing buyers.
During the 1970s Newell continued to acquire other companies, greatly expanding its product line in the process. In 1968 Newell purchased a majority interest in Mirra-Cote Industries, a manufacturer of plastic bath accessories. In 1969 Newell acquired Dorfile Manufacturing Company, a maker of household shelving, and E.H. Tate Company, which brought the "Bulldog" line of picture hanging hardware into the Newell line of products. During the late 1960s DRACO began phasing out of manufacturing operations and finally closed its doors in the early 1970s. In 1970 the company was reincorporated in Delaware as Newell Companies, Inc. The following year Newell added sewing and knitting accessories to its product line when it acquired The Boye Needle Company, a Chicago-based world leader in knitting needles and crochet hooks, and Novel Ideas, Inc., another maker of do-it-yourself sewing materials.
In April 1972 Newell went public as an over-the-counter stock and that same year initiated an acquisition strategy that would later be replayed in various forms. Newell made an offer to buy EZ Paintr Corporation, a paint and sundries company in which Newell already had a 25 percent stake, and EZ Paintr in turn filed a pair of lawsuits to fight back against a possible takeover. But in February 1973 Newell gained majority control of EZ Paintr after its president and co-founder agreed to sell his family's interest in the paint supply company, a move opposed by EZ Paintr's management. By March 1973 Newell had ousted the EZ Paintr board and Daniel Ferguson had became president of the company, which yielded complete control of its stock to Newell six months later. In 1974 Newell completed another drawn-out acquisition and purchased complete control of Mirra-Cote.
In 1975 Leonard Ferguson died and a descendant of Ben Cuthbert, William R. Cuthbert, was later named chairman. Between 1976 and 1978 Newell expanded its shelving, paint, and sundries offerings and acquired Royal Oak Industries, Inc., Baker Brush Company, and Dixon Red Devil Ltd. (later renamed Dixon Applicators). During the same period the company sold some of its knitting products businesses, including Novel Ideas. In May 1978 Newell acquired 24 percent of the financially-troubled BernzOmatic Corporation, a manufacturer of propane torches and other do-it-yourself hand tools. In February 1979 Newell gained operational control over BernzOmatic after its president, who had earlier sold convertible debentures to Newell, yielded his position to Ferguson and Newell had taken control of the smaller firm's board.
In June 1979, after coming off of its first $100 million sales year, Newell began trading on the New York Stock Exchange. About the same time Newell began targeting a new customer base--the emerging mass merchandisers like K Mart--in order to piggyback on the increasing popularity of such stores.
Newell entered the 1980s riding on the growth of mass merchandisers while continuing to expand and compliment its product line through acquisitions. Between 1980 and 1981 Newell acquired the drapery hardware division of The Stanley Works and Brearley Co., a manufacturer of bathroom scales. In April 1982 Newell acquired complete control of BernzOmatic and in December of that year entered into a $60 million financing and stock purchase agreement with Western Savings & Loan Association, with the S&L paying $18.4 million for a 20 percent stake in Newell, which it gradually sold off to private investors during the next five years.
Through two separate stock deals worth over $42 million, in 1983 Newell acquired Mirro Corporation, a maker of aluminum cookware and baking dishes. In May 1984 Newell increased its number of common stock shares from 14 million to 50 million and later that year through a stock swap acquired Foley-ASC, Inc., a maker of cookware and kitchen accessories. In May 1985 the company changed its name to Newell Co. In June 1985 Newell acquired a 20 percent stake in William E. Wright Company from a group dissenting from the majority, including three board members and the grandson of Wright Company's founder. A few months later Newell raised its stake in Wright, a maker of sewing notions, and by the end of the year Newell had obtained majority control of the company and ousted Wright's board and top officers.
In January 1986 William P. Sovey, former president of AMF Inc., was named president and chief operating officer. Ferguson remained chief executive and was named to the new position of vice chairman. In October 1986 Newell acquired the assets of Enterprise Aluminum, the aluminum cookware division of Lancaster Colony Corporation.
By 1987 Newell had acquired complete control of Wright, which was added to a list of about 30 acquisitions the company had logged since Ferguson had become president. In July 1987 Newell--true to its acquisition formula--paid $330 million to acquire control of Anchor Hocking Corporation and its targeted glassware operations. At the time of the acquisition Anchor, with $758 million in sales, had nearly double the annual revenues of Newell and provided its new parent with brand name tabletop glassware, decorative cabinet hardware, and microwave cookware, with each product line holding a number one or two position in their respective markets. Within a week after the takeover Newell began employing its usual post-acquisition strategy on a large scale, dismissing 110 Anchor employees and closing its West Virginia plant.
Between 1988 and 1989 Newell acquired several small companies that made bakeware, paint sundries, metal closures, cabinet hardware, and aluminum cookware, and sold its Carr-Lowrey specialty glass container business and its William E. Wright/Boye Needle home-sewing business. In 1989 Newell unsuccessfully tried to buy a 20-plus percent investment in Vermont American, a maker of consumer and industrial tools that turned to another suitor after suggesting Newell would be a disruptive force in its operations.
Newell closed its books on the 1980s having achieved a number of significant financial accomplishments. Between 1987 and 1989 the company's income rose more than $48 million, while during the course of the entire decade sales spiraled from $138 million to $1.12 billion as income ballooned from $7.8 million to $85.3 million. Newell was also listed number 22 on Forbes list of the best stocks of the 1980s, having provided a total return to stockholders that averaged 39.5 percent per year.
Newell entered the 1990s as a market leader in Electronic Data Interchange, a computer-to-computer system that allowed Newell customers to place orders electronically. Attempting to once again piggyback on a growing mass merchandiser market--namely the trend to sell office supplies through mass retailers--in 1991 Newell entered the office products business by acquiring two small firms, Keene Manufacturing, Inc., and W.T. Rogers Company.
In 1991 Newell also increased its interests in hardware firms and agreed to invest $150 million in the Black & Decker Corporation in a stock deal giving Newell a 15 percent stake in the hardware company. (The following year Newell backed away from a move to purchase a 15 percent interest in another hardware manufacturer, Stanley Works, which had filed an anti-trust suit against Newell.) In 1991 Newell also acquired a six percent stake in the Ekco Group Inc., a maker of houseware products, kitchen tools, and bakeware, which was later sold.
In 1992 Newell became a major force in the office products market. It acquired both Sanford Corporation, a leading producer of felt-tipped pens, plastic desk accessories, storage boxes, and other office and school supplies, and Stuart Hall Corporation, a well-known stationary and school supply business, in two stock swaps totaling more than $600 million. The two businesses combined brought Newell's annual office products sales to $350 million. In 1992 Newell also sold its closures business for $210 million, and the company's books for the year reflected a record $119 million in earnings on a record $1.45 billion in sales.
In a 1992 changing-of-the-guard, Daniel Ferguson bowed out of active management to move up to chairman, replacing the retiring William Cuthbert, and Thomas A. Ferguson (no relation to Daniel and Leonard Ferguson) was named president. Sovey was named to succeed Daniel Ferguson as vice chairman and chief executive. Although the company had another Ferguson in line to run Newell, by 1992 stock dilution had reduced insider control of the company to 15 percent. However, four members of the 11-person board were members of the Ferguson, Cuthbert, or Newell families.
In 1993 Newell--in what could be perceived as a return to its roots&mdashquired Intercraft Industries, Inc., the largest supplier of picture frames in the United States. As it moved through 1993, Newell's strategy was to continue merchandising an expanding but complimentary multiproduct brand-name group of staples while improving its image as a customer service company through such programs as EDI and shelf restocking services. With Newell selling primarily to leading mass merchandisers and virtually all of Newell's products claiming brand names and positions as market leaders within their respective product groups, Newell entered the mid-1990s in an apparent position to hold onto--if not improve--its status in more familiar markets, such as drapery, hardware, and houseware product areas. At the same time Newell was becoming an emerging force in the office product market, where the trend towards mass merchandising was just gaining momentum.
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