Robbins & Myers Inc. History

Address:

1400 Kettering Tower
Dayton, Ohio 45423
U.S.A.

Telephone: (513) 222-2610
Fax: (513) 225-3355

Public Company
Incorporated: 1889 as The Robbins & Myers Co.
Employees: 2,230
Operating Revenues: $121.65 million (1994)
Stock Exchanges: NASDAQ
SICs: 3561 Pumps & Pumping Equipment; 3577 Computer Peripheral Equipment, Not Elsewhere Classified

Company History:

With operations in North and South America, Europe and Asia, Robbins & Myers Inc. (commonly known as R&M) is a leading manufacturer of fluid control devices, or industrial pumps and pumping equipment. The company underwent a significant overhaul of its operations in the early 1990s, shedding its electric motor and other businesses in order to focus on the industrial pump business that it had first entered in the mid-1930s. Augmented by an unprecedented era of acquisition, R&M's annual sales volume nearly quadrupled to over $300 million by 1995. At that time, Pfaudler glass-lined vessels contributed 42 percent of annual sales, Moyno pumps--Robbins & Myers's core fluid process business--brought in 36 percent of sales, and Chemineer and Prochem industrial mixers generated about 22 percent of revenues. R&M's Pfaudler and Moyno products led their respective markets, while Chemineer ranked a distant number two to its top competitor.

The company was originally established in 1878 by Chandler Robbins and James Myers in Springfield, Ohio, near Dayton. The founders brought varied experiences to the business. Robbins had worked as an astronomer and surveyor, while Myers had been a teacher and grocer. Robbins had invested $500 in a gray-iron foundry in 1876, and was joined two years later by Myers. The new owners changed the company name from Lever Wringer Company to The Robbins & Myers Company. The company namesakes initially manufactured castings for agricultural tools and machines, then broadened into bicycle parts when that industry boomed at the turn of the century.

The late Nineteenth-century development of direct-current generators freed electric motors from the big, heavy batteries to which they had been bound and opened up a new universe of electric appliances. Robbins & Myers entered this burgeoning new market in 1897, when the company began manufacturing electric desk, ceiling, oscillating and ventilating fans. Over the course of its history, Robbins & Myers developed into a full-line producer of electric fans, and later acquired the well-known Hunter brand of overhead fans.

The company concurrently developed and began production of a series of small (under 15 horsepower) motors known in the industry as fractional motors. These motors were widely applied in household appliances like sewing machines, vacuums, washing machines, and refrigerators in the early Twentieth century.

Robbins & Myers quickly earned a reputation for precision engineering and manufacturing that won it contracts with several important inventors. For example, R&M's motor generator sets helped Guglielmo Marconi take the wireless telegraph from concept to commercial feasibility. In 1910 Charles Kettering called on Robbins & Myers to help him design and manufacture a very efficient armature for his revolutionary DELCO (Dayton Engineering Laboratories Company) automobile starter motor. R&M went to produce starters for both General Motors and Ford Motor Company throughout the 1910s and 1920s.

In fact, Henry Ford's development of mass production techniques indirectly influenced R&M's expansion into a new market in the late 1920s. That's when the company began manufacturing labor-saving electric hoists, winches and cranes that quickly and efficiently moved goods down the assembly line.

While Robbins & Myers had manufactured rotary and force pumps as well as air compressors since the 1910s, this business segment reached a critical turning point in the 1930s, when then-president Walter S. Quinlan met with Rene Joseph Louis Moineau. Moineau had devised and patented an innovative new concept in pumping technology called the "progressing cavity pump." This versatile device could be slanted in any way and would pump in either direction. It was durable enough to withstand such exacting functions as waste water treatment, pulp and paper production, and food and beverage processing. According to a 1978 centennial history of Robbins & Myers, Moineau's machine "revolutionized that portion of the pump industry wherever thick, viscous, abrasive and corrosive substances needed to be handled." R&M became one of the first companies to license the design, and in 1936 began producing the "Moyno" brand pump that would later become the core of its business.

But throughout the late 1930s and early 1940s, Robbins & Myers was involved in a more pressing project. In 1938 Carl Norden, inventor of the "Norden bombsight," asked R&M to build the motors used in these strategic devices. Since each sight required several motors, this sideline grew to consume 80 percent of R&M's production capacity by the end of World War II.

At war's end, Robbins & Myers resumed its traditionally diverse product line. With its standing in both motors and materials handling, R&M was well positioned to benefit from the postwar boom in consumer consumption. But in spite of continuously growing demand, the market for electric motors began to mature in the 1960s, plagued by the twin demons of intensifying competition and rapidly rising raw material costs. Imports from the United Kingdom and Japan exacerbated competitive pressures in the 1960s, during which time the unit rate of imports more than quintupled.

Inflation intensified the industry's difficulties in the early 1970s, and the dollar volume of shipments in the electric motor industry actually declined during this period. R&M reacted by reorganizing its operations into four autonomous, product-oriented divisions: electric motors, material handling devices, comfort conditioners (i.e. fans), and fluids handlers (i.e. pumps). By the end of the decade, Robbins & Myers annual sales volume had grown to about $90 million in accord with double-digit increases in the electric motor market overall.

The advent of the 1980s brought a new wave of inflation, retarded market growth, and intensified import competition that had a devastating effect on Robbins & Myers. The company recorded annual losses in four of the decade's first five years, a string of negatives that culminated in the departure of company President Fred Walls in 1986.

Walls was succeeded by an outsider, Daniel W. Duval, who had previously served as president and chief operating officer of Midland-Ross Corporation. The new CEO lead Robbins & Myers to its first profit in two years in 1987, in part by divesting unprofitable divisions. While the company's profitability continued to rebound in the late 1980s, its ability to generate cash made it more an acquisition target than an influential player in any of its historical businesses. Realizing that their company had become, to a certain degree, a "jack-of-all-trades and master of none," R&M's managers made a revolutionary proposal for reorganization of the company around its fast-growing fluids management division.

By the early 1990s, in fact, pumps and related equipment (known collectively as the fluids process controls) industry had grown into the second-most-common machine used in industry and a $40 billion worldwide market. (Electric motors, ironically, ranked as the most prevalent device.) R&M already had a foothold in the fluids management business. Its manufacture of Moyno pumps had broadened to include industrial pumps for the food and beverage, pulp and paper, pharmaceutical, chemical, and waste water treatment markets, as well as an entire line of pumps for oil and gas recovery. R&M divested its motion control and electric motor operations in 1991.

Building on the foundation laid by Moyno, the unprecedented era of acquisition that followed gave R&M capabilities in virtually every segment of the fluid control industry. The $125 million-plus in purchases from 1991 to 1995 built R&M into a full-line designer, manufacturer and servicer of fluid process equipment. The additions of Prochem in 1992, JWI in 1993, and Chemineer Limited in 1994 positioned R&M with the second-largest share of the worldwide industrial mixing and agitation market. These subsidiaries, which began to be merged in 1995, designed and manufactured mixing equipment for virtually all the industries already served by Moyno, from food manufacturing to waste water treatment and from chemicals to polymer makers. The acquisitions of Pfaudler, Inc., and Edlon, Inc., in 1994 gave R&M a leading position in the global market for glass-lined storage and reactor vessels. Pfaudler had pioneered the fusion of glass to steel to combine strength and durability while maintaining the integrity of the substances stored and/or combined in its containers. Purchased in 1995, Pharaoh Corp. and Cannon Process Equipment augmented this business. In all, acquisitions from 1991 to 1995 cost R&M over $125 million--more than double its 1988 sales of $53 million.

By 1995, Robbins & Myers's acquisitions was able to service virtually all the equipment needs of its target markets, from the pumps that moved the fluids, to the containers in which they were mixed, to the software that controlled the entire process, and more. The company's concentration on equipment for hard-wearing applications like oil fields, foods, and chemicals opened the door to a thriving (and recession-resistant) service and replacement parts business. In fact, replacement parts generated up to 50 percent of some divisions' sales. The acquisitions also expanded R&M's geographic reach into South America, continental Europe, Asia and the Far East. By 1995, international sales contributed more than 45 percent of annual revenues. And in 1995, R&M formed a strategic alliance with Universal Process equipment, a global distributor of reconditioned industrial equipment. Thus, while the company was focused on a single market, its diversification (in terms of product, target market, and geography) within that business was expected to shield it from economic cycles.

Robbins & Myers's strategy appeared to be succeeding by the mid-1990s. The parent company's annual sales volume nearly quadrupled during the first half of the decade, from $78.66 million in 1991 to $302.95 million in 1995. Debt also ballooned, from zero to more than $80 million by September 1994, but R&M immediately began to whittle that burden, reducing it to about $62 million by the end of fiscal 1995 (August 31). That December, the company announced an offering of over one million new shares, the proceeds of which would be used to further reduce debt. Growing pains (and an accounting change) resulted in a loss of $1.84 million in 1993, but annual profits more than doubled from $5.01 million in 1991 to $13.12 million by 1995. In 1995 analysts Wertheim Schroder & Co., Inc., forecast that Robbins & Myers "should outperform the market" through 1997.

Principal Subsidiaries: Robbins & Myers Canada, Ltd.; Robbins & Myers Ltd. (England); Robbins & Myers International Sales Company, Inc.; Robbins & Myers NRO Ltd. (Canada); R & M Environmental Strategies, Inc.; Chemineer, Inc.; Chemineer Ltd. (England); Edlon Inc.; Pfaudler, Inc.; Pfaudler Equipamentos Industrias Ltda. (Brazil); Chemical Reactor Services Ltd.; Pfaudler-Werke GmbH (Germany); Pfaudler Balfour Holdings, Ltd.; Pfaudler S.A. de C.V. (Mexico); Pfaudler Balfour Ltd.

Robbins & Myers Inc. History

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