United Dominion Industries Limited Business Information, Profile, and History
Charlotte, North Carolina 28202-6039
Vision '99 is a strategic plan designed to take United Dominion to a new growth plateau. Its strategies: increase profitability through strategic acquisitions; pursue international growth; improve margins through intensive operating focus; capitalize on natural synergies of building products mosaic; accelerate internal development of engineered products.
History of United Dominion Industries Limited
United Dominion Industries Limited once provided extensive manufacturing, engineering, and construction services to customers around the globe, but in the mid-1990s the company resolved to focus its vast resources on the design and sale of proprietary engineered products for industrial and construction customers. With 60 primary operating locations selling to 120 countries, United Dominion divided its operations into two principal business segments: Industrial Products and Building Products. Industrial products included market leaders BOMAG/HYPAC (compaction equipment for asphalt, soil, and sanitary landfills); Fenn Manufacturing (new and overhauled aerospace parts and industrial equipment); Flair (industrial equipment and filters to dehydrate, filter, and purify air); the Marley companies and Weil-McLain (engineered equipment and services for heat exchange, heating applications, and fluid handling including cast iron boilers, submersible pumps, and water cooling towers); and Waukesha Cherry-Burrell (pumps and food processing equipment). The Building Products division manufactured an array of mostly nonresidential construction products, produced by Ceco/Windsor (commercial, industrial, and residential doors); Robertson (architectural panels for roofs and walls); Serco (loading dock equipment); and Varco-Pruden (pre-engineered metal building systems).
United Dominion's Roots, 1882-1950s
United Dominion was originally incorporated in 1882 as Dominion Bridge Company, Limited, and reincorporated in 1912 under the Companies Act of Canada. As the name suggested, Dominion Bridge was primarily engaged in building bridges, specifically the bridges required for the completion of the 2,600-mile Canadian transcontinental railroad. From these beginnings, the company diversified in the early 1900s into more of a general engineering firm, capable of handling most types of structural steel work. By the beginning of the 1930s, Dominion Bridge had either formed or acquired several companies. Among these were the National Bridge Company of Canada, Ltd., founded in 1910; Riverside Iron Works, Ltd., of which Dominion Bridge acquired controlling interest in 1928; and Dominion Hoist & Shovel Co., a joint venture with American Hoist & Derrick Co., which was launched in 1931.
By 1934 Dominion Bridge's plants had an annual capacity of 200,000 tons of bridge and structural work. In addition to steel and iron bridges, the company was producing boilers and electric- and hand-powered traveling cranes, among other things. The company's headquarters and main works were located in Lachine, Quebec, where it had connections with important railways including the Canadian Pacific. Branches were also operating in Ottawa, Winnipeg, and Toronto, as were fabricating plants in Vancouver, Amherst (Nova Scotia), and Calgary. The company remained primarily a structural steelmaker and construction outfit, with nearly all of its properties located in Canada, through the first half of the 20th century. In fact, Dominion Bridge quickly became Canada's largest steel distributor, as well as its leading structural steel company.
Change and Growth, 1960s and 1970s
In 1961 Dominion Bridge acquired the Runnymede Construction Co. and all of its assets. That year, the company also absorbed its former subsidiaries Manitoba Bridge and Engineering Works Ltd. (acquired in 1930), and Manitoba Rolling Mill Ltd. Another of the company's subsidiaries, the majority-owned Dominion Engineering Works Ltd., was sold to Canadian General Electric Co. in 1962, while in 1964 its Robb Engineering Works subsidiary was merged into the company. Another acquisition, the Crane division of Provincial Engineering Ltd., was finalized in 1967.
As the 1960s drew to a close, a long-term decision was made at Dominion Bridge's executive offices to move the company--by this time based in Montreal and controlled by Algoma Steel (with 43 percent ownership)--into the United States. Management determined that the company had to diversify beyond the structural steel market, and at the same time escape the uncertainties associated with both the capital goods market and labor situation in Canada. Over the next several years, many of the company's Canadian holdings were sold to raise money for the purchase of U.S. firms. This move across the border was spearheaded by Kenneth Barclay, then vice-president of finance who became CEO a few years later. A ten-year plan was put into effect, with the goal of reaching $1 billion in sales by the end of the 1970s.
Dominion Bridge's first significant incursion into the United States was the 1971 acquisition of Varco-Pruden, Inc., of Pine Bluff, Arkansas, by Dominion Bridge's U.S. subsidiary, Dombrico, Inc. Varco-Pruden, which made pre-engineered metal buildings, was purchased from Fuqua Industries, Inc., and had annual sales of about $25 million.
Barclay set up shop in Hanover, New Hampshire, which served as a base of operations for Dominion Bridge's U.S. expansion program. Meanwhile, the acquisitions continued in rapid succession: in 1973, the Dombrico subsidiary purchased Priggen Steel Building Co. of Holbrook, Massachusetts; two other companies (Wiley Manufacturing Co., a maker of vehicular tunnel tubes, and Clyde Iron Works, which produced Whirley cranes) were also purchased from Microdot Inc. that year. When he became chief executive the following year, Barclay gradually began to relocate the company's corporate headquarters to Hanover rather than return to Montreal.
A year later in 1975, another shopping spree commenced, including Morgan Engineering Co., an industrial crane manufacturer based in Alliance, Ohio, purchased from United Industrial Syndicate; Cherry-Burrell, a maker of processing and packaging equipment, purchased from Paxall, Inc.; the Indianapolis-based Insley Manufacturing Co.; and Chicago's DESA Industries, which manufactured construction equipment like chain saws, power tools, and excavating machines. The purchases were once again made by the company's U.S. subsidiary, which by this time had been renamed AMCA International Corporation. Between 1970 and 1978, Dominion Bridge purchased and absorbed a total of 12 businesses. During roughly the same period, ten major plants and properties that were no longer in the company's long-term plan were sold, as was its $12 million interest in Canadian General Electric, to raise money for Barclay's acquisition program.
As a result of the extensive acquisition program, Dominion Bridge's sales grew from $168 million in 1970 to $521 million by 1977. That same year, Barclay added chairman of the board to his list of titles. His mentor during this period of diversification and expansion was Royal Little, who had orchestrated a similar process at Textron Inc. over a decade earlier. Little, along with his partner Lon Casler, sought out companies for Dominion Bridge to consider as potential acquisition targets. Another company whose agenda for growth had been guided by Little was Amtel, Inc., which was founded by Little after he left Textron. In 1978 Dominion Bridge acquired Amtel, a diversified steel products and energy services company, for $80 million. Amtel, which had sales of over $250 million, was the company's most important acquisition of the decade, with 33 percent of Dominion Bridge's $886 million in sales for 1978 contributed by Amtel.
Yet the company didn't stop its quest for growth after the Amtel purchase. In 1979, Dominion Bridge formed a subsidiary to explore business possibilities in the Far East. The same year the company geared up for another major acquisition by selling a fabricating facility in Quebec and various debt issues to raise $200 million in cash in its bid for control of the Cleveland-based Warner and Swasey Co., only to be narrowly beaten by the Bendix Corporation.
A Second Ten-Year Plan and a New Name, 1980-89
In 1980 Dominion Bridge embarked on a second ten-year plan, this time to reach sales of $5 billion by 1989. The first move toward the new goal was the $140 million acquisition of the Koehring Company, a Wisconsin-based manufacturer of construction equipment, which increased Dominion's sales by about 50 percent. In the long run, however, the acquisitions of the 1980s did not achieve the unqualified success of those of the 1970s. In order to simplify, in 1981 Dominion Bridge changed its name to a slight variation of its U.S. subsidiary and officially became AMCA International Ltd.
The newly renamed company soon had to deal with the souring of the 1982 purchase of Giddings & Lewis Inc., a Wisconsin machine tool company with sales of nearly $400 million. AMCA paid $310 million for Giddings, which at the time was the fifth-largest company in its industry. Although Giddings & Lewis had always been a strong performer compared to other machine tool operations, it didn't survive the beating the entire American tool industry took in the 1980s, mainly at the hands of competitors from Germany and Asia. By 1987, AMCA was ready to write off much of its investment in Giddings, and the company was spun off to the public two years later.
AMCA purchased Chemetron Process Equipment, Inc., a subsidiary of Allegheny International, Inc., in 1983. A manufacturer of food and chemical processing equipment, Chemetron was integrated into AMCA's Cherry-Burrell division. The following year, the company's Dominion Bridge operating unit shared a contract with a British firm for the construction of a special coal harbor in Indonesia, at the island of Sumatra's southernmost point. By 1985 AMCA had sales of $1.6 billion, but overall the company was losing money. Between 1983 and 1987 AMCA lost $285 million, including the write-off for Giddings & Lewis. William Holland took over as president and CEO in 1986, with Barclay continuing as chairman.
Holland embarked on a mission to pare the company back down to its core engineering-related businesses, eliminating many of the other enterprises that held the company's earnings down. This restructuring, AMCA announced, would amount to some $500 million, or about one-third of the company's total assets. Yet unable to find a buyer for the company's construction products business, Holland ended up closing it down and taking a write-off that erased 20 percent of AMCA's revenue for 1986. By this time, Canadian Pacific had bought out Algoma Steel's 34.5 percent holding in AMCA, bringing its own interest in the company to just over 50 percent.
In 1987 Holland became chairman in addition to his duties as CEO, with Barclay remaining a director. That year AMCA reported a net loss of $188 million on sales of $974 million, but the company finally rebounded to profitability in 1988 with $25 million in earnings on sales of nearly $1.3 billion. The company had also succeeded in raising $261 million in 1988 through two offerings of common stock. Another important development was the reconsolidation of BOMAG, the company's West German subsidiary and a world leader in landfill compaction equipment. AMCA had been trying unsucessfully to sell BOMAG since 1986. The failure to find a buyer, however, proved fortunate, as BOMAG's business improved significantly in 1989, bringing in $240 million in sales and a record $25 million in pretax profits.
Another Name Change anda Five-Year Plan, 1990-95
Eager to shake things up after a decade of disappointments, AMCA moved its headquarters from Hanover to Charlotte, North Carolina, in 1989. Moreover, the company succeeded in going public with its shares in Giddings & Lewis, which had accounted for $168 million of the company's sales the year before. By 1990 the company underwent another name change to United Dominion Industries in homage to its strongest subsidiary. A new five-year plan was initiated, whose goals included doubling the company's 1989 net income, producing at least a 15 percent after-tax return on common equity, and keeping net debt at or below 30 percent of total capital. This was to be accomplished by concentrating on fewer and larger businesses that were leaders in their markets, or which served a very specific market niche.
For 1990 United Dominion earned $26 million on sales of $1.4 billion and returned to its acquisition mode. Among its purchases was AEP-Span, a producer and distributor of architectural metal roofing and composite wall products for nonresidential construction uses. In 1991 United Dominion combined the operations of units Varco-Pruden and Stran (purchased in 1983), which both produced pre-engineered building systems and acquired the Blaine Construction Company. Although sales dropped off a bit to $1.35 billion in 1991, net income actually increased, to $37 million. More acquisitions followed at the beginning of 1992. Most important among these was the Robertson-Ceco Corporation, which included Ceco Door and Robertson Building Products. Bredel Exploitatie B.V., a pump manufacturer in the Netherlands, was also acquired, prompting a jump in sales to $1.7 billion. Also contributing to the increase was Litwin Engineers & Constructors, whose sales grew by $200 million from the previous year.
In May 1992 United Dominion made an offering of 6.5 million shares of common stock (which reduced Canadian Pacific's ownership to 45.4 percent interest). At this time, the company announced a realignment of its management structure to decentralize decision-making and increase the autonomy of each business unit. Then, in one of Holland's more inspired moves, United Dominion agreed to purchase the Marley Co. from Kohlberg Kravis Roberts for $356 million, an acquisition that proved nearly priceless in the years to come.
At the beginning of 1994, United Dominion ended talks with the Manson Group of Montreal and instead moved to the Cedar Group Inc. of Conshohocken, Pennsylvania, selling an 85 percent stake in Dominion Bridge for less than $20 million, which was a sad end for the venerable subsidiary. That year also marked the appointment of Jan Ver Hagen, formerly vice-chairman of Emerson Electric, as United Dominion's new president and chief operating officer. Serco Doors, a loading dock manufacturer, was then purchased, and a stock offering of another three million shares in September was quickly snapped up by mostly Canadian investors. The public offering again lowered Canadian Pacific's ownership in United Dominion (to 41.2 percent), yet Canadian Pacific was immersed in a restructuring plan and was more concerned with its core assets.
Year-end 1994 brought United Dominion's sales to just short of $1.6 billion, with net income up by 56 percent to $62.1 million; the recently acquired Marley companies contributed 43 percent to these earnings. During the year, four more companies were purchased: Flair Corp. (air-drying and purification equipment and filters), McKee Door, Inc. (garage and rolling steel doors), Puriti S.A. de C.V. (a pump manufacturer from Mexico), and Davenport International (a European cooling tower company). On the international front, Varco-Pruden formed a joint venture (30 percent stake) with the Bao Steel Group of Shanghai and the International Steel Company of Taipei to build China's first pre-engineered metal manufacturing facility, and signed a licensing agreement with Dongbu Steel for manufacturing in South Korea. Marley Cooling Tower also established a joint venture in China, to produce fiberglass HVAC towers. International sales for 1994 reached 15 percent, a slight downturn from 1993, but rallied again in 1995 to 19 percent of United Dominion's revenues.
Though growth through acquisition seemed unabated, Ver Hagen and Holland had successfully reduced debt and increased sales to $1.8 billion and net income (by 26 percent) to $78.5 million in 1995. Unfortunately, much of the trimming came from the divestiture of the company's construction units Aneco, Blaine Construction, and JESCO, as well as the Litwin Companies. "While these units are fundamentally good businesses," Holland announced at the time, "they no longer fit our strategic focus on manufacturing proprietary engineered products."
Streamlined, Independent, and Readyfor the Future, 1996-2000
United Dominion seemed to have regained the footing it had lost during the previous decade. By narrowing the focus of its growth to include the acquisition of only companies among the top handful in their specific markets, the potential for problems such as those experienced with Giddings & Lewis had been sharply reduced. Having pulled itself together during a period in which the manufacturing and building products industry wasn't particularly strong, United Dominion's future seemed secure for the late 1990s and beyond. Additionally, United Dominion was finally free of its former parent company, Canadian Pacific, which divested the remainder of its controlling interest in August and December of 1995. And while U.S. investors didn't generally associate United Dominion with its internationally known, top-notch subsidiaries like BOMAG, Marley, Varco-Pruden, and Waukesha Cherry-Burrell, a February 1996 stock offering of nearly 5.2 million shares was quickly picked up by mostly North American investors. With another five-year plan in place, United Dominion hoped to double earnings to $3.10 per share and raise revenues to $3 billion by the end of the decade.
Principal Subsidiaries: AEP-Span; BOMAG; Ceco Door Products; Compaction America; Davenport International; Fenn Manufacturing Company; Flair Corp.; Marley Cooling Tower Company; Marley Electric Heating Company; Marley Pump Company; McKee Door, Inc.; Puriti S.A. de C.V.; Robertson Building Products; Varco-Pruden Buildings; Waukesha Cherry-Burrell; Weil-McLain; Windsor Door Products.
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