Ha-Lo Industries, Inc. History

Address:

5980 Touhy Avenue
Niles, Illinois 60714
U.S.A.

Telephone: (847) 647-2300
Fax: (847) 647-5999

Public Company
Incorporated: 1972
Employees: 4,000
Sales: $589.6 million (1998)
Stock Exchanges: New York
Ticker Symbol: HMK
SICs: 7389 Business Services, Not Elsewhere Classified

Company Perspectives:

The arena for any company's product or service is extremely competitive. A favorable position in the mind of your customer or prospect is a never ending challenge. At Ha-Lo, we understand the communications clutter in today's market place. We also believe that promotional products can play an important role in making a lasting impression with your customers and prospects as well as your employees.

Company History:

The largest marketer and distributor of promotional products in the United States, Ha-Lo Industries, Inc. offers more than 300,000 promotional giveaway products to a lengthy list of customers--more than 30,000 in total--that includes many of the elite Fortune 500 corporations. One of the fastest-growing companies in the country, Ha-Lo recorded prodigious growth during the 1990s by acquiring dozens of competitors in domestic and international markets. By the end of the 1990s, the company's marketing and promotional capabilities included promotion marketing through UPSHOT, brand identity and packaging through LAGA, telemarketing through Market USA, and sports-related promotions through Ha-Lo Sports. In addition to the services provided through its subsidiaries, Ha-Lo provided corporate event planning and communication and design services. Logo-emblazoned coffee mugs, apparel, watches, and scores of other items represented Ha-Lo's mainstay business. Clients included Ford Motor Company, General Electric, General Mills, IBM, and Siemens.

Origins

Lou Weisbach was 23 years old when he struck out on his own as an entrepreneur. A former high school basketball coach in Chicago, Weisbach made his start by borrowing $3,500 from his mother for the capital to launch his own business, Ha-Lo Industries, named after himself and his brother Hal. With the money he received from his mother, Weisbach began selling calendars to butcher shops and beauty shops--the type of promotional calendars imprinted with the name of the particular shop. His choice of business was far from glamorous, and not an occupation expected to produce a multimillionaire. The $3,500 he started with in 1972 blossomed into a $500 million business during the ensuing three decades.

Weisbach's arena of achievement--known variously as the promotional products or corporate premium business--had roots stretching back to the late 19th century, when corporate giveaways first appeared. The first to use such promotional items were small-town newspapers and print shops, whose business owners, in an effort to generate new business, printed the name of their enterprise on virtually anything that would accept ink. Customers received horse blankets, buggy whips, playing cards, flyswatters, and a host of other inexpensive goods that were the predecessors to the logo-emblazoned pens, coffee mugs, and baseball caps prevalent a century later. In the decades following their inception, promotional giveaway items appeared in various shapes, sizes, and types, each bearing the name of the business they were intended to promote. Initially, the promotional gifts were made by the shop owners and business operators themselves, but gradually companies began to emerge whose sole occupation was to produce such items for other businesses. One of the first great successes registered by this new breed of business competitor was a St. Paul, Minnesota, company named Brown & Bigelow. During the 1940s and 1950s, Brown & Bigelow created calendar giveaway promotions for John Deere, Ford, and Pillsbury, whose corporate banners were imprinted alongside the artistic work of Norman Rockwell and Maxfield Parrish. In their day, the calendars were as well known as the most frequently aired television commercials of the late 20th century.

Although Brown & Bigelow's calendars enjoyed national distribution, the corporate premium industry contained few companies that operated on a national basis. Instead, the industry was a collection of small companies with a local or regional focus. This characteristic of the industry&mdash highly fragmented, without an upper tier of national leaders&mdash-dured as the corporate premium business grew during the latter half of the 20th century.

1992 Conversion to Public Ownership

The industry did not begin to consolidate or produce a dominant national leader until Weisbach took aim at becoming the biggest and best competitor in the corporate giveaway sector. Before Weisbach began earnestly pursuing this objective, Ha-Lo was similar to the thousands of other distributors of promotional products in the nation: relatively small and operating within a limited territory. Weisbach began devoting resources toward national expansion 20 years after he started the company, making a late but propitiously timed bid toward dominance. The U.S. promotional products industry was a $4.9 billion-a-year business in 1989, according to Promotional Products Association International. During the ensuing seven years, distributors' sales shot upward, more than doubling to $9.5 billion. Midway through this prolific growth spurt, Weisbach launched his expansion campaign, touched off by a 1992 initial public offering (IPO) of stock. The IPO raised $7.9 million, giving Weisbach the resources to fund an acquisition campaign and achieve geographic expansion by swallowing up other firms.

Aside from aggressively acquiring companies, Ha-Lo's progress during the 1990s was aided by another aspect of Weisbach's strategy: an emphasis on innovation. Ha-Lo distinguished itself by developing new types of giveaway items. Instead of relying on ubiquitous coffee mugs and pens, the company piqued its customers' interest by imprinting corporate banners on a vast and ever-changing selection of items. Ha-Lo distributed logo-engraved wine bottles, disposable cameras that printed a company's name on each photo, and, in one special case, the company sold 250 logo-bearing condoms to the Cook County Public Defenders Office. Ha-Lo also catered to the particular needs of individual clients, developing promotional items designed for specific corporate events and giveaways unique to an industry. For the movie theater chain Cineplex Odeon, Ha-Lo created ceramic vases shaped like popcorn bags. When the food conglomerate Kraft Foods wanted to call attention to its new packaging for Parmesan cheese, Ha-Lo developed heat-sensitive coffee mugs whose designs changed from the old label to the new label after the introduction of hot coffee. With these innovative products and the more traditional items such as paperweights, luggage tags, and apparel, Ha-Lo was a comprehensive supplier to businesses both large and small. Once Weisbach began expanding his operations and extending his geographic reach through acquisitions, the company's sales began to mushroom.

Following the 1992 IPO, Weisbach wasted little time in his acquisitive pursuits. There were 12,000 distributors in the corporate premium business at the time of Ha-Lo's stock market debut, providing a wealth of acquisition candidates from which to choose. Between 1992 and 1996, Weisbach acquired 11 competitors, as well as advertising agency Duncan & Hill, and had diversified in two important directions. In 1995, the company broadened its promotional capabilities by forming Ha-Lo Sports. The subsidiary was created to provide promotional items for sports teams, including endorsements and vendor programs. The following year, Weisbach acquired Market USA, which moved Ha-Lo into telemarketing, giving the company operations that served the United States and Canada. This initial acquisition spree had a significant effect on Ha-Lo's stature, executed at a time when the corporate premium industry ranked as the fastest-growing segment in the advertising business. By the end of 1996, Ha-Lo's annual sales had swelled to $255 million, but Weisbach was just beginning his assault on competitors. During the late 1990s, Weisbach moved steadfastly forward, causing an industrywide trend toward consolidation that would distance Ha-Lo from all rivals.

Late 1990s Acquisitions

As a medium, corporate giveaways generated more revenue annually than outdoor billboard advertising and not much less than magazine advertising generated. It was big business, but still highly fragmented, with approximately 15,000 distributors in existence during the late 1990s. Weisbach, pursuing a greater share of the nearly $10 billion worth of business available, was intent on reducing the number of distributors in the industry through his own acquisitive efforts. He embarked on his second round of acquisitions in 1997, quickly outpacing his record of expansion between 1992 and 1996.

In January 1997, Ha-Lo completed the acquisition of Creative Concepts in Advertising, a Beverly Hills, Michigan, specialty advertising products company with annual sales of $100 million. Creative Concepts ranked as the third largest distributor in the industry, with large corporate clients in the United States, Canada, and, importantly, Europe. One month later, Weisbach signed an exclusive agreement with Champion Products Inc., a leading brand in sports apparel, that gave Ha-Lo the exclusive rights to sell branded Champion apparel to the corporate promotional market, marking the first time an apparel brand with mass appeal became available for corporate promotional purposes. In April, Weisbach picked up a corporate premium distributor in Detroit, Bradley Marketing Group, with $9.7 million in annual sales and large corporate clients such as the United Auto Workers, Audi, and Ford. Next, Weisbach strengthened Ha-Lo's presence in New York, acquiring a 45-year-old promotional products distributor named Lees/Keystone, Inc. With annual revenues of $10 million, Lees/Keystone added clients such as IBM, Weight Watchers International, and MasterCard International to Ha-Lo's growing roster of more than 15,000 customers. After entering an exclusive agreement with Roots Canada--the largest Canadian manufacturer and retailer of apparel and fabric goods--that was similar to the deal struck with Champion, Weisbach acquired a nine-year-old company named The Corporate Choice/Red Sail Merchandising, Inc. in July 1997. The acquisition added offices in San Francisco, Chicago, and northern New Jersey, bolstering Ha-Lo's presence in the New York market and adding an estimated $14 million in annual sales.

A brief respite followed the acquisition of The Corporate Choice/Red Sail Merchandising, offering an opportunity to reflect on the company's prodigious growth. During this lull in acquisitive activity, Fortune Magazine selected Ha-Lo as one of the country's 100 fastest-growing companies, crediting the company's "hard charging sales culture," and concluding that Ha-Lo "rules what is now the second-biggest part of the ad industry." Weisbach remarked that the recognition provided "an additional incentive to pursue our successful strategies for growth," and quickly made good on his words, acquiring $15-million-in-sales Joking, Spa. in September 1997. Joking, one of Italy's largest promotional products companies, added large European clients such as American Express Europe, Fiat, and Motorola; offices in Florence, Buenos Aires, and Mexico City; and furthered the international expansion inaugurated by the acquisition of Creative Concepts earlier in the year. By the end of the year, the frenetic activity had led to record financial results. Net income in 1997 increased 68 percent to $13.9 million and sales rose 20 percent, reaching $413.8 million.

In 1998, Weisbach continued to push forward on the acquisition front, as he spearheaded a drive to push Ha-Lo past the half-billion sales mark. In February, the company purchased R&T Specialty, Inc., a promotional products company based in Peoria, Illinois. Ha-Lo's next purchase was an Illinois-based company as well, the country's third highest-rated promotion marketing agency, Chicago-based UPSHOT. With annual revenues of $35 million, UPSHOT offered a diverse range of marketing services, including strategic and creative planning, promotion, merchandising, promotional advertising, retail planning, and event marketing. The company, described as a creative boutique agency, boasted an enviable list of clients such as The Coca-Cola Company, Sony Electronics, Anheuser-Busch, and Proctor & Gamble Cosmetics--the Fortune 500 corporations that Ha-Lo thrived on. The acquisition of UPSHOT was followed by the August 1998 purchase of Lipson Alport Glass & Associates (LAGA), the largest independent brand identity and package design firm in the United States. The acquisition, which added $21 million in revenues, broadened the scope of Ha-Lo's marketing services, increasing its ability to meet the diverse marketing and promotion needs of its clientele. In December 1998, Weisbach completed his next acquisition, purchasing New York City-based Siebel Marketing Group. A privately owned promotion marketing agency with $25 million in annual sales, Siebel was organized as part of UPSHOT following its acquisition by Ha-Lo and renamed UPSHOT, NY.

Early 1999 saw Ha-Lo continue the trend it had established during the previous six years. The company acquired Parsons International Trading Business, one of Europe's largest corporate premium companies. Based in Paris, Parsons maintained sales offices in Holland and Italy and generated revenues in excess of $40 million. In February 1999, the company completed its acquisition of Idea Man, Inc., one of California's leading promotional products companies and one of three acquisitions announced by the company in late 1998. Ha-Lo also had agreed to acquire Premier Promotions and Marketing, Inc., which developed and implemented specific consumer-oriented promotions for major global corporations, and Smith Advertising Specialties, Inc., a promotional products company based near Harrisburg, Pennsylvania. As Ha-Lo prepared for the 21st century, the company was expected to continue acquiring competitors both domestically and internationally. With annual sales reaching $589 million in 1998, it was evident that Weisbach's strategy of purchasing small competitors by the handful was reaping lucrative financial rewards.

Principal Subsidiaries: Creadis Group, Inc. (Canada); Creative Concepts in Advertising, Inc.; Fletcher, Barnhardt & White; Flow Plastics, Inc.; HMK International Holdings, Inc. (Netherlands); HA-LO Sports, Inc.; Joking, Spa. (Italy); Lees Keystone, Inc.; Market USA, Inc.; Marusa Marketing, Ltd. (Canada); Wolff Marketing Group, Inc.

Ha-Lo Industries, Inc. History

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