Thermadyne Holding Corporation History

Address:

101 South Hanley Road, Suite 300
Clayton, Missouri 63105
U.S.A.

Telephone: (314) 721-5573
Fax: (314) 721-4822

Public Company
Incorporated: 1987
Employees: 3,005
Sales: $439.74 million (1996)
Stock Exchanges: NASDAQ
SICs: 3548 Welding Apparatus; 3549 Metalworking Machinery, Not Elsewhere Classified; 6719 Holding Companies, Not Elsewhere Classified

Company Perspectives:

"Our mission is as follows: Implementing a strategy of steady growth through the development of new products, international expansion, penetration into related markets, manufacturing improvements, and strategic acquisitions."

Company History:

Thermadyne Holding Corporation is one of the world's largest suppliers of welding, cutting, and welding safety products. Thermadyne was founded in 1987 by James N. Mills when his company, Mills and Partners, acquired the Pacific Lumber Co. (Palco Industries). The core units of Thermadyne, including Victor Equipment Co., Stoody Co., Tweco Products, and Thermal Dynamics, date back as far as 1913. Each unit offers a different component to the welding industry and contributes a significant portion of the holding company's overall revenues. These units are marketed as brand names and separate divisions, and actually have a higher visibility than the holding company.

Victor Equipment Co.

The oldest portion of Thermadyne is the Victor Equipment Co. It was founded in San Francisco in 1913 by L.W. Stettner after he suffered a serious injury. A welder by trade, Stettner lost an eye during a welding accident, and following recovery, he was determined to design safer welding equipment and accessories.

Stettner was associated with Fred W. Clifford, owner of the Great Western Welding and Cutting Company. At this shop, Stettner began experimenting with many different equipment designs. His designs for welding equipment, cutting torches, and regulators were quickly adopted within the industry, and the welding shop soon became a manufacturer of welding equipment.

Under the name Victor Oxy-Acetylene Welding Equipment Company, Stettner became a leader in innovations and patent awards. These "firsts" included gooseneck nozzles, safety regulators, spiral mixers, water-cooled torches, bent cutting tips, and multiple-flame heating nozzles.

In 1928, the firm's name was shortened to Victor Welding Equipment Company. Two years later, it merged with Kimball Krogh Pump Company, which was founded in 1864, and the new name was shortened further to the Victor Equipment Co., a name still used into the 1990s.

By the 1960s, expansion was necessary, and the company moved its manufacturing from San Francisco to Denton, Texas. In Denton, the company experienced considerable growth, requiring additional plant expansions, fueled in part by the acquisition of Wingaersheck, originators of the Turbotorch air-fuel product line. A second Texas facility was built in Abilene, and the Turbotorch product was moved there. The Turbotorch line continued to be marketed to the public in the 1990s. Victor Equipment Co. was acquired by Palco Industries in the early 1980s, which was later purchased by Thermadyne.

The Stoody Co.

It never hurts to be in the right place at the right time, and that certainly was the case with the Stoody Co. This segment of Thermadyne had its origins in Whittier, California. In 1921, brothers Winston F. and Shelley M. Stoody opened up the Stoody Welding Co. to service the growing farm implement and tractor repair business. Right after opening their storefront, oil was discovered in nearby Santa Fe Springs, and soon a whole new business was born: repairing drill bits from the oil rigs.

But the Stoody brothers were not content to merely repair busted bits. They were convinced there could be a way to make the drill bits more durable, and to stay sharper longer. From their experiments begun in 1922, they developed a technique, called hardfacing, that would stay with the industry for many decades. Hardfacing is the overlaying of metal with a coating of abrasion-resistant alloys via a welding process. This overlay greatly extends the life of the equipment.

Winston and Shelley began applying hardfacing to drill bits, at first called the "Stoody Rod," then later the "Stoody Self-Hardening." They developed the first chromium-manganese alloy for this process. Two years later, they introduced the "Stoodite," a cast welding rod that would become the industry standard for the next 40 years. Their next breakthrough came in 1927, when they perfected the use of borium, a tungsten-carbide material that became one of the hardest commodities ever used.

With its success in alloy innovations, the Stoody Co. continued to pursue other metal combinations. During the 1930s and 1940s, the company expanded its product line of metal coatings to a wide variety of industries. In 1946, Stoody developed the industry's first application for submerged arc processing for hardfacing various types of equipment parts. By the 1950s, the company had a large line of long-wearing castings that had gained wide acceptance. In 1979, Stoody was acquired by Palco Industries, and six years later, Palco sold it to Polaris, a large metallurgical company. In 1988, Thermadyne acquired the Stoody Co.

Tweco Co.

Another key component of Thermadyne is the Tweco product line. Tweco stands for Townsend Welding Equipment Co., and was started in the basement of Ray Townsend, of Wichita, Kansas, in 1936. Townsend was known for his innovation called the "Redhead Ground Clamp," which was inspired by his belief that better ground connections would result in stronger, longer-lasting welds.

The next year, Townsend officially shortened the company name to Tweco, and launched a national advertising campaign. Growth came quickly for Townsend, as he moved his company out of his basement to its first storefront in 1938, and within a year, he bought some land and built his first factory, which he occupied in 1940.

World War II provided a boon for Tweco, as the demand for ships, tanks and armaments necessitated a huge supply of arc welding products. The product line included both metallic and carbon electrode holders (the part of the welding equipment held by the operator when welding.) He introduced "quick connect" type cable connectors. Truly, his advertising slogan captured the essence of his business: "If it goes on the end of a welding cable, Tweco makes it."

Prosperity continued following the war, and in 1950, he moved to a new manufacturing facility in Wichita. Although Tweco had always been an innovator, no inventions were more important than two introduced in the late 1960s. Tweco showed off its new MIG gun, a process using metal inert gas and electrodes for a faster weld, at the 1969 American Welding Society show. The firm also introduced a patented coaxial product called "Cablehoz." This innovation combined the power cable, control wires, and gas hose into a single cable. With these two new products, Tweco was propelled to the top as a leader in the industry. The company's growth spiraled, and soon it built its present-day facilities covering 188,000 square feet on a 21-acre tract in Wichita. The company has since sold more than 2,000,000 MIG guns, as well as cable, welding holders and other accessories. In 1981, Tweco was acquired by Palco Industries, which was purchased by Thermadyne in 1987.

Thermal Dynamics

Thermadyne is a leader in the area of plasma cutting and plasma welding, and its strength comes from its Thermal Dynamics unit. Plasma cutting is a method of using ionized-heated gas to cut materials, which is hotter and faster than the traditional usage of oxy-fuel technology.

Thermal Dynamics was started by two professors, James Browning and Merle Thorpe, from the Thayer School of Engineering at Dartmouth College in Hanover, New Hampshire. The two men developed the plasma torch in 1957 after experimenting with a high-temperature electric-arc torch. They started their business in a garage in Wilder, Vermont.

By 1960, sales of plasma cutting equipment had reached $1 million, and Browning and Thorpe moved the company to a plant in Lebanon, New Hampshire. The company became involved with NASA's Mercury space program, building systems that were used to simulate re-entry conditions. The firm continued its association with NASA through other early space programs.

Browning was founder and chairman of the company through 1968, when he sold his interest. Bradley Dewey Jr. then became chairman and CEO, and guided the company through its continued development of plasma cutting techniques. Dewey experienced catastrophe shortly after the purchase, as a huge fire destroyed the plant. Scrambling to keep the company together, he operated out of an abandoned automobile dealership in Vermont until the company could build a new plant in West Lebanon, New Hampshire, where it continued to produce equipment into the 1990s.

Dewey felt the market would eagerly support smaller equipment, and he began to focus research efforts in that direction. The move paid off, as in 1970, the company introduced the PAK 40, a 400-amp cutting system. Downsizing units seemed to be popular, so two years later, Thermal Dynamics introduced the PAK 20, a low-amp unit that was considered very affordable, and five years later brought out the PAK 10, the first plasma cutting unit that did not require a water-cooled torch.

These innovations made the company a popular purchasing target, and in 1977, it was acquired by Palco Industries. After Thermadyne acquired Palco in 1987, the company continued its trend toward smaller, more affordable plasma cutting units. In the early 1990s, Thermal Dynamics created a revolutionary product called the Stak Pak, the industry's first modular plasma cutting system.

Thermadyne's Formation

Although Thermadyne Holding Corporation has a relatively short history, it does not lack in the areas of growth and acquisition. Thermadyne started as a privately held company, with the expressed purpose of targeting other industrial companies for acquisition through leveraged buyouts (LBOs). When Mills and Partners purchased the Pacific Lumber Company, Palco owned Victor Equipment Co., Tweco Products, Thermal Dynamics, and Coyne Cylinder. The latter company was divested in 1996. Palco was changed to Thermadyne Industries Inc., and Thermadyne Holding Corporation was formed in 1989 to accommodate other diverse acquisitions.

In 1988, Thermadyne acquired the Stoody Co., which had become Stoody-Deloro Stellite through the acquisition of Deloro Stellite by its previous owner. In 1988, Thermadyne also acquired the Materials Applications Groups, known as MAG. From this, the company formed a unit called the "Wear Resistance Unit," which were divisions that produced alloys and coatings to help metal resist wear. As of the late 1980s, the holding company had three main components: 1) welding and cutting equipment; 2) wear resistance products; 3) floorcare products.

The floorcare products unit came about through the acquisition of Clarke Industries in 1986, one of James Mills' first acquisitions. This group manufactured floor buffers, waxers, sanders, and steam cleaners. Clarke Industries was divested in 1996.

Acquisition Campaign in the 1990s

The mid-1990s was a time of great change for Thermadyne. The large debt incurred through acquisitions plus high interest rates forced the company to briefly file for bankruptcy. It emerged several months later as a publicly held firm, trading on the NASDAQ stock exchange beginning in 1994. James Mills stayed active in the company for about another year after that date.

Acquisitions were plentiful in the mid-1990s, including: MECO, maker of gas regulators and other gas equipment; C & G Systems, makers of automated (computer-driven) cutting tables that move large units of metal on the tables to exact locations to be cut; Hard Metal Alloys, a hardfacing manufacturer whose products were merged into the Stoody line; CIGWELD, the top manufacturer in the Australian and the Pacific Rim market of general welding equipment and supplies; and GenSet, an Italian company started in 1974 to build low-power portable generators often used at construction sites.

Thermadyne's net sales reflected its many acquisitions. Revenues for 1992 and 1993, the last two years of its existence as a private company, were $243 million and $248 million, respectively. By 1995, net sales jumped to $316 million, and reached nearly $440 million in 1996.

New Focus for Thermadyne Holding Corp.

As the company entered the next century, it announced a new focus--one that is strictly on the welding market. To that end, it announced the divestiture of any companies that no longer fit directly in the welding market. The Deloro Stellite segment of Stoody-Deloro Stellite was put on the market since it was a metal coating unit, according to Randall E. Curran, the company's chairman, president and CEO. However, Thermadyne planned to keep the Stoody Co., which still manufactured hardfacing equipment and consumables, including welding alloys that mixed in with the weld to coat the metal materials. Thermadyne moved Stoody from its Californian roots to a new 180,000 square foot manufacturing facility in Bowling Green, Kentucky.

So the company that had three distinct operating units in 1989 trimmed itself down to just one--that being welding and cutting equipment. The various company names continued to be marketed as individual brand names, rather than under the Thermadyne umbrella, as they each had a rich history. When Mills formed Thermadyne, one of the principles was to always purchase a leader in a particular field. Each unit kept its leadership position, and therefore the individual company names continued to be extremely important.

As of 1997, the company "line-up" of businesses and brand names consisted of: Victor Equipment Co., oxy-fuel cutting equipment; Turbotorch, a unit of Victor Equipment Co., producing brazing and soldering materials; MECO, gas regulators; Thermal Dynamics, plasma cutting equipment; Thermal Arc, plasma welding equipment; Tweco, MIG and TIG (tungsten inert gas) welding guns, torches, and accessories; Arcair, a unit of Tweco, making air-carbon arc products, including systems widely used by fire and rescue personnel; Stoody Co., hardfacing equipment and consumables; CIGWELD, general welding and cutting supplies; C & G Systems, automated cutting tables; and GenSet, maker of generators.

As Thermadyne's focus was fixed solely on the welding market, it sought to expand its global position. The purchase of CIGWELD was prompted not only by its leadership position, but it opened the doors to the large Australian and Pacific Rim markets, as well as providing a foothold for entering China and other Asian countries. Focusing on a single market or industry has become the trend for many manufacturers in the 1990s, and Thermadyne Holding Corporation is positioned to hold on to its leadership role through its increasing global presence and marketing strength.

Principal Divisions: Victor Equipment Co.; Tweco; Stoody Co.; Thermal Dynamics; Thermal Arc; C & G Systems; CIGWELD; GenSet, MECO.

Thermadyne Holding Corporation History

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Company History:

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