National Presto Industries, Inc. History

Address:

3925 N. Hastings Way
Eau Claire, Wisconsin 54703
U.S.A.

Telephone: (715) 839-21210
Fax: (715) 839-2122

Public Company
Incorporated: 1929 as National Pressure Cooking Co.
Employees: 700
Sales: $128 million (1994)
Stock Exchanges: New York
SICs: 3634 Electrical Housewares and Fans

Company Perspectives:

It is the company's intention to continually provide innovative new products which meet the needs of today's changing lifestyles as well as a wide selection of basic appliances which reflect the image of quality long associated with the Presto name.

Company History:

National Presto Industries, Inc., based in Eau Claire, Wisconsin, is a leading manufacturer of small, electric kitchen appliances and pressure cookers. An aggressive advertiser, National Presto markets its products through national discount chain stores, including Wal-Mart and Kmart, which account for nearly 70 percent of sales. Although traded on the New York Stock Exchange, the company is essentially family owned; in the mid-1990s, the family of chairman Melvin Cohen controlled more than 45 percent of the stock. In 1994, the company had earnings of $21.5 million on sales of $128 million, and 1995 marked the 51st consecutive year the company paid a dividend to shareholders.

Early 20th-Century Origins

Best known since the 1970s for its innovative, sometimes quirky kitchen gadgets, National Presto can trace its history to the 1905 founding of the Northwestern Iron and Steel Works in Eau Claire, Wisconsin, as the Northwestern Iron and Steel Works for the production of cement mixers. By 1908, however, the company had settled into manufacturing 50-gallon retorts, or steam pressure cookers, for the canning industry. The company also made 30-gallon retorts for hotel use, and in 1915, installed an aluminum foundry for manufacturing ten-gallon pressure cookers for home use.

Two years later, the U.S. Department of Agriculture reported that using steam-pressure cookers was the safest way to eliminate the bacteria that cause botulism when canning low-acid foods, including meats and most kinds of vegetables. Business boomed for Northwestern Iron and Steel, whose pressure cookers, sold under the brand name of National, were already well known among home canners. In 1929, the company, which also manufactured a line of cast-aluminum cookware, further capitalized on its market niche by changing its name to the National Pressure Cooking Co. By 1930, annual net income had surpassed $1 million on revenues of more than $12 million.

Innovations in Pressure Cooking in the 1930s

By 1935, in the midst of the Great Depression, the National Pressure Cooking Co. was selling 60,000 pressure cookers annually, mostly for home canning by farm households. But these were still miniature versions of the complex, large-scale commercial retorts the company made. Then in the late 1930s, a company engineer, E.H. Wittenberg, developed an easier sealing mechanism with a rubber gasket clamped between upper and lower handles. Wittenberg's "home-ec seal" meant that pressure cookers, which provided the fastest as well as the safest method of preparing food, could be used for everyday cooking.

In 1939, the company also introduced the first saucepan-style pressure cooker for home use, which it marketed under the trade name "Presto." The demand for the new Presto cooker, which became virtually synonymous with pressure cooking, was so great that by 1940, despite a decade of economic depression in the United States, sales had doubled to $2 million.

Wartime Production Shake-Up

But in 1941, as the United States prepared to enter World War II, government restrictions on the use of aluminum in domestic products sharply curtailed production, and National Pressure Cooker, which had invested heavily to increase its manufacturing capacity, was forced to lay off most of its employees. Everett R. Hamilton, then president and majority owner of the company, managed to land a $3 million government contract to make artillery fuses, but Hamilton died of a heart attack in February 1942, before the conversion to defense work could be completed. An editorial in the Eau Claire Leader noted that Hamilton "had the satisfaction of knowing that it would be only a matter of months before employees laid off by priorities would be back on the job and that perhaps in the not too distant future the National Pressure Cooker company might be Eau Claire's most important industry."

However, despite the defense contract, by the summer of 1942, National Pressure Cooker was reportedly on the verge of bankruptcy and unable to meet its payroll. To save the company, Lewis E. Phillips, an Eau Claire businessman, together with his brother Jay, bought controlling interest in the company from Hamilton's widow. The brothers also owned Ed Phillips and Sons, a wholesale distributor of liquor, tobacco, and candy, with operations in Wisconsin and Minnesota. Lewis Phillips became president of National Pressure Cooker and ultimately managed to right the company by negotiating additional government defense contracts. In fact, National Pressure Cooker eventually received five Army and Navy E Awards for its contribution to the war effort, including about 500,000 "victory pressure canners" at the request of the Department of Agriculture.

Post-War Diversification

The company resumed production of cookware after the war, introducing a 16-quart canner and a four-quart Presto saucepan pressure cooker in 1945. The company also acquired the Century Metalcraft Association in Los Angeles, which gave it access to West Coast markets, and the Lakeside Aluminum Co. in Menomonie, Wisconsin.

In 1946, the National Pressure Cooker Co. also formed a subsidiary, the Martin Motors Division, to manufacture outboard motors developed by George W. Martin, a former professional outboard-racing champion. The Aluminator, National Pressure Cooker's company newspaper, touted Martin's innovative design, noting that "this type of motor once in use would give a great new thrill, and unlimited pleasure, to the vast throng of outdoor living people who find so much peace and relaxation on the many waterways of America." A year later, the company moved its outboard-motor operations and its research and development operations to a 348-acre, former government ordnance site near Eau Claire that it had purchased from the War Assets Administration for $350,000. The site became known as Presto, Wisconsin.

However, National Pressure Cooker faced stiff competition in the postwar leisure boating market from Outboard, Marine and Manufacturing, the Illinois-based company later known as the Outboard Marine Corporation, which made both the popular Johnson and Evinrude-brand outboard motors. In 1948, Outboard, Marine and Manufacturing introduced the first outboard motor with a separate fuel tank and a shift lever that allowed the operator to select forward, reverse, or neutral. Outdoor Marine also began manufacturing fiberglass motorboats that were sold through the same network of dealers and distributors that handled Evinrude and Johnson motors. In the early 1950s, National Pressure Cooker filed a complaint with the Federal Trade Commission alleging that Outboard, Marine and Manufacturing was pressuring dealers not to carry its Martin outboard motors. The company liquidated the Martin Motor Division in 1954, before the case was resolved.

In 1949, the company also introduced its first electric appliance, a steam iron with the Presto brand name that could use tap water instead of distilled water. By 1950, National Pressure Cooker had introduced the Presto Automatic Dixie-Fryer, a thermostat-controlled deep-fryer for home use that presaged many of the company's later innovations. In a "Talk of the Town" column in a November 1950 New Yorker magazine, company spokesman Russell Bloomberg remarked on the versatility of the deep-fryer: "The Fryer fills a much needed want for Mrs. Housewife. It does the same work as the expensive commercial kettle. It can take very mediocre leftovers, such as cold mash potatoes and chicken wings, and convert them into delicious croquettes. With it you can glorify corn-meal mush by frying it along with ten per-cent ground-up leftover cheese. Mrs. Housewife can use the fat over and over again, with no interchange of taste. I spent a month frying doughnuts in it eight hours a day, just to determine the absorption of fat. Its entertaining possibilities are endless. Suppose your husband, after a fishing trip, brings home a tiny trout. You can cook it with bread crumbs."

As the company began introducing more consumer products under the Presto brand name, including an automatic coffee maker, the stockholders voted at the 1953 annual meeting to change the corporate name to National Presto Industries, Inc.

Defense Contracts in the 1950s and 1960s

A few months after changing its name to emphasize its consumer products, National Presto announced that it had signed a multimillion dollar contract with the U.S. government to produce artillery shells. The company immediately began converting its Eau Claire manufacturing facilities, including the former ordnance plant purchased at the end of World War II, to defense work, and announced that its consumer-products division would move to Jackson, Mississippi, where a subsidiary, the Century Manufacturing Co., was building a new facility.

In 1955, National Presto expanded its defense work to include airplane components for the U.S. Air Force. At the time, the company employed about 2,000 defense workers in Eau Claire and about 650 consumer-products workers in Mississippi. In a press release, Phillips noted that the "new contract represents a diversification of our Eau Claire production, and if all concerned extend their full support, this new contract should aid not only in increasing local employment generally, but in stabilizing our employment at a higher level."

However, by 1958, the government had cut back sharply on orders for artillery shells, and employment at Presto in Eau Claire had fallen to about 500. Moreover, National Presto's remaining defense workers went out on strike for 60 days in the summer of 1958. When the strike ended, Phillips issued a warning: "The future of this company in Eau Claire and hence the security of our jobs here, is now almost wholly dependent upon defense contracts awarded by the U.S. Government. Our Government is rapidly moving toward a policy of granting or renewing contracts only where the supplying company has established and is maintaining a reputation for efficiency and quality in production, competitive prices, and above all, reliability and dependability as a supplier."

Phillips' concern was borne out a year later. In 1959, the Army Ordnance Corps abruptly cancelled its contract with National Presto for artillery shells. In a tersely worded statement, Phillips announced, "This cancellation is indeed an unfortunate turn of events for Presto and its manufacturing employees here at Eau Claire. With little or no notice, this Government decision has forced us completely out of the manufacturing business here in Eau Claire."

National Presto shut down its defense operations in Eau Claire in 1960 but contracted with the government to maintain the manufacturing equipment in a state of semi-readiness. The tide would soon turn again as the company resumed production of artillery shells in 1964, as U.S. ground troops were being sent to Vietnam, and between 1966 and 1975, National Presto produced more than 92 million 105-millimeter artillery shells. It also produced two million eight-inch artillery shells between 1967 and 1971. At the height of U.S. involvement in Southeast Asia, employment at the defense plant in Eau Claire reached 3,000, a figure that fell off dramatically after the United States withdrew from Vietnam in 1973. The defense plant was again closed in 1980, two years after Phillips' death, but the government continued to contract with National Presto to keep the plant on stand-by through the 1990s. Defense requirements were eventually ceased in 1993, and in the mid-1990s, the company was planning on how best to dispose of the special purpose manufacturing equipment.

Lewis Phillips served as company president until 1960 and chairperson until 1966. An important contributor to his community, he created the Presto Foundation and L.E. Phillips Charities, and upon his death in 1978 was memorialized in Eau Claire by the numerous educational and health-care facilities that bore his name.

Focus on Consumer Products

While the company's success in defense production through military contracts was erratic, the postwar economy was ripe for new consumer product introductions, as American housewives in particular were encouraged to purchase appliances that would make their lives easier. During the 1950s, Presto's consumer products division had introduced the first in a line of immersible electric cooking appliances. The cookware, including an electric skillet, griddle, and coffee maker, featured a removable "Master Control" heat unit, allowing the appliance to be washed safely in water. Over the next dozen years, National Presto also introduced popular models of toasters, egg cookers, hair dryers, and electric toothbrushes. A second manufacturing plant for consumer products was built in Alamogordo, New Mexico, in 1971.

In the mid-1970s, National Presto began introducing kitchen appliances designed for a changing American lifestyle, starting in 1974 with the PrestoBurger, an electric hamburger cooker that broiled a single patty of meat in less than three minutes. The PrestoBurger was followed by the electric Hot Dogger in 1975 and the Fry Baby, a single-serving, deep-fat fryer, in 1976. As Melvin S. Cohen, Lewis Phillips' son-in-law and then-chairman of the board, told Forbes in 1977, "we were the first in our industry to recognize a fundamental change in American society." Cohen referred to demographic changes, noting that "the Census Bureau says 51% of all U.S. households now consist of singles and doubles, not the traditional family group. They have informal, casual lifestyles and money to spend. Yet everybody designs appliances for that old, traditional 5.8-member family. Well, we started designing for singles and doubles."

The company continued to expand its product line. Cohen told the Wisconsin Business Journal in 1984: "Our life-blood is new products. And we must constantly be turning them out and developing new ones. We also recognize that to some extent they're in the nature of yo-yos--that they'll be faddish in nature, they'll enjoy a brief popularity and then virtually disappear from the scene, either by virtue of loss of consumer interest or because it is so widely copied it is no longer attractive." While National Presto was unable to guarantee that every one of its products would catch on with consumers--for example, an electric, vibrating hairbrush was a flop--it aggressively tried to defend its successes from copycat competition through patents and litigation.

Competition in the Late 1980s and 1990s

In 1988, National Presto introduced the SaladShooter, an electric slicer/shredder. Hamilton Beach Corp. and Black & Decker Corp. introduced similar products the same year, and National Presto, which had patented the mechanical features of its SaladShooter, filed suit against both competitors. Two years later, Hamilton Beach settled by agreeing to destroy its remaining inventory and withdrawing from the slicer/shredder market. In 1992, a federal district court jury found Black & Decker guilty of infringing on National Presto's patent and awarded the company $2.35 million in damages.

In 1991, National Presto introduced the Tater Twister potato peeler. The same year, the West Bend Co. introduced a similar product. The two companies sued each other, and again National Presto prevailed. In 1993, a federal jury found West Bend guilty of patent infringement and awarded National Presto $230,000 in damages. Indeed, National Presto was becoming a formidable name in the industry; also in 1993, the Dazey Corp. agreed to withdraw from the deep-fryer market after being sued by National Presto. In the company's 1994 annual report, management noted: "Hopefully, this Company's competitors are now convinced that it will not brook copying, and will aggressively seek injunctive and/or damages relief when infringements occur."

Despite costly involvements in litigation, increased competition from other manufacturers, the permanent closing of its defense operations, the negative effects of new inventory practices at such retailers as Kmart and Wal-Mart, and some criticism from shareholders, National Presto was experiencing improved sales and earnings as it moved into the mid-1990s. Consolidated net sales rose to $128 million in 1994, up from $118 million the year before, while consolidated net earnings reached $21 million, up from $18 million in 1993.

The company attributed its success largely to its product innovations. Research and development resulted in new versions of National Presto pressure cookers, griddles, and deep fryers, as well as new electric knives and sharpeners, coffee pots, and electric can openers. The company also experienced success with its line of popcorn poppers, including the Orville Redenbacher air popper and the Presto PowerPop microwave corn popper. In the 1990s, National Presto began aggressively introducing new products shortly before the Christmas shopping season, supporting such introductions with national television advertising campaigns. In 1994, for example, the company's "featured product" was the Presto PowerPop, and the company estimated its advertising reached 98 percent of all U.S. households an average of 36 times, making for about 3.3 billion "consumer impressions." With such efforts, the company might expect to garner a greater share of the American market for electric housewares in the 21st century and could assuredly be proud of its long history as an innovator in the industry.

Principal Subsidiaries: Presto Manufacturing Co.; Presto Products Manufacturing Inc.; Jackson Sales and Storage Co.; Canton Sales & Storage Co.; National Holding Investment Co.; National Defense Corp.

National Presto Industries, Inc. History

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