AMETEK, Inc. History

Company History:

AMETEK, Inc. is a global manufacturer and marketer of precision instruments for the aerospace, trucking, petroleum refining, and food processing industries, as well as a major small motor producer for business machines, computers, copiers, and floor care machines. The company's U.S. Gauge division is the world's largest manufacturer of gauges, while the Microfoam division is the only producer in the world of recyclable polypropylene (plastic) foam sheeting. Furthermore, the company was rapidly becoming a national leader in water filtration systems and products. A small regional firm at the outset, AMETEK over the years has directed its operations into the global market, acquiring plants in Italy, Germany, Great Britain, Denmark, and Mexico, and exporting products to over 90 countries worldwide.

By March 1930, several months after the stock market crash, AMETEK's predecessor, the Manhattan Electric Supply Company, had fallen into bankruptcy, and stockholders decided to establish a new company in which the Manhattan electric firm would be included. The new firm, American Machine and Metals, was listed on the New York Stock Exchange as AME, which for many years thereafter served as the abbreviated company name.

AME consisted of several companies, including the Troy Laundry Machinery division in East Moline, Illinois, Haliwell Electric in New York City, and the Trout Mining Company in Phillipsburg, Montana. One year after AME's formation, the Manhattan Electric Supply Co. proved to be ill-fitted to the group and was sold by the end of 1931. In its place, the Tolhurst Machine Works of Troy, New York, which showed a small profit despite the national economic conditions, was brought into the AMEfold. AME headquarters were located on Wall Street, and the company's first president was Philip G. Mumford, under whose leadership the company managed to survive the Depression years, although it operated in the red for well over a year.

By 1932, the worst year of the Depression, AME began to show a slight profit, reporting overall assets of nearly $5 million. With the New Deal inaugurated the following year and massive government orders flowing into the economy, AME's business showed marked improvement. By 1935, AME was profitable. Perhaps because the firm was born of the Depression, the company took its social responsibilities seriously: its 900 employees received benefits and incentives and were a factor in the company's rapid recovery. At the end of fiscal year 1935, AME was able to pay its stockholders their first dividends.

The onset of war in Europe in 1939 brought about significant growth for AME. During this time, the U.S. government began looking for businesses that could be transformed rapidly into manufacturers of critical war material, should the country become involved in the war. One of those selected was the East Moline branch of AME, which in 1941 converted its production towards the war effort, turning out laundries for ships and fans for tanks. By war's end, the company's Tolhurst division was manufacturing centrifuges--rotating machines used to separate substances of unequal densities--that helped produce the new miracle medicines of the war, penicillin and sulfa drugs.

Like many American companies, AME's growth during the war years was phenomenal, enabling stockholders to consider further acquisitions. Their choice in terms of future growth proved excellent: the United States Gauge company in New York. The purchase was finalized in 1944 for the price of $3 million in cash. This division employed twice the number of people that had begun work at AME in 1930. Considering the importance of U.S. Gauge in the postwar years, this purchase marked a turning point in the history of the company that would contribute to a transformation in its identity.

After a period of impressive growth and sales, AME experienced a slump during the immediate postwar years. Mumford, having guided the company through tough times, stepped down as president in 1948 and was replaced by the energetic, younger John C. Vander Pyl. Soon thereafter, the company's business increased, chiefly because of the demands of the Cold War. Tensions turned into open hostilities in Korea in 1950, and for the next several years the demands of confronting communism kept the U.S. economy almost as prosperous as the World War II years.

Annual sales for AME in 1955 stood at $30 million, making the company a comparably small player among the giants of American industry. Nevertheless, stockholders' dividends had increased annually, and in 1955, they once again approved a worthy acquisition: the purchase of Lamb Electric for $34 million. Like U.S. Gauge, Lamb Electric would become one of the most important components of AME and would enable the company to make the transition from the manufacture of simple machinery to more technologically advanced products.

By the early 1960s, AME's principal operations had changed significantly from the traditional manufacture of heavy machinery and mining ventures. Trout Mining of Montana had been divested in 1958, and with the additions of U.S. Gauge and Lamb Electric, the company was producing a wide variety of precision components and electric motors for small appliances. In recognition of the company's new focus on smaller, more technologically refined products, stockholders approved the company's name change from American Machine and Metals to AMETEK, Inc., a changeover that allowed the firm to retain AME as its stock trading symbol.

Rapid expansion followed, and new plants, among the first to boast central air conditioning, were constructed. In 1965, with the acquisition of Mansfield and Green, Inc., AMETEK was launched into the lab instruments business. The accession of Dr. John H. Lux as president of the firm in 1966 also vitalized the company. Under Lux, managers were required to visit company plants and get to know the employees and business firsthand, a strategy that boosted employee morale and contributed to company growth. In 1967, the first water filtration equipment business of the company, Plymouth Products, was acquired. Furthermore, Lamb Electric branched out into the manufacture of computer and photocopier motors. By 1980, sales had reached $400 million, and three years later, AMETEK for the first time made it into the rankings of the Fortune 500 companies, with a reputation as a manufacturer of highly advanced products and materials.

In 1988, stockholders approved a major restructuring of AMETEK, which resulted in the divestment of a dozen unrelated industries. As a result, AMETEK became much more streamlined with a sharper focus. Henceforth, the company consisted of three principal entities: Electro-mechanical, Precision Instruments, and Industrial Materials. Moreover, AMETEK expanded its markets globally, with exports accounting for an increasingly larger proportion of sales revenues. These changes proved timely as trade barriers were collapsing in much of the world, and free market economies were on the rise in Eastern Europe, Russia, and China. With a diverse array of products, the company would not suffer should any one of them fail in the marketplace.

In 1993, under chairperson and CEO Walter E. Blankley, AMETEK consisted of 33 manufacturing facilities and 14 divisions across the country and abroad. Of its three principal operating segments, the Electro-mechanical Group, which included Lamb Electric, represented more than 40 percent of company sales. Its market was global, with over 25 percent of its sales derived from overseas. To enhance this division, AMETEK acquired three Italian electric motor companies that gave the company a base on the European continent. The Electro-mechanical group produced a wide variety of electric motors, chiefly for floor care appliances, computers, copiers, medical equipment, and high efficiency heating units. As a producer of small appliances, the Electro-mechanical Group became a global leader in the early 1990s, increasing its sales 24 percent in 1992, despite an economic recession in the United States.

The second principal segment of AMETEK was the Precision Instruments Group, to which U.S. Gauge belonged as did Aerospace Products, acquired by AMETEK in 1989 as the company's only major subsidiary. Manufacturing advanced measuring and monitoring devices for the aerospace industry, this group of companies generated nearly 40 percent of company sales in 1993. However, of all AMETEK's operations, Precision Instruments suffered the most from the 1990s recession, primarily due to cutbacks in military spending and financial difficulties in the commercial airlines industry, areas on which Precision Instruments relied for nearly half of its sales. Nevertheless, the division manufactured a wide variety of products and expected to make up for its losses by exploring new markets. For example, demand for instrument panels for the heavy truck industry increased as did the need for measuring and monitoring devices in Europe, where air pollution standards have become increasingly stringent. Furthermore, industry analysts project that by the turn of the century, most airplanes will need modernization and repair, renewing business opportunities in the airline industry. AMETEK's acquisitions of Debro Messtechnik GmbH in Germany and AMETEK Denmark A/S testify to the broadening of the market for precision instruments.

AMETEK's third major segment, Industrial Materials, contributed approximately 20 percent of sales in 1993. Among the great variety of items produced by this group were specialty metals, heat exchangers, feather weight foam sheet packaging material, drinking water filters and treatment systems, and high temperature resistant plastics and textiles. Plymouth Products, in Sheboygan, Wisconsin, was the group's leading producer of kitchen and bathroom water filtration products, demand for which was expanding rapidly. Such important acquisitions as the Kleen Plus Company in Milwaukee and AMETEK Filters (formerly Eurofiltec) in Billingham, England, are expected to position AMETEK as a global leader in the water filtration enterprise. Furthermore, Industrial Materials was the only producer in the world of low density polypropylene foam packing material and a leader in heat exchanger technology, aimed at recovering waste energy from boilers more efficiently.

Growing concern for the environment at home and abroad has prompted AMETEK to produce and market environmentally safe products. Water filtration became a major growth enterprise for AMETEK when the state of Wisconsin certified its water filtration products as 99.9 percent free of the parasite that polluted Milwaukee's drinking water in 1993. In addition, the Haveg manufacturing facility, in the Industrial Materials group, became the world's biggest producer of silica yarn, a suitable replacement for asbestos. The Microfoam division of Industrial Materials produced plastic furniture packing that not only was recyclable but was made without Chloroflourocarbons, another first for AMETEK. High efficiency furnaces that utilize the type of high temperature motor blowers produced by AMETEK were increasing in popularity in the early 1990s.

A broad range of products, attention to international marketing opportunities, and new product development for a safer environment are regarded as AMETEK's strengths and should provide the company with growth and profitability in the future.

Principal Subsidiaries: Aerospace Products, Inc.

Further Reading:

• "Ametek Buys Bruner Filter Line," The Wall Street Journal, December 1, 1992, p. C14, C20.
• "Ametek, Inc.," The Wall Street Journal, May 13, 1993, pp. B6, B12.
  Annual Report: AMETEK, Inc., Paoli, Pennsylvania: AMETEK, Inc., 1992.
• Reisch, Marc, "Environmental Push Pays Off for Packaging Firm," Chemical & Engineering News, February 3, 1992, pp. 14-15.
• "Unique Recycling Idea Could Save Millions," Modern Materials, December 1992, p. 12.
• Young, P. K., "Ametek--Company Report," Shearson Lehman Bros., Inc., March 26, 1993.

Source: International Directory of Company Histories, Vol. 9. St. James Press, 1994.

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