Barnes Group Inc. History

Address:

123 Main Street
P.O. Box 489
Bristol, Connecticut 06011-0489
U.S.A.

Telephone: (860) 583-7070
Fax: (860) 589-3507

Public Company
Incorporated: 1922 as Associated Spring Co.
Employees: 6,100
Sales: $890.82 million (2003)
Stock Exchanges: New York
Ticker Symbol: B
NAIC: 332116 Metal Stamping; 332611 Spring (Heavy Gauge) Manufacturing; 332999 All Other Miscella- neous Fabricated Metal Product Manufacturing; 551112 Offices of Other Holding Companies

Company Perspectives:

Management has embraced a corporate culture within Barnes Group that has as its common goals the generation of sustainable, profitable growth and building lasting value for its stockholders. The Company's strategies for generating growth include organic growth from new products and services, markets and customers; and growth from strategic acquisitions, of which eight have been completed since 1999.

Key Dates:

1857:: Wallace Barnes acquires clockmaking shop in Bristol, Connecticut.
1922:: Three businesses merge to form Associated Spring Co.
1946:: Associated Spring begins trading shares publicly.
1963:: Associated Spring is listed on the New York Stock Exchange.
1976:: Associated Spring is renamed Barnes Group Inc.
1995:: Wallace Barnes resigns as last family member to head company.
1998:: New CEO Edmund Carpenter sets company on acquisition path.
2004:: Nine acquisitions in five years have added $370 million to annual sales.

Company History:

Barnes Group Inc. serves diversified industrial markets throughout the world. It is the largest manufacturer of springs in North America, for example, and is a leading distributor of maintenance, repair, and overhaul parts and services in the United States. Barnes also sells specialized aerospace parts and services. The company's rich history is illustrative of the Yankee ingenuity that built the American industrial machine. Barnes is organized into three business units: Associated Spring, Barnes Aerospace, and Barnes Distribution.

Bristol Origins

The founder of what would eventually become a Fortune 500 company was Wallace Barnes. Wallace, nicknamed "Bub," was born on Christmas Day in 1827 and grew up in Bristol, Connecticut, where his ancestors had settled in the mid-1600s after arriving from England in 1630. Wallace's ancestor Thomas Barns (the name was later changed to Barnes), the original settler who arrived from England, fought in the Pequot War. After bearing three children, his wife Mary was put to death by hanging in 1662 for "entertaining familiarity with Satan." One of Thomas Barns's children became the first settler of Bristol and that town's first tavern keeper. Succeeding Barnes family members became war heroes, political figures, and noted businessmen.

Wallace Barnes began working for both his father Alphonso and grandfather Thomas in the family hotel and general store. The general store specialized in clocks, but it also sold drugs and general merchandise. Wallace eventually became skilled as a druggist. Partly because he and his father did not get along, however, he left to start his own druggist shop in a nearby town. Lackluster returns from that venture prompted him to try his hand at a new business, clockmaking. Wallace started out contracting to supply cut glass, doors, and parts to different clockmakers who were part of the bustling clock trade that had developed in Bristol; in fact, Bristol was known as the clockmaking capital of the United States at the time. Unfortunately, the local clock industry fell on hard times when the Panic of 1857 caused a severe depression.

At the time of the Panic, Wallace was working for clockmaker A.S. Platt. Platt, for whom Wallace had been working at the rate of $1.25 per day, became unable to pay him for his services. Instead of cash, Barnes accepted some hoop-skirt wire as compensation. In a move that demonstrated his dealmaking savvy, Wallace hauled the wire in a wagon to nearby Albany. There, he traded the wire for a financially troubled haberdashery store. Rather than stay to run the store himself, Wallace turned around and traded it for a Missouri farm that he had never seen. Upon returning to Bristol, he managed to trade the farm for a blacksmith shop, which he sold for the handsome sum of $1,600. Incredibly, Wallace used the money to purchase the troubled A.S. Platt, the company that had given him the wire in the first place.

Barnes's new purchase included a bevy of equipment and raw materials. Importantly, Barnes also received the rights to a secret method of tempering steel springs that involved heating the springs and then quenching them in oil. Wallace wisely partnered with E.L Dunbar, a more experienced manufacturer who was also Wallace's longtime friend. They each contributed $2,000 to the venture and set up shop in a two-story building in Bristol. They started with a handful of employees making springs and hoops for skirts, but their workforce quickly expanded when the demand for hoops exploded in the wake of a fashion craze. Wallace and his partner scrambled to relocate in a bigger shop, and by the end of the year had 150 workers manning three eight-hour shifts six days a week. Although the hoopskirt fad died out before the start of the Civil War in 1861, Barnes and Dunbar managed to reap profits of about $225,000 in 1859 alone.

When the Civil War started, Wallace and Dunbar switched to making musket springs and powder horns, among other items. Although the company was still making money, the two partners split in 1863; political differences may have forced the departure of Dunbar, a "Copperhead" who sympathized with the South and differed from the staunchly Republican Barnes. Barnes continued to operate the business during the next several years, expanding into new product lines and even patenting several new springs and production techniques. Despite a discouraging fire that destroyed his factory in 1866, Wallace persevered with his springmaking operations and was employing a workforce of 35 by the mid-1870s.

Interestingly, the intense and optimistic Wallace Barnes was known in his community during this time more as a trader of Jersey cattle than as a manufacturer. In fact, Wallace was much more of a tinkerer, trader, and venturer than he was a businessman. During the 1880s, when his spring business was faltering, Wallace was probably making more money from the new livestock drug that he had developed and patented and was selling throughout the world. Thus, the success of his spring business was not necessarily paramount. Other interests included a theater that he built in downtown Bristol and coon hunting, a favorite hobby to which he devoted significant energy. When Wallace died in 1893 at the age of 65, he left an estate appraised at about $70,000--not as much as one might expect from such an active businessman, but reflective of his varied interests.

Carlyle Fuller (C.F.) Barnes, the eldest of Wallace's five sons, had become active in the spring business in the 1880s. He and his brothers changed the name (and focus) of the business, in fact, to the Barnes Brothers Clock Company, although that venture lasted only four years and the brothers returned to making springs instead of clocks. Part of the problem had been that their father had a habit of taking money from that business to cover debts related to other ventures. In any event, C.F was credited with saving the company from bankruptcy following Wallace's death. Despite economic turbulence at the time, he was able to get his creditors to back his foray into manufacturing bicycle wheels and related parts. The Barnes Company, as it had become known, cashed in on the bicycle fad and generated much needed profits in the late 1890s. That put the company in good financial shape going into the 1900s.

The fading bicycle boom was replaced in the early 1900s by the emerging automobile industry. Barnes benefited from strong demand for motorcar springs for valves, clutches, starters, suspensions, and hundreds of other items. At the same time, Americans were increasingly purchasing other items, introduced en masse during the Industrial Revolution, that required springs, such as typewriters, telephones, ice-cream makers, electric sewing machines, and more. As demand for Barnes's various springs grew, the company expanded, adding new production facilities and even building its own steel mill. By 1910, when C.F Barnes's son Fuller joined the company, Barnes was employing a workforce of about 200. Fuller's younger brother Harry also started working for the company in 1913. The two brothers helped steer the company through its biggest expansion wave during the next few years, as demand for springs spiraled during World War I, and the company's workforce temporarily soared to 1,400. Barnes churned out an estimated 90 million springs for the U.S. government during that war.

Formation of Associated Spring: 1922

Although sales slowed after the war, they were soon supplanted by demand unleashed during the Roaring Twenties. Barnes was reaping about $2 million in revenues annually by the early 1920s and was rapidly expanding its product lines and production facilities. Barnes's primary area of interest, however, was still the automobile industry. Still, the brothers thought their company lacked the size needed to take a leadership role as a supplier of springs to that industry. Consequently, the Barnes brothers engineered the November 1922 merger of three companies to form Associated Spring Co., with Fuller Barnes as president. The new company grew rapidly during the 1920s, increasing sales 85 percent and broadening its scope to include all types of appliance and aviation industries. Associated Spring also purchased other competitors, including the descendant of a springmaking firm created by E.L Dunbar after he had split from Wallace Barnes.

The stock market crash of 1929 and the resulting Great Depression battered Associated Spring. After nearly a decade of success, the company posted a crushing $43,585 loss in 1931 and then a $482,925 shortfall in 1932. Salary cuts, layoffs, and restructuring allowed the company to survive the Depression. During that period, Barnes was separated from the other two companies with which it had merged, although all three subsidiaries were still under the same corporate umbrella.

By the late 1930s the Barnes factories were humming once again as the United States geared up for World War II. Throughout the war, Barnes delivered millions of springs for airplanes, tanks, trucks, and jeeps. In addition, its steel mill cranked out products ranging from band saws to machine-gun ammunition clips. Associated's total payroll jumped to 6,000 in 1943, when shipments hit an all-time high of $31 million.

Public in 1946; NYSE-Listed in 1963

When the war ended, Associated Spring and its Barnes subsidiary enjoyed steady demand as peacetime markets surged. Sales in 1946 hit $22.6 million and the company was still employing more than 4,000 workers. To fund growth, Associated went public and sold its shares over-the-counter. It used the cash to expand its factories, open new sales and distribution offices, and to buy other companies. By 1953 the company was capturing about $50 million in annual sales. In that year, Carlyle F. ("Hap") Barnes, Fuller's son, was made president of Associated; he would become CEO in 1964. Under his direction, the company expanded internationally, first into Puerto Rico and then into Argentina, England, Japan, and Mexico by the early 1960s. Throughout the 1950s and 1960s, Barnes sustained its legacy of innovation in the spring industry. By 1963, in fact, the company was employing 5,200 workers and was selling its shares on the New York Stock Exchange.

Hap Barnes, who had been joined at the executive level by his cousin Wallace (Wally), was satisfied with Associated's performance by the early 1960s. But he also realized that it was time for a change, mostly because the company had become overly dependent on the automotive industry. To reduce the dependency, he decided that the organization should diversify into distribution, which was more closely tied to the countercyclical replacement and overhaul market. To that end, Associated purchased Bowman Products Company in 1964, giving it an instant and significant stature as a distributor of repair and replacement parts. Several acquisitions followed during the mid- and late 1960s, but Bowman proved to be among the most successful. By 1968 Associated was doing $100 million in sales annually, and by the early 1970s was employing 6,000 workers in 41 locations in the United States and abroad. It was even listed on the London Stock Exchange.

Global Expansion in the 1970s and 1980s

During the 1970s Associated stepped up its global expansion efforts. It purchased major spring producers in England and Sweden in the early 1970s, for example, that added about 1,500 workers and more than $11 million in new sales to its portfolio. In the mid-1970s, moreover, Barnes bought companies in South America, Germany, and India. Because of the widened scope of the organization, its name was changed in 1976 from Associated Spring to Barnes Group Inc. One year later, Hap Barnes stepped aside as chief executive and handed the reigns to his cousin, Wally Barnes; Hap remained a senior officer at the company until 1989, his 41st year at Barnes. Wally oversaw the opening of a new $3 million international headquarters in downtown Bristol in 1979.

Under Wally Barnes's direction, Barnes Group continued to expand and acquire companies. In 1979, in fact, Barnes achieved record sales of $432 million, making that its eight consecutive annual rise in both sales and earnings. The sales figure placed Barnes on the Fortune 500 list for the first time. Although Barnes's growth was impressive to many, critics were concerned that the company had expanded too rapidly. Their concerns were confirmed in 1981, when net income plunged from $24 million to just $5 million. One year later that figure dipped to an embarrassing deficit of $5.5 million. Although a recession was partly to blame, Barnes executives realized that changes were needed. Barnes shuttered several poorly performing plants and divisions in 1983 and sold off several interests that no longer complemented its corporate goals. After showing a loss of $2.6 million in 1983, Barnes enjoyed a profit recovery in 1984 as net income increased to $15.7 million.

Barnes continued to make acquisitions and expand certain operations, particularly those related to aerospace, in the mid- and late 1980s. But it also sustained a concerted effort to cut costs, focus on customer service, and jettison badly performing businesses. It sold a major portion of its distribution business, for example, and got completely out of the steelmaking industry. The end result of restructuring was steady sales growth and healthy profits during most of the 1980s. Revenues increased from about $420 million in 1984 to about $545 million in 1990, while net income hovered between about $13 million and $18 million. Wally Barnes announced his retirement as chief executive in 1990, to become effective in 1991, leaving leadership of the company to someone outside of the Barnes family.

Turbulence in the 1990s

Barnes Group Inc. was hurt by the global economic downturn of the early 1990s. Sales slipped to about $500 million by 1993, and Barnes was forced to post a loss in 1992 as a result of restructuring charges and accounting changes. Barnes stepped up cost-cutting efforts during the period and closed some operations, among other reactions to the downturn. Total Barnes employment fell from about 4,500 to 4,200 during the period. In 1994, however, Barnes rebounded and managed to record its highest profit since 1980. After a few years of turbulence in the executive ranks, Barnes's board named Theodore E. Martin president and chief executive in 1995. Martin had served stints with several manufacturers before joining Barnes in 1990.

Going into the mid-1990s, Barnes was still a global leader in the spring business, which had been its mainstay for most of its history. Its Associated Spring division, which operated 11 plants in five countries and served a wide range of industries, was accounting for roughly half of corporate revenues in 1995 and the large majority of profit. Through its Bowman division, Barnes was also a top distributor of repair and maintenance parts. Bowman was contributing about 40 percent of sales and about one-third of corporate income. Meanwhile, Barnes's aerospace division was a leading producer of titanium and precision parts for jet engines, and also provided jet-engine refurbishing services. That struggling division lost money during the defense industry downturn in the early 1990s, but was rapidly improving going into the mid-1990s.

Acquisitions Path in the Late 1990s

Edmund M. Carpenter, formerly head of General Signal Corporation, became Barnes Group's president and CEO in 1998. He promptly set the company on an acquisition path. Cleveland area-based Nitrogen Gas Products, the nitrogen gas spring operation of Teledyne Fluid Systems, was acquired in August 1999.

Curtis Industries, Inc., a nearby Mayfield Heights, Ohio-based distributor of MRO (maintenance, repair and operating) supplies, was bought in May 2000 and combined with Bowman Distribution to form Barnes Distribution. Curtis had sales of more than $80 million a year. Curtis CEO A. Keith Drewett was picked to head the combined business.

The Bowman Distribution and Curtis Industries brand names remained in place, as did the Mechanic's Choice, a line Curtis had acquired from Avnet in 1996. According to Industrial Distribution, Curtis was stronger in automotive markets, while Bowman catered to the aerospace and railroad industries.

Two units were acquired from Aviation Sales Company and added to Barnes Aerospace in September 2000. Kratz-Wilde Machine Company and Apex Manufacturing Inc. produced precision machined components for the aerospace industry. The deal was worth $41 million and boosted Barnes Group's involvement with the booming regional jet industry.

Barnes's three businesses had net sales of $740 million in 2000, up 19 percent from the previous year. Net income rose 25 percent to $35.7 million. Associated Spring was the largest division, with sales of $327 million. Barnes Aerospace did $135 million worth of business, while Barnes Distribution contributed $291 million to revenues. Each was profitable.

Still Expanding After 2000

England's Euro Stock Springs & Components Ltd. was acquired in 2001, as was Forward Industries of Michigan. Euro Stock, a distributor of springs, had fewer than 20 employees. Nearly all of the manufacturing assets of Seeger-Orbis GmbH & Co. OHG, a retaining ring manufacturer in Germany, were acquired in February 2002.

Spectrum Plastics Molding Resources Inc. of Connecticut was also added a month later. The Spectrum buy brought metal-in-plastic and plastic-on-metal parts to the Associated Spring product line. Spectrum employed 120 people and had sales of about $17 million a year.

Des Plaines, Illinois-based MRO supplies distributor Kar Products was also acquired in 2002 for $78.5 million. It had sales of $122 million that year and employed a sales force of 600 people. As the Waterbury Republican-American noted, the deal brought Barnes 40,000 new customers throughout the United States.

By 2003 the acquisition drive had raised the number of employees to 6,100 at 60 sites around the world. Barnes had also trimmed some of its operations during this time, shutting down a spring plant in Dallas that had employed 100 people. The Aerospace Division had its workforce cut by 20 percent, or 260 employees.

Such cost-cutting helped boost Barnes Group's profits 42 percent to $27.2 million in 2002, even as sales fell at the aerospace and distribution units. Total sales were $784 million. Net income rose 22 percent in 2003 to $33 million. Sales, up 14 percent, reached a record $890.8 million during the year.

Things were rolling particularly smoothly at Barnes Group's joint venture with NKH Spring Co., Ltd. Formed in 1986, NASCO NHK-Associated Spring Suspension Components Inc. produced automotive springs at a plant in Bowling Green, Kentucky. It was investing $18 million to expand the facility to keep up with the SUV craze. The plant, which employed more than people, also supplied Honda and Toyota sedans.

The acquisitions continued in 2004. In September, Barnes bought Troy, Michigan-based DE-STA-CO Manufacturing from Dover Corp. for $17 million. DE-STA-CO designed and produced reed valves for air conditioning compressors and shock disks for automotive ride control systems at plants in Michigan, Thailand, and the United Kingdom. It had sales of about $28 million a year.

Principal Subsidiaries: Associated Spring-Asia PTE. LTD. (Singapore); Associated Spring do Brasil Ltda. (Brazil); Associated Spring Mexico, S.A.; Associated Spring (Tianjin) Company, Limited (China); Barnes Financing Delaware LLC; Barnes Group (Bermuda) Limited; Barnes Group Canada Corp.; Barnes Group (Delaware) LLC; Barnes Group France S.A.; Barnes Group Finance Company (Bermuda) Limited; Barnes Group Finance Company (Delaware); Barnes Group (Germany) GmbH; Barnes Group Holding B.V. (Netherlands); Barnes Group Spain SRL; Barnes Group Trading Ltd. (Bermuda); Barnes Group (U.K.) Limited; Barnes Sweden Holding Company AB; Euro Stock Springs & Components Limited (U.K.); Kar Products, LLC; Raymond Distribution (Ireland) Limited; Raymond Distribution-Mexico, S.A. de C.V.; Ressorts SPEC, SARL (France); Seeger-Orbis GmbH & Co. OHG (Germany); Spectrum Plastics Molding Resources, Inc.; Stromsholmen AB (Sweden); The Wallace Barnes Company; Windsor Airmotive Asia PTE. LTD. (Singapore); 3031786 Nova Scotia Company (Canada); 3032350 Nova Scotia Limited (Canada).

Principal Operating Units: Associated Spring; Barnes Aerospace; Barnes Distribution.

Principal Competitors: Harbour Group Industries, Inc.; Howmet Castings; W.W. Grainger, Inc.

Barnes Group Inc. History

Company Perspectives:

Key Dates:

Company History:

Further Reading:

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