Bird Corporation

1812–1995

Bird Corporation (Bird), which began its third century of business in 1995, is best known for making asphalt roofing shingles and vinyl siding, popular items in the American construction market. After expanding into window fabrication and environmental services, Bird refocused itself in the mid-1990s and sold these operations. Its remaining business unit was devoted totally to the production of commercial and residential asphalt and roll roofing materials, which were marketed through independent wholesalers and retail building materials outlets. Bird's main geographic market was the northeastern United States; its base of operations remained near the site of its original paper plant in Massachusetts.

Early History

In 1995 Bird celebrated its 200th anniversary, proudly announcing that it was one of the ten oldest existing companies in the United States. The company opened for business during George Washington's second term as president, when George Bird obtained a license to build waterwheels on the Charles River in Needham and Dover (only a few miles from Boston) and set up a small paper mill. At first production was limited to five reams of handmade paper per day. However, by 1812 Bird had established his reputation as a maker of quality paper, and his company was chosen to produce the rag paper on which currency for the new nation was printed. Bird opened a second plant on the Neponset River in East Walpole, Massachusetts, in 1817. Bird's son, Francis, joined the company in 1833 and the business continued to expand steadily, aided by the introduction of new products made with newly developed machinery.

The late 1800s brought great changes for the growing company. When Charles Sumner Bird graduated from Harvard and joined the company in 1877, the company took the name "Bird and Son," which it would keep for the next 100 years. Charles Bird remained the guiding force at the company for the next 50 years. An eccentric character filled with energy and enthusiasm, he would spend half of his day dressed in overalls and working in the mill, and the other half in his starched shirt learning the details of running the business. He also spent many evenings at home, performing experiments in his kitchen.

These experiments proved a lifesaver when the main Bird mill was destroyed by a terrible fire in 1880, closely followed by the worst flood in Massachusetts history. The only equipment still usable could produce only coarse paper, rather than the fine writing paper on which Bird's reputation had been built. Charles Bird retreated to his kitchen table, and within months three new Bird products were on the market. "Neponset Black Waterproof Building Paper" was a tarred paper that quickly became popular for building New England barns. "Neponset Red Rope Roofing Paper" and "Neponset Paroid Roofing Paper" soon followed. In one of the original American recycling activities, Bird salvaged wood resins and discarded rope from ships in the Boston harbor to produce these papers.

As a result, the company emerged from this crisis even stronger than before as it celebrated the beginning of its second century. Having been driven by disaster to manufacture the first felt-based asphalt roofing product on the market, Bird then made this product a mainstay of the company. Asphalt shingles as introduced in 1895 remained virtually unchanged and in widespread use for almost a century. The company also began to expand outside of the rural areas of New England into the Midwest, South, and Canada, and to market more new products, such as corrugated boxes.

The joint venture to fabricate vinyl replacement windows, just formed the previous year, was blamed for the bulk of 1993's $28 million in losses.

1900–1980

A new plant was built in East Walpole in 1904 for production of roofing materials and served as the company's headquarters for more than 75 years. A highlight of the building was a machine invented by Charles Bird himself to heat and dry rag material more quickly. Bird also imported a German papermaking screen and began to manufacture it at his plant, giving birth to the now-defunct Bird Industrial Group.

Along with the technological innovations he instituted during his half century in charge of the family business, Charles Bird was also a pioneer in the area of employee relations. Between 1900 and 1925, Bird became one of the first American companies to offer an eight-hour workday (as opposed to the standard twelve-hour day of that time), an employee suggestion box, an employee credit union, paid employee vacations, and a benefit association to provide income for sick or disabled employees.

Prosperity and a Rude Awakening in the 1930s-1970s

The great guiding figure of the company, Charles Sumner Bird, ended his fifty years of management in 1927 on the brink of the Great Depression in which his creative approach to crisis would have been welcome. Nevertheless, the company managed to stay financially sound through the 1930s, even acquiring several faltering companies along the way. When World War II began, Bird once again was flexible enough to adapt its roofing and paper technology and create new products. It began to manufacture shell casings and waterproof shipping cartons for sale to the government. Following World War II, Bird was buoyed by the postwar housing boom and continued to expand its line of building materials. In 1964, it introduced a new product at the New York World's Fair: vinyl siding. This product quickly became extremely popular and Bird earned record profits year after year into the 1970s.

However, the economic expansion of the previous thirty years came to a crashing halt with one unforeseen event: the Arab oil embargo of the mid-1970s. Suddenly the price of asphalt--the essential ingredient of Bird's shingle production--rose dramatically, and soon afterward the national housing boom stopped short. As the decade ended, Bird had to report that it earned no profit in 1980, an occurrence unheard of in its 186-year history. To add to its difficulties, Bird also began to face competition from foreign manufacturers, and the first of 550 asbestos-related liability cases was filed against it.

In order to survive, Bird had to reexamine its entire approach to business. It was time to move from production that was so dependent on asphalt and felt-based products. At the same time, the plant built in 1904 had become outdated, as had much of the machinery in general use by the roofing industry.

1983–1994

Back to Basics in the 1980s

As it entered the 1980s, Bird experimented with a number of new business operations and invested $15 million in a state-of-the-art computerized facility, designed to produce shingles with refinements such as fiberglass matting and improved coatings. In the Bird tradition, the plant was built around an existing facility near the site of the original paper mill. But, at the same time, the company changed its name from "Bird and Son" to "Bird Inc." in 1983 to show it had become a modernized company.

New operations included an environmental services company based in Texas and vinyl building products and window fabrication manufacturing based in Kentucky. Initially these operations were promising, with the environmental services business quadrupling between 1989 and 1992. Bird was chosen to clean up a dumping area behind a Texas refinery and Bird celebrated in 1990 by once again changing its name, this time to its current name, Bird Corporation.

However, Bird entered the 1990s with serious financial difficulties brewing. Although its sales continued to grow, its earnings dropped each year, from $5.18 million in 1991 to the company's low point, a net loss of over $28 million in 1993. George Haufler, CEO at the time, sold peripheral operations such as Bird's municipal sludge disposal business in order to focus on more promising operations such as the industrial resource recovery business. However, Haufler was forced to step aside in late 1993 after he was diagnosed with lung cancer. Joseph Vecchiolla, who had joined Bird earlier that year as vice-president and chief financial officer, was named president and chief operating officer. With a background in finance and operations management, Vecchiolla had been brought into the company in a conscious strategy of succession planning.

Vecchiolla inherited the company's management just as the worst financial year in Bird's history was almost over. The joint venture to fabricate vinyl replacement windows, just formed the previous year, was blamed for the bulk of 1993's $28 million in losses. Bird was forced to enter into a $65 million refinancing agreement and the company was restructured to concentrate on its housing products operations.

In 1994 Bird began to jettison major operations in order to regain its financial footing. It sold its distribution businesses (located in New England, New York, Kentucky, Texas, Louisiana, and Arizona) to Cameron Ashley Inc., allowing it to pay off $23 million of its debt. The company ended 1994 with a net loss of $3.68 million, a major improvement over the previous year.

1992–1996

In March of 1995 Bird sold its vinyl building products manufacturing operation (including the ill-fated vinyl replacement window venture) to Jannock, Inc. for $47.5 million, again using the sale proceeds to reduce its debt. That November, Bird also sold all of its holdings in its Texas hydrocarbon waste recycling center, effecting its total withdrawal from the environmental services industry. Nevertheless, Bird still sustained a net loss for 1995, slightly over $12 million.

As a result of these divestitures, Bird's manufacturing operations were reduced to one primary unit by the end of 1995: the Housing Group, which manufactured and sold asphalt roofing products from the home base in Norwell, Massachusetts. Facilities at this location included a roofing manufacturing facility, a granule plant, a quarry, an asphalt plant, and a private landfill. Vecchiolla retained a position as chairman of the board of directors, and Richard Maloof, former president of the Roofing Division, began to serve as president and chief operating officer in May 1995.

Bird's board of directors soon decided the best course of action would be for the company to merge with another corporation and it entered into an agreement to be acquired by CertainTeed Corporation, another manufacturer of roofing materials and a subsidiary of the French company, Saint-Gobain Corporation (Compagnie de Saint Gobain). Vecchiolla explained the reasoning behind the merger: "Bird has enjoyed a rich and innovative history since its founding over 200 years ago. However, during the past year it became apparent that greater progress could be made if Bird became part of a larger, financially strong organization with similar goals and philosophies." It was hoped that the merger would strengthen Bird's remaining core operations.

The announcement of the planned merger in March 1996 set an unexpected chain of events in motion. Bird was one of three companies which already controlled over half of the national market for asphalt shingles. The U.S. Justice Department viewed the planned merger as having potential anti-competitive results and immediately launched an investigation of the industry's leading companies, including Bird. By May 1996 CertainTeed had terminated its agreement with Bird. No reason was given by CertainTeed for dropping the $50 million transaction, but a spokeswoman implied that the investigation "could have influenced the decision," according to the Wall Street Journal. Bird's stock value fell 32 percent as soon as the termination was announced. Shortly afterward, the Justice Department dropped the investigation without taking action against anyone in the roofing industry. However, the merger with CertainTeed was not revived.

Surprisingly, Bird weathered this rather chaotic episode by reporting its first profitable year since 1992 with net earnings of $2.3 million in 1996. Bird's management was encouraged by the return to profitability in 1996 and believed that the company had completed its financial and operational turnaround and reemerged with a strong position in the industry.