Bou-Matic History

Address:

1919 South Stoughton Road
Madison, Wisconsin 53716-2259
U.S.A.

Telephone: (608) 222-3484
Fax: (608) 222-9314

Private Company
Incorporated: 1939
Employees: 380
Sales: $91.2 million (2002 est.)
NAIC: 333111 Farm Machinery and Equipment Manufacturing

Company Perspectives:

From its humble beginnings to the industry leader it is today, Bou-Matic has held true to a set of fundamental, yet significant beliefs. Beliefs in: A concern for the health of the animal. A dedication to scientific research. A regard for milk producer profitability.

Key Dates:

1939:: Lawrence Bouma establishes Bou-Matic Milkers, Inc. in Ontario, California.
1956:: Bou-Matic operates from a new location in Ontario and distributes equipment via its Bouma Distributor Agency.
1961:: Bou-Matic is acquired by Madison, Wisconsin-based Dairy Equipment Company and relocates to Madison.
1969:: Bou-Matic becomes a subsidiary of the newly-formed holding company DEC International, Inc.
1997:: Annual sales reach some $80 million, 60 percent of which derives from outside the United States.
2001:: Bou-Matic parent DEC International files for Chapter 11 reorganization.
2002:: DEC sells Bou-Matic to Houston businessman John P. Kotts for $32 million.

Company History:

Headquartered in Madison, Wisconsin, Bou-Matic is a leading dairy equipment manufacturer that serves both domestic and international markets. The company's products include automated milking systems, bulk cooling tanks, integrated computerized management systems, and more.

Origins

Bou-Matic's history can be traced to 1939, when Lawrence Bouma established Bou-Matic Milkers, Inc. in Ontario, California. The new enterprise manufactured a line of milking machines for the dairy industry. According to the company, "the Bou-Matic milking system was scientifically designed for efficient milking while at the same time being gentle to the cow."

Bou-Matic quickly established a good reputation within the dairy industry. By 1956, the company operated from a location at 1126 West Mission Boulevard in Ontario, distributing equipment via its Bouma Distributor Agency. Bou-Matic continued operations from the site on Mission Boulevard until 1959, when it relocated to 12375 Euclid Avenue.

Bou-Matic's next move was significantly further afield. In 1961, the company was acquired by Madison, Wisconsin-based Dairy Equipment Company. As part of the acquisition, Bou-Matic relocated its manufacturing operations to Madison. A Clintonville, Wisconsin, veterinarian named John C. Dahl, who would later become Bou-Matic's president, played a significant role in Dairy Equipment's acquisition of the small California firm. After learning about Bou-Matic Milkers at a seminar, Dahl became friends with founder Lawrence Bouma. Also during this time, he also served as a consultant to the Dairy Equipment Company. As columnist John Oncken explained in the April 25, 2002, issue of the Capital Times, Dahl's "interest and research into the new milking system was a major influence in the purchase of Bou-Matic Milkers." In addition, the Bou-Matic system was a complement to Dairy Equipment's existing Kari-Kool and Dari-Kool product lines. Dairy Equipment started to market Bou-Matic's equipment throughout the United States in 1962, and the solid reputation Bou-Matic had enjoyed in California spread accordingly.

Bou-Matic and the Dairy Equipment Company had similar histories. In addition to being in the same industry, both firms were founded in the late 1930s. Dairy Equipment was the brainchild of Gilmon F. Albrecht, a law graduate from the University of Wisconsin-Madison who worked for the James Manufacturing Company in Fort Atkinson, Wisconsin, before deciding to start his own company in 1938. His enterprise, a wholesale and retail distributorship, achieved rapid growth early on. The company expanded to serve customers in 11 states by 1947, at which time it was incorporated.

Albrecht was a true industry pioneer. As the Bou-Matic Web site noted: "Albrecht saw many problems and inefficiencies in the can system being used for handling milk at the time. Can-type milk coolers required the dairy farmer to lift a full can of milk over the sides of the cooler to place it inside the refrigerated compartment--a backbreaking job for even the strongest individual. Dairy Equipment Company designed a cooler with an open front so the milk can could be slid inside. This open-front can cooler was well received and the Dari-Kool line of milk cooling equipment was born." Albrecht proceeded to develop Dari-Kool bulk milk coolers in 1951, which made the use of milk cans unnecessary.

Following its acquisition of Bou-Matic, Dairy Equipment continued to grow and succeed. In 1969, it reorganized and formed a holding company called DEC International, Inc. Following the restructuring, Bou-Matic became a DEC International subsidiary.

New Directions in the 1970s

By 1970, the manufacture of Bou-Matic Milkers had been moved to the Truax Plant--a 60,000-square-foot airplane hanger leased from the City of Madison for ten years. In addition to Bou-Matic Milkers, Dari-Kool milk coolers also were manufactured in the plant. DEC obtained the new plant because of strong growth within its special products division, which made custom fabricated stainless steel products for a number of different industries. In 1971, John C. Dahl became Bou-Matic's president, a position he would retain until 1983.

In addition to Bou-Matic and the flagship Dairy Equipment Company, by the early 1980s DEC International had grown to include a number of other different enterprises, including Alkar; Berg Company; Bowman Dairy; Damrow Company; and Falls Dairy Company. Falls Dairy, which was at the time among the nation's largest producers of bulk cheese, accounted for approximately half of DEC's 1982 sales, which totaled $250 million.

By the early 1980s, technological advancements within the dairy sector had changed the industry significantly. DEC's Bou-Matic arm was at the forefront of producing computerized equipment that made farmer's lives easier and their operations more efficient. In the November 27, 1983, issue of the Wisconsin State Journal, columnist Joe Beck described the latest milking devices on the market, some of which used microprocessors to determine when a cow was finished milking and automatically detach from her udders. Beck explained: "Some of the newest systems now include computerized equipment that automatically checks, records and analyzes milk production. The computers record information on the production of each cow as it is milked and list cows in the herd in order of average individual production. A deviation report identified cows that have dropped below their average production. Eight other reports available from the new systems keep track of information, such as each cow's reproductive status, and summarize the day's total herd production."

Bou-Matic had evolved into a truly international business by the mid-1990s. By that time, the company attributed some 40 percent of its sales to international customers, a percentage that was expected to increase. As of late 1994, Bou-Matic had divisions in several different countries including Australia, England, France, Israel, Japan, and Saudi Arabia. At that time, the company was also pursuing markets in Korea and Taiwan.

Dairy cooperatives in Argentina represented an especially lucrative market for Bou-Matic, due to demand for the company's refrigerated milk tanks, which held anywhere from 600 to 2,000 gallons of milk and sold from $8,000-$17,000 apiece. Projections indicated that Bou-Matic would sell some 400 of its coolers to Argentina in 1995. Other South American countries, including Brazil, Chile, and Uruguay, also represented promising markets.

Despite its relatively strong international presence, Bou-Matic followed what some observers considered a conservative international expansion plan. As columnist Anita Weler explained in the December 29, 1994, issue of the Capital Times, the "company adds no more than three or four countries a year to its market base, in order to properly train distributors in installation, service and use of equipment."

By the late 1990s, Paul Thompson was serving as Bou-Matic's president. The company had made remarkable progress since the 1970s, benefiting from roughly 20 years of 10-percent annual sales increases. Sales were roughly $80 million in 1997, about 60 percent of which came from outside the United States. These revenues accounted for more than half of DEC International's sales, which were reported at $150 million that year.

By 1998, Bou-Matic employed 400 workers and held more than 200 patents related to dairy technology. This number continued to increase as Bou-Matic developed more high-tech products that helped farmers do their jobs more quickly and efficiently. One example was an electronic identification collar that transmitted such data as milking time and milk weight to the dairy manager's computer, where it could be stored in a database.

Another product developed during the late 1990s was actually a new attempt at something the dairy industry had tried during the 1920s, and again in the 1970s. In 1998 Bou-Matic was preparing to reintroduce rotary milking parlors, which involve cows lining up on a moving carousel for milking. Ranging in price from roughly $200,000 to more than $1 million, the best rotary parlors gave one or two technicians the ability to milk as many as 500 cows per hour.

Innovation at Bou-Matic continued into the 2000s. In mid-2000 the company was working in cooperation with a European firm to introduce robotic milking equipment to U.S. dairy farmers, once government regulations were met. Columnist Rick Barrett explained how the high-tech equipment worked in the July 29, 2000, issue of the Wisconsin State Journal: "With the equipment, cows will be able to milk themselves. The high-tech bovine, wearing a computer chip in her collar for identification, approaches a milking machine several times a day. A robot equipped with laser sensors preps the cow for milking by disinfecting her teats, and then does the milking--all in a few minutes." According to Barrett, one robot was capable of milking some 65 cows per day.

New product introductions continued during 2001. That year, Bou-Matic began distributing HydraFeed, a milk substitute produced by HYPRED/A&L Laboratories that was used to remedy dehydrated young calves. The company also introduced its Flo-Star Supreme Claw, a durable plastic milking unit intended for use in large dairy operations.

Headed by President Robert Kmoch, by the early 2000s Bou-Matic was widely recognized as an industry leader. In the April 25, 2002, issue of the Capital Times, columnist John Oncken referred to the firm as "one of the 'big three' in terms of manufacturing and marketing of milking systems and bulk tanks to dairy farmers."

However, at the same time, Bou-Matic parent DEC International was in trouble, having filed for Chapter 11 reorganization in August 2001. Within the industry, many observers predicted that DEC would shed several of its 16 companies and retain Bou-Matic.

New Beginnings: 2002 and Beyond

Instead of rebuilding around Bou-Matic, DEC sold the company to Houston businessman John P. Kotts and his Madison One Holdings company for $32 million in 2002. According to The Daily Deal, after receiving the green light from Chief Judge Robert D. Martin of the U.S. Bankruptcy Court for the Western District of Wisconsin, Kotts paid $22 million in cash for Bou-Matic, along with a promissory note to cover the $10 million balance.

In Oncken's April 25, 2002, Capital Times article, DEC International Chairman Randal Albrecht, grandson of founder Gilmon F. Albrecht, commented on the circumstances that prompted the company's demise, explaining: "Mad cow disease in Europe brought the dairy business to a standstill. A currency devaluation and energy crisis brought the Brazil economy to a stop, and a period of very low milk prices in the U.S. in 2000 slowed dairy expansion. And a slowing economy hurt many of our subsidiaries. Banks get nervous when business slows down and debt mounts. Even though we never missed a payment, the bank pulled the plug. It's a terrible financial blow for our family."

Kotts, who brought in a financial officer to address the company's challenges, was new to the dairy industry. His previous experience--as both an investor and business owner--was largely tied to the oil industry, especially in the Gulf of Mexico region. Following his purchase of Bou-Matic, Kotts became the company's chairman and CEO. According to various news accounts, Kotts bought the company because he was impressed with its products, employees, structure, market position, and potential for growth.

Bou-Matic continued introducing new products after Kotts took the helm, including software that dairy farmers could use to monitor herds via hand-held computers. In August 2003, Bou-Matic began marketing pulsation-monitoring equipment for dairy farmers under the brand name Pulse-O-Rater. According to Feedstuffs, the new equipment was "engineered to monitor dairy pulsation equipment around-the-clock and detect changes or malfunctions in pulsation systems." Under new leadership, Bou-Matic remained positioned for success. Despite challenging conditions that led to the demise of its once venerable parent company, the future appeared to be a bright one.

Principal Competitors: WestfaliaSurge, Inc.

Bou-Matic History

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