Thermo King Corporation History

Address:

314 West 90th Street
Minneapolis, Minnesota 55420
U.S.A.

Telephone: (612) 887-2200
Fax: (612) 887-2615

Wholly Owned Subsidiary of Westinghouse Electric Corporation
Incorporated: 1938 as U. S. Thermo Control Company
Employees: 4,200
Sales: $877 million
SICs: 3585 Refrigeration & Heating Equipment; 3433 Heating Equipment Except Electric & Warm Air Furnaces

Company History:

Thermo King Corporation, a technological leader in mobile temperature control, revolutionized the eating habits of the world. Truck and trailers fitted with Thermo-King self-powered refrigeration units cooled meats, poultry, fruits, and vegetables and permitted consumers to begin enjoying fresh food grown beyond their immediate vicinities. From 13 plants, Thermo King manufactures mobile temperature control equipment for trucks, trailers, and seagoing containers, as well as air conditioning equipment for buses and rail cars. The company also maintains an extensive distribution and service network, developed during the first years of production. A profitable company for parent Westinghouse, Thermo King had a record setting year in 1994: revenue grew 22 percent to $877 million and operating profit rose 19 percent to $130 million.

The Minnesota-based company began with a collaboration between entrepreneur Joseph Numero and self-taught engineer Frederick McKinley Jones. Having found early success in real estate, manufacturing, and finance, Numero had the means to retire by the time he was 25 years old. Instead, he studied law at the University of Minnesota. Although he passed the bar exam and was eligible to practice law, he was not able to graduate, since he was still a few credit hours short of the undergraduate degree requirements. This problem, however, paled in comparison to another event; in 1929 the stock market crashed, wiping Numero out financially.

During the Great Depression, one of the few industries that thrived was the motion picture business, and an old school friend of Numero's got him interested in the business possibilities of "talkie" motion pictures. The motion picture sound industry's two major manufacturers at the time were Western Electric and RCA, which leased, rather than sold, their equipment to theater owners. Determining that he could produce less expensive equipment of a higher quality, Numero founded Ultraphone Sound Systems Inc. to develop, manufacture, and sell motion picture sound equipment. Specifically, Numero sought to replace earlier sound systems, consisting of phonograph turntables and loud speakers, with a better, sound-on-film system. And he needed a technical expert to facilitate the shift from sound-on-record to the electronic-sound-track equipment.

Frederick McKinley Jones provided that expertise and much more. Jones, the son of an Irish father and African American mother, was on his own at an early age. By the time he was 16 years old he was foreman in an automobile repair shop in Cincinnati, across the Ohio River from Covington, Kentucky, where he was born. He was passionate about race cars and designed and built them for his boss, until a dispute arose over whether or not Jones, a black man, should be allowed to attend the races in which his cars were running.

Quitting his job, Jones left Cincinnati and traveled, working at a series of repair jobs. One of those jobs led Jones to a farm in Hallock, Minnesota, where he was put in charge of maintaining all equipment at the 300,000-acre farm. He next went to work at a garage and farm implement shop, where he again began building and this time racing dirt track cars. Since he was living in the snow belt, he also experimented with early snowmobile design. During World War I, Jones served as a mechanic and electrician in France, returning to Hallock in 1919. Although he had only a few years of formal education, he had a broad range of interests and gained expertise by watching others, asking questions, reading books and magazines, and by practice.

It was motion pictures that led Jones to the next phase of his life, a 30-year business relationship and friendship with Joseph Numero. The Hallock movie house, like many other small theaters, had difficulty making the expensive switch over from silent films to "talkies." While working as a projectionist there, Jones volunteered to build a version of a sound-movie machine. Using such materials as disks from a plow and a leather machine belt to drive them, he pieced together a sound-on-record projection system for the Grand Theater. When the industry upgraded to sound-on-film, Jones again went to work and ground a glass towel rod into the lens needed to produce the sound. The system he created rivaled the quality of those that commercial manufacturers were leasing to movie houses. Word of the homemade sound system Jones fabricated reached Minneapolis, and when Joseph Numero heard how well it worked he sent a letter to the Hallock theater asking the maker to come to Minneapolis.

When Jones arrived at Ultraphone Sound Systems Inc. in 1930, he again encountered the racism so prevalent in the United States at the time, as he was immediately informed that there were no janitorial jobs available at the company. Nevertheless, Jones produced the letter Numero had sent to the Hallock theater, and was eventually introduced to the other engineers. Soon after going to work for Ultraphone, Jones was appointed chief engineer.

The sound-on-film systems Jones developed were sold throughout the Midwest, including Chicago. However, the company experienced intense competition from Westinghouse and RCA, and was also plagued with a six-year patent infringement lawsuit filed by Western Electric and American Telephone & Telegraph that was eventually settled out of court. In the meantime, in order to offset such challenges, Ultraphone sought to introduce other industry-related products such as ticket dispensing machines. Also during this time Jones became interested in designing air conditioning systems. According to one anecdote, he was inspired one summer evening while sitting in his car by a lake; he had to roll up the windows to keep mosquitos out and, of course, the car became unbearably warm with the windows shut. Jones did develop such a system but had difficulty persuading Numero that his automobile air conditioner would sell.

Then, in 1938, Numero found himself in a friendly golf course wager that changed the direction of the company. Upon hearing that one of his golf foursome had lost a truck load of poultry to the heat, Numero prodded another of the four, an air conditioning man, to create a reliable cooling system for the transport company. Experiments with transport air conditioning previously had met with limited success due to the damage caused by the vibration of the trucks and the lack of an independent power source. Numero said, in jest, that if the air conditioning expert could not come up with something, then he would. Numero's trucking friend took him seriously. What had begun as a joke resulted in a transport refrigeration business.

In a 1949 Saturday Evening Post article, Steven M. Spencer noted that Jones was "largely responsible for the gasoline-powered automatic refrigerators that now keep thousands of tons of food fresh on long hauls from farm to packing house to consumer." Options for keeping perishable goods cool over a long distance haul in the 1930s were limited to old-fashioned ice and salt methods or to electric refrigeration units which required layovers at power sources. However, Jones applied his knowledge of race car shock proofing and automobile air conditioning to the transport refrigeration project. The result was a 2,200-pound apparatus mounted under a trailer. A fourcylinder, gasoline-powered engine drove the compressor and a starter-generator-flywheel combination controlled the engine and the expansion thermostat. That first model cost $30,000 to build and was sold for $1,500. Following test runs Jones pared the weight down by 400 pounds, and the transport company bought several more of the refrigeration units. Numero sold Ultraphone to RCA along with the patents on the electronic-sound-track equipment and the ticket dispensing machine, borrowed $10,000 on his life insurance, and formed the U. S. Thermo Control Company.

Since the early product--first called the Thermotrol and soon renamed Thermo-King--tended to collect dirt and mud from the road and was also susceptible to excessive heat and damage from road debris, Jones soon returned to the drawing board. He redesigned the unit, mounting it on the upper front of the trailer where it was cooled by the truck's motion through the air. The gas engine, compressor, and condenser were mounted on the outside of a truck, while the evaporation coils were placed inside the truck's trailer. The new model weighed 950 pounds thanks to the light weight aluminum compressor; the use of the porous alloy was considered unwise by some who believed the refrigerant would leak from the compressor.

The world was skeptical about this new form of transport refrigeration. In 1988 Numero told Irene Clepper of Air Conditioning, Heating and Refrigeration News, "The saying about the world beating a path to your door if you invent a better mousetrap--don't believe it. You have to sell the idea. I can't think of any invention that didn't have its trial and tribulations in reaching the market. We certainly had ours." In order to get the product on the road, Numero made a deal with Armour, a meat packing company. He agreed to install, without charge, refrigeration units in two of their trucks and guaranteed to reimburse them for any loses due to equipment failure. The experiment succeeded and Armour ordered eight more units; however, Thermo Control's first real breakthrough came during World War II.

The entry of the United States into World War II precipitated the shutdown of plants not necessary for the war effort. Numero considered re-enlisting in the military and even went to Washington D.C. to offer his services. While he was there he followed up a lead on a military refrigeration contract; as a result, Numero did not join the service but began to manufacture refrigeration units for the Army. Jones's light weight, portable refrigeration units performed so well in the field they became designated equipment for all the armed forces. Variations of the Thermo-King units were used all over Europe and Africa, as well as in the South Pacific, cooling everything from drinking water to blood plasma. Military personnel in field hospitals, repair shops, and transport trucks were made more comfortable, and cockpits and engine nacelles of B-29s were also cooled by Thermo's Control systems. Thermo Control sales to the military during the war topped $10 million.

After World War II, Jones and U.S. Thermo Control Co. developed refrigerated containers that could be moved from one kind of transportation to another, from train to ship to truck. Myron Green, who founded the company along with Numero, pioneered a nationwide service and distributorship system. (Green would later serve as company president from 1963 to 1975.) In 1948 the company established a training school for refrigeration mechanics. By 1949 sales climbed toward $4 million, the company employed 200 people, and more than 5,000 trucks and trailers on roadways in North and South America, Europe, and in the Middle East carried Thermo-King refrigeration units.

The ability to keep food fresh or frozen in transport propelled the growth of the frozen food and supermarket industries beginning in the 1950s. Thermo King grew along with these industries: plants in Minneapolis and St. Paul employed about 450 persons during peak production times. In 1956 the company needed more space and purchased a 90,000-square-foot plant in Bloomington, Minnesota. In the mid-1950s the company took the name of its successful product and was renamed Thermo King Corporation. By 1960, Thermo King had net earnings of $1.5 million.

The 1960s ushered in a new era for the privately held company. In February of that year, engineering genius Fred Jones died. And soon thereafter Numero sold Thermo King to Westinghouse Electric Corporation for approximately $35 million. Numero continued as company president until 1963 and then served as honorary chairman, when Myron Green, who had been serving as executive vice-president, was named to the presidency.

But with the progress of 1950s and the 1960s also came some troubling times. Labor strikes were called against the company in 1958, 1960, 1963, and 1966; each strike lasted longer than the one before it. Another dark period for the company occurred in 1966 when an airplane crash in Japan killed three top company officials and 35 key dealers on a Far Eastern tour.

Despite its problems Thermo King continued to grow and thrive. By the late 1970s Thermo King had plants in Georgia, Puerto Rico, Belgium, and Brazil. Cooling and heating products powered by diesel, gasoline, propane, and electricity were used in more than 60 countries in trucks, shipboard containers, fishing vessels, railway cars, warehouses, and cargo planes.

Thermo King annual sales had climbed to the $300-$400 million range by the late 1980s. About 2,700 persons were employed worldwide and plants had been added in the Dominican Republic, Ireland, and Spain. The main office in Bloomington included a manufacturing plant, an engineering test facility, a parts distribution center, and a training school for transport refrigeration engineers. Jim Jones noted in a 1987 Star Tribune article: "The company has outlasted such one-time giants in mechanical refrigeration as Frigidaire and International Harvester." The company that Numero had founded was a multimillion-dollar business when he died in 1991.

James F. Watson Jr., appointed president of Thermo King in 1993, continued the international focus of the company. That year Thermo King had nearly half the Japanese market in transport refrigeration. In the next year dealer networks in Eastern Europe and Asia increased by 36 percent. The international emphasis appeared to be working: sales of products and services and operating profit increased each year during the period from 1992 to 1994.

Indeed, Thermo King was a bright spot for parent Westinghouse. The conglomerate had lost billions due to its troubled financial services unit and slow down in the environmental clean-up sector. As part of Chairman Michael H. Jordan's efforts to turn Westinghouse around, layoffs and divestitures ensued; however, Westinghouse retained a few main businesses including Thermo King. While Westinghouse reduced its debt from $9.9 billion in 1991 to $3 billion in 1995, Thermo King began cost cutting measures of its own and expected to save $16.5 million in 1995 and $27 million in 1996 with its new purchasing program.

The refrigeration industry itself faced dramatic changes in the 1990s, particularly in the face of environmental concerns. Specifically, chlorofluorocarbons (CFCs) and halons, commonly used in the refrigeration industry, were found to be depleting the earth's ozone layer. The Montreal Protocol, a global agreement to ban CFCs, was signed in 1987, and the U.S. deadline for the production phase-out of CFCs was set for December 31, 1995. Options left for users of refrigerants included: recycling CFCs, rebuilding equipment for use with ozone-friendly refrigerants, and developing new types of products. In 1994, Thermo King completed development of components and refrigeration units using ozone-friendly chemicals.

As Thermo King headed toward the 21st century, it faced yet another potentially dramatic change. In August 1995, Westinghouse announced its agreement to buy CBS Inc., the well-known broadcasting company, for $81 a share, or $5.4 billion. According to a Wall Street Journal article during this time, Westinghouse was "expected to put its Thermo-King refrigeration-equipment business up for sale, which could bring as much as $1 billion to help fund the [CBS] purchase." Regardless, it appeared that Thermo King would continue to look to the global marketplace, along with competitors Carrier Transicold Corporation and Mitsubishi Heavy Industries, as the source of the majority of its new revenues in the future.

Thermo King Corporation History

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