South Jersey Industries, Inc. Business Information, Profile, and History
Folsom, New Jersey 08037
South Jersey Industries is an energy services holding company. Our natural gas utility has historically been our primary activity and has accounted for the vast majority of our profits. We also provide through several subsidiaries, nonregulated energy services that include marketing gas and electricity on a retail basis to residential, commercial and industrial customers; wholesale gas distribution; marketing a patented air monitoring system; and providing a wide variety of energy-related services.
History of South Jersey Industries, Inc.
South Jersey Industries, Inc. provides natural gas to nearly 300,000 customers in southern New Jersey through its main subsidiary, South Jersey Gas. The company is diversified in the energy field and markets both gas and electricity on the East Coast.
The Early Years in Atlantic City: 1873–1910
In 1873 a group of Philadelphia businessmen formed the Atlantic City Gas & Water Company. The new company was located in Atlantic City, New Jersey, on Michigan Avenue and manufactured coal gas for the city. The businessmen had many interests in Atlantic City and, in fact, helped to found and promote the city, incorporated in 1855.
As the city grew, so did the company, and in 1882, electric light service was added to the company's product offerings. Although gas lights were preferred by many, electric lights gained in popularity. The gas services of the company continued to grow and gas mains extended down nearly every street in the city by the end of the 1890s. Hotels, boarding houses, and other businesses hooked up to the gas main, as well as many homes in the area.
Although the company was supplying electric service as well, the board of directors decided to eliminate that portion of the business in 1900 and sold the electric plant to the Electric Company of America for $80,000. The purchase included an agreement that the Electric Company would not compete with Atlantic City Gas in the gas business.
That agreement, however, did not stop another competitor from moving into town—the Consumers Gas & Fuel Company, formed in 1905, with a product offering identical to that of Atlantic City Gas. The two companies were fierce competitors until 1910 when they were purchased by the same investor and merged into a new company.
Clarence Geist and a New Company: 1910s-30s
When Clarence Geist purchased the two competing Atlantic City gas companies, he incorporated the newly formed company as the Atlantic City Gas Company. Geist was a native of LaPorte, Indiana, and owned other utility companies, including the Indianapolis Water Company and the Philadelphia Suburban Water Company. He was a colorful character and a self-made man who began his professional career as a railroad worker. He had no formal education but soon branched out into real estate and then finally to utility ownership.
He and his wife, Florence, owned all of the company's stock except for a small percentage owned by the members of the board of directors. The board members changed often at the whim of Geist. He also was president of the company, although day-to-day operations were handled by his brother Carlton Geist who was named general manager. One of the first changes enacted by the new owners was the construction of new offices at 2001 Atlantic Avenue. Geist purchased the property, razed the hotel that was on it, and constructed the building, which was completed in May 1912.
In 1913, electric lights began to replace the gas lights on the streets of Atlantic City, and in 1917 material costs for oil, coal, and labor increased for the company. The company petitioned the city to raise rates in July. The city failed to respond promptly, however, and soon Atlantic City Gas was in financial trouble. As of November of that year, C.H. Geist's life insurance policies were the only cash assets. He agreed to surrender those as well as reducing the rent of the office building (which he owned and leased back to the company). Dividends were not paid, and Geist took a salary reduction.
Finally, nearly a year after the petition, the city approved new rates on July 1, 1918. Since the company had been unable to pay interest on some mortgage bonds for the previous six months, however, Atlantic City Gas went into receivership later that same month. President C.H. Geist had thought the company had three more months to catch up with the payments. A local court agreed with him, and the company was returned.
In 1920 Atlantic City's transition to electric lights was complete, and it did not renew its contract with Atlantic City Gas. The company continued to provide gas heat as well as water to the area, however, and in 1923 the Public Utility Commission of New Jersey proclaimed the company one of the state's most efficient utilities.
In 1922, C.H. Geist decided to expand his New Jersey utility holdings and purchased New Jersey Gas Company, which provided gas and utilities to the towns of Elmer, Vineland, East Greenwich, Pitman, Swedesboro, Penns Grove, and Bridgeport. He formed a new company, People's Gas Company of New Jersey, and then merged it with the newly acquired company. The company was separate from Atlantic City Gas, however, throughout Geist's ownership of the two companies.
In 1925, a nationwide coal miner's strike caused a coal shortage and resulted in more homeowners switching to gas heat. This helped Atlantic City, especially since the street lighting business was nonexistent by the 1920s. More growth occurred in 1926 when C.H. Geist acquired Pleasantville Gas Company and merged it with Atlantic City Gas. Carlton Geist, general manager and C.H. Geist's brother, resigned from the company in 1925 and was replaced by Chester Grey.
While the 1920s boomed, so did Atlantic City Gas. A total of 80 percent of all hotels were heated by gas, and housing developments were being developed all over the area. Atlantic City was "the place to be" with the resort business in full swing. The Great Depression, however, which began in October 1929, took the wind out of the economy's sails. For Atlantic City Gas, the downturn occurred at a time when C.H. Geist was considering selling the company and his other utility holdings. Despite the economic challenges, Public Service Corporation of New Jersey became the new owners of the company, with the sale completed in April 1930. Of Geist's holdings, Atlantic City Gas and People's Gas Company both would be owned by Public Service.
1930s and 1940s: A New Era for Atlantic City Gas
In 1930 Atlantic City Gas became a subsidiary of the largest utility in New Jersey, Public Service Corporation of New Jersey. Thomas N. Carter was the president of Public Service, which also was incorporated in 1910. Chester Grey, who had been serving as general manager for Atlantic City, was appointed president of the subsidiary. The worst years of the Depression were still ahead, however, and in 1932, employees' wages were decreased 6 percent. In 1933, another 9 percent reduction was enforced.
In 1933, after only three years as president, Chester Grey resigned due to ill health and was replaced by Robert Wiederwax. Wiederwax was married to the daughter of Atlantic City's mayor. Grey's concerns about his own health were well founded, and he died just two years after leaving the company. In 1934, the company increased its workforce due to the National Recovery Act. The Act required employers to pay time-and-one-half for all hours beyond 40. Most of the employees had been working many extra hours, but the company now hired more workers rather than increase pay to existing workers for overtime.
By 1936, however, the employees had their wages restored to the pre-Depression amounts, and it seemed the worst of the downturn was behind the country and Atlantic City Gas. New appliance sales (and gas hookups) increased in 1937. Wages continued to improve as well, since the Fair Labor Standards Act guaranteed a minimum wage of 40 cents per hour.
With the 1940s came World War II, and the country joined together to support the war effort. Along the East Coast, a "dim out" was ordered in 1942 to conserve energy and black out the vision for the German submarines that were reported to be close to shore. Even motorists traveling along the shore did so without lights. The company and its employees were involved in volunteer efforts for the war, and the blackout finally ended in November 1943.
In December 1944, company President Robert Wiederwax committed suicide in his office. The note he left indicated that poor health and finances were among the reasons why he shot himself at the age of 60. Earl Smith became president in January 1945. The cold winter of 1944–45 combined with a nationwide coal shortage created a record sales year for the company. More and more homeowners wanted to install gas heat in their homes, but the company could not keep up with the high demand.
After World War II ended, Public Service Corporation, in accordance with the Public Utility Holding Company Act of 1935, announced that it would be selling both Atlantic City Gas Company as well as Peoples Gas Company. Public Service Corporation merged Peoples into Atlantic City and then dispersed the stock in the new company to its stockholders. In April 1947, the transaction was complete, and Atlantic City Gas Company became South Jersey Gas Company. The new name better reflected the regional nature of the company.
In 1948, the company reorganized as a publicly owned company. The stock traded on the "over-the-counter" market and opened at $3 on July 1, 1948. Revenues for 1948 were $3.6 million with a net income of $210,000. South Jersey Gas Company, which had always manufactured the gas it sold to the public, was attempting to secure a supplier for natural gas. The Transcontinental Gas Pipe Line Corporation (Transco) was constructing a pipeline to the East Coast from Texas, and South Jersey Gas decided to construct 75 miles of its own pipeline to connect with Transco at the nearest point in Camden, New Jersey.
1950s Through the 1960s: 20 Years of Change
In 1950, the pipeline of natural gas was complete, and the South Jersey Gas contract with Transco was signed for a 20-year period. With the increased capacity, South Jersey branched out to the industrial market and added its first industrial customer, Owens-Illinois Glass Company. Also in 1950 the company acquired Bridgeton Gas Light Company, adding 3,300 customers. Atlantic City Gas continued to grow when, in 1952, it purchased the Cumberland County Gas Company and added 11,000 customers.
In May 1953, Earl Smith stepped down as president, and Theodore H. Kendall was elected president and CEO of the company. Many changes took place in Atlantic City, still the company's headquarters, during the early 1950s. The historic Atlantic City pier was demolished and the city's trolley service was discontinued. Changes were occurring for South Jersey Gas as well, and in 1956, the company listed its stock on the Philadelphia-Baltimore Stock Exchange. Just a few years later, in 1958, the company began trading on the New York Stock Exchange. The initial price was $38 per share.
By the end of the 1950s, 90 percent of residential customers were using natural gas as well as many industrial and commercial customers throughout southern New Jersey. By early 1960, the company was constructing a new commercial office in Millville as well as modernizing the corporate headquarters at 2001 Atlantic Avenue in Atlantic City. The company attempted in the early 1960s to locate natural gas in New Jersey rather than pipeline it in from Texas. In partnership with New Jersey Natural Gas Company and Anchor Gas Company, South Jersey Gas drilled in three separate, promising locations. The exploratory drilling was unsuccessful, however, and soon was abandoned.
In 1964, Theodore Kendall retired as president, and William Gemmel became the new president after starting with the company in 1947. By 1968, the company had outgrown its Atlantic City headquarters. It was decided by the board of directors that rather than attempt to expand the existing headquarters, it made more sense to construct a new building outside of Atlantic City. A site in Folsom, New Jersey, near the center of the company's territory, was selected.
Because of legal restrictions governing public utilities, the board of South Jersey Gas was forbidden from investing in other types of businesses. In response to this, the company formed a second business as a holding company, South Jersey Industries, Inc., incorporated in 1969. South Jersey Gas effectively became a subsidiary of South Jersey Industries.
Diversification and Growth in the 1970s and 1980s
The new headquarters of South Jersey Industries was completed in 1971 on ten acres in Folsom, New Jersey. Early in the 1970s, the company began diversifying when it purchased Jesse S. Morie & Sons, Inc., a gravel and sand mining company, as well as three small fuel oil distribution companies that became South Jersey Fuel, Inc. In 1972, the company entered the propane business with the purchase of another company, but the venture was not successful and was sold off in 1975.
In 1973, the company opened the Liquefied Natural Gas storage facility at McKee City, New Jersey. As natural gas supplies became further depleted across the nation, the company decided to form South Jersey Energy Company to build and operate a plant to manufacture substitute natural gas and sell it to South Jersey Gas as well as other utilities in neighboring states such as Delaware, Pennsylvania, and New York. The company formed Energy & Minerals, Inc. in 1977 to combine the subsidiaries of Jesse S. Morie & Son, Inc; South Jersey Fuel, Inc.; Delaware Valley Industrial Gases, Inc.; and South Jersey Exploration Company.
Big changes were on the way to southern New Jersey as casino gambling was legalized in 1977. The first casinos opened in 1978, creating more opportunities for South Jersey Industries as well as other area companies; growth in the area from 1980 to 1985 was unprecedented. Although the coastal areas of southern New Jersey had always enjoyed an annual seasonal boom, the economy was now based on a yearlong tourist trade.
In 1981, Bill Gemmel retired, and Bill Ryan became president and CEO of the company. Ryan had been with the company since 1965. The company continued expanding throughout its businesses, purchasing and enlarging different areas.
In 1983, Cape May Division became part of the Gas Company, bringing the total customer count to 157,000 in 112 municipalities. South Jersey Industries lost one of its largest customers in 1983 when Owens-Illinois closed its glass plant in Bridgeton. The softening glass industry also affected South Jersey Industries' Energy & Minerals business, and the company stopped mining for sand to sell to the glass companies.
At the end of the 1980s, the company continued to grow, although two purchases of other companies were attempted but not completed. Record years in 1988 and 1989 yielded $7.9 million in net income. "Gas Company's service area has experienced exceptional growth in the last five years," said President and CEO Bill Ryan. The company acquired five New Jersey utility construction and contracting firms in 1989. The acquired companies focused on utility construction and fit well into the current holdings of South Jersey Industries.
1990s and 2000s: Focusing on Energy
By 1992, South Jersey's gas company operations served 220,000 customers and experienced growth in its operations. Another South Jersey company, however, The Morie Company (sand and mining), was sold to Unimin Corporation in 1996. The sale, for $55 million in cash, was closely followed by the sale of a second subsidiary, R & T Group, Inc., as the company divested itself of all non-energy businesses.
The sales were in response to a 1996 strategic plan that called for a focus of resources on the core energy business of the company. "The plan's second phase focuses on ensuring that SJI's remaining businesses are efficiently coordinated to maintain its competitive edge in the rapidly changing energy industry," said CEO Bill Ryan.
In 1997, "energy" stopped meaning exclusively gas for the company. A new subsidiary, South Jersey Energy, was added to lead the company into electricity trading. The addition was one way the company decided to move toward offering total energy solutions for its customers. In the middle of this new focus, President and CEO Bill Ryan died suddenly in 1997 at the age of 63. Richard Dunham became chairman of the company, and Charles Biscieglia was named president. Both were longtime employees of South Jersey Industries.
South Jersey Industries continued to add business in the late 1990s, including being named as the preferred energy provider by New Jersey chambers of commerce, winning the contract for Atlantic City's energy and providing gas to more than 269,000 customers.
By the early 2000s, South Jersey Industries was confident in its financial outlook. "We made a statement that we are going to grow our earnings between five and ten percent per year," said CEO Charles Biscieglia in May 2001. "We increased our earnings this year over seven percent, so we're on track moving toward a ten percent growth in earnings."
Principal Subsidiaries: Energy & Minerals Inc.; South Jersey Energy Company; South Jersey Gas Company.
Principal Competitors: Conectiv; New Jersey Resources; NUI.
- Key Dates:
- 1873: Philadelphia businessmen form Atlantic City Gas & Water Company.
- 1910: Clarence Geist purchases Atlantic City Gas & Water and Consumers Gas & Fuel to form Atlantic City Gas Company.
- 1930: Public Service Corporation acquires Atlantic City Gas Company.
- 1947: Public Service spins off Atlantic City to shareholders; name of newly independent company changes to South Jersey Gas Company.
- 1950: Company builds 75 miles of pipeline to connect with the Texas to East Coast span of Transcontinental Gas Pipe Line Corporation (Transco).
- 1958: Company joins the New York Stock Exchange.
- 1969: South Jersey Industries, Inc. is created as a holding company.
- 1971: Company builds new headquarters in Folsom, New Jersey.
- 1977: Energy & Minerals Inc. becomes a subsidiary.
- 1996: Non-energy subsidiaries are sold.
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