Blodgett Holdings, Inc.

1848–1997

Post-Civil War Years: Blodgett rebuilds his business, expanding his line with such new products as deck ovens and conveyor ovens.

1997: Maytag Corporation acquires Blodgett for $96.4 million in cash and assumes $53.2 million in debt; Maytag sets up Blodgett Holdings, Inc. as a holding company for G.S. Blodgett Corp.

Blodgett Holdings, Inc., through G.S. Blodgett Corporation and other subsidiaries, is one of the world's leading manufacturers of specialized commercial cooking equipment. The product lines of Blodgett and its affiliates include Blodgett convection ovens, conveyor ovens, and ranges; Blodgett Combi combination convection oven/steamers; MagiKitch'n charbroilers and grills; and Pitco fryers. With the help of its parent company, The Middleby Corporation, Blodgett sells its products in more than 100 countries worldwide.

Early History

The company was started by Gardner S. Blodgett, an ambitious and imaginative plumber who ran his own store at 191 College Street in Burlington, Vermont. In 1848, when Blodgett was only 29 years old, he was approached by the owner of a nearby tavern, who told him that his oven was not heating food properly. Specifically, customers were complaining that the meat from the tavern was cooked on one side but not on the other. In response, Blodgett and his partner built a wood-burning stove that solved the tavern owner's problems. The success of Blodgett's creation spread quickly and soon tavern owners from the surrounding areas were requesting new and improved ovens. By 1854, the young entrepreneur patented his improved baking oven and incorporated his business as G.S. Blodgett & Company.

The company thrived during the mid- and late 1850s, but with the onset of the American Civil War in 1860, Blodgett joined the Union Army and his business came to a standstill. Blodgett attained the rank of assistant quartermaster of volunteers, helping to outfit all the members of the First Vermont Cavalry. He was also instrumental in acquiring and planning the United States National Cemetery in Arlington, Virginia.

When Blodgett returned to civilian life, he began to rebuild his company. In just a few years, Blodgett was again providing high-quality commercial ovens to tavern owners in Burlington, Vermont, and was also experimenting with other types of ovens as well. Blodgett was convinced that newer, more efficient types of ovens were needed by the commercial cooking and baking industry, and he began producing convection ovens, deck ovens, and conveyor ovens. With the addition of these products, the company's revenues climbed rapidly. Blodgett became a wealthy man by the 1880s.

During the 1890s, the company continued to increase its revenues and expand its customer base. More and more employees were hired, including a young man named John S. Patrick. Patrick, hired as the company's secretary and treasurer, soon became an indispensable part of Blodgett's management team. He learned quickly about the company's affairs, even the intricate details surrounding the manufacture of convection ovens. In 1892 Patrick decided to purchase Blodgett's interest in the company and assume control of the firm's operations. The new owner's acquisition signaled the beginning of three generations of Patrick family control and management over the company.

1997: Maytag Corporation acquires Blodgett for $96.4 million in cash and assumes $53.2 million in debt; Maytag sets up Blodgett Holdings, Inc.

1902–1985

Establishment of Pitco Frialator and MagiKitch'n, Early 20th Century

Like his predecessor, John Patrick was determined to develop and expand the company's product line. In 1902 he began to develop ovens that used gas as their energy source. Then, following years of increasing sales and profits, Patrick decided to establish a new operating division outside Vermont. Located in Bow, New Hampshire, the new division was founded as Pitco Frialator in 1918. Specializing in the manufacture of commercial frying equipment, the new division was an immediate success. Restaurants from all over the country, especially on the eastern seaboard, began ordering Blodgett equipment, and sales continued to rise.

During the 1920s, the company took advantage of the expanding American economy and the plethora of new restaurants opening in major cities, including New York, Boston, Philadelphia, and Chicago. With the crash of the stock market in the fall of 1929 and the start of the Great Depression, however, people were forced to conserve their financial resources and, as a result, many restaurants were forced out of business because of a loss of customers. Although Blodgett felt the effects of the Depression, the company was able to remain competitive. In 1931 the firm was being managed so competently by the Patrick family that a new operating division was established in Quakertown, Pennsylvania. This division, called MagiKitch'n, a manufacturer of charbroilers for the commercial market, was another success story.

Having survived the Depression, Blodgett entered the 1940s poised to expand its market share in the burgeoning commercial foodservice industry. With the United States' entry into World War II, the U.S. government placed numerous contracts with Blodgett to supply ovens for cooking food near the front lines of battlefields. Former employees who were now soldiers would write back to company management describing how Blodgett ovens were able to cook food evenly in the most terrible weather conditions. When these same former employees were served food that was improperly cooked, they suggested to their quartermaster sergeants that Blodgett would be able to provide an efficient oven that would satisfy the battle-weary soldiers who needed a good hot meal. Surprisingly, it was in this way that Blodgett sold numerous ovens to the U.S. Army and Navy throughout the war years.

Continued Expansion in the Postwar Era

After World War II, and continuing through the 1950s, Blodgett built upon its previous success. Each passing year brought increased revenues, with more benefits accruing to the company's employees all the time. The Patrick family, still in control of the company's entire operations, built a tradition of excellent management-employee relations over the years. Not only rewarding its long-term workers with profit sharing and generous pension plans, the Patrick family never laid off a single worker during the time it ran the company. By 1958, Blodgett had grown large enough for management to consider expanding company operations overseas. Consequently, Blodgett International contracted its first foreign distributor in the same year. Another development in the 1950s was the introduction of a line of pizza deck ovens.

Growth continued apace from the 1960s into the 1980s. The company sold ovens to the entire spectrum of the foodservices industry, from such large fast-food restaurant chains as Pizza Hut and Taco Bell, to such small chains of three or four units as Zachary's Pizza in Burlington, Vermont. Blodgett also sold ovens to grade schools, high schools, universities, hospitals, bakeries, U.S. Army and Navy installations, sports complexes, gourmet restaurants, taverns, large-volume food manufacturers, and hotels. In the foreign arena, Blodgett contracted numerous distributors throughout Europe. The company in 1982 acquired Q Industries Food Equipment Company, a small manufacturer of conveyor ovens based in Chicago. In 1985 Blodgett purchased the intellectual property rights from a German manufacturer of multifunction steamer ovens. One year later, management created Blodgett Combi, a new division of the firm that produced both the multifunction steamer oven and the company's famous brand name Mastertherm conveyor ovens. Together, these two items quickly became the most popular of all Blodgett products.

Management-Led Buyout and Restructuring: Late 1980s and Early 1990s

1985–2003

During the mid-1980s, the Patrick family, who had remained in control of Blodgett over the years, began to contemplate how to raise liquidity for their shareholders. The three options the family considered included a merger with another company, a public offering of stock in the firm, and the sale of the company. Doug Johnson, hired as the president of Blodgett in 1985, reportedly contacted some of his friends on Wall Street and began to arrange for a leveraged buyout of Blodgett by the company's management. Along with Sam Hartwell, who joined Blodgett in 1988, the two men reached a deal with The First Boston Corporation and Metropolitan Life Insurance Company that accounted for approximately 85 percent of the capital needed for the buyout.

Johnson and Hartwell, acting as co-chairmen of the company, immediately analyzed Blodgett's financial condition and operational structure, and determined that certain changes were necessary. One year after the management buyout of Blodgett, Johnson and Hartwell either closed or sold three company divisions that were losing money or just breaking even. They relocated the conveyor oven business, which had previously been operating out of Chicago, to Burlington, Vermont. This relocation also signaled a more aggressive strategy for marketing the company's conveyor ovens, both domestically and internationally. Three production facilities were sold, including sites at Burlington and Philadelphia, and then leased back to Blodgett in order to raise more working capital. During these changes, Johnson and Hartwell also implemented strict cost-control measures, while at the same time reducing expenses and working capital.

In the early 1990s, under the new management, Blodgett made an aggressive move to expand its international image. The company began to exhibit its products at trade shows in London, Prague, Singapore, and Sydney, Australia. As the firm's international revenues grew, management decided to open sales offices in Prague, Amsterdam, Singapore, and Toronto. Slowly, Blodgett began to successfully compete with other top companies in the highly specialized field of commercial cooking equipment, including Cidelcem of France, Fujimak of Japan, Zanussi of Italy, and Rational of Germany. In 1995 the company gave an even greater profile to overseas sales by establishing Blodgett International as an operating unit of G.S. Blodgett Corporation.

The reorganization of Blodgett after the leveraged management buyout started to reap rewards by the end of 1993. The term "de-leveraging," used by Wall Street analysts to describe the paying off of debts after a leveraged buyout, was worked on assiduously by Johnson and Hartwell. Approximately 60 percent of all the company's senior debt was paid off during that year. At the same time, since 1988 Blodgett was able to increase its sales by an impressive 67 percent, up from $67 million to $110 million in just five years. More importantly, Blodgett snared nearly 12 percent of the entire market for products manufactured in the commercial cooking equipment industry, which has annual domestic sales greater than $1 billion. Of the 650 members that belonged to the National Association of Food Equipment Manufacturers, Blodgett was one of the top 50 companies with sales over the $25 million mark.

Blodgett management also made a commitment to research and development. Since the late 1980s, over $3 million per year was being devoted to developing new products, and by the mid-1990s over 50 percent of the company's offerings were new. The company manufactured ovens that could bake 300 to 400 pizzas in one hour; combined microwave and radio frequency technology with traditional methods of hot air and atmospheric steam; and was in the process of developing products that used voice activation to control oven temperatures, magnetic induction, and automatically programmed cooking cycles. In the early 1990s, the company's products cost anywhere from $500 to $20,000, and Blodgett engineers traveled as far away as Sao Paulo, Brazil, to investigate new ideas and search for new technology in order to improve and develop its products.

The Maytag Years: 1997 to 2001

By 1997 G.S. Blodgett Corp. was producing commercial ovens, fryers, and charbroilers at four manufacturing plants in Vermont and one each in New Hampshire and Pennsylvania. The company had 750 workers and annual revenues of about $135 million. In October 1997 Blodgett once again came under new ownership. As part of a push into the commercial appliance sector, home appliance giant Maytag Corporation acquired Blodgett for $96.4 million in cash and the assumption of $53.2 million in debt. Maytag set up Blodgett Holdings, Inc. as a holding company for G.S. Blodgett Corp. and its subsidiaries. In April 1998 Glenn B. Kelsey was named president of Blodgett, having previously served for 17 years in various executive positions at Oneida Ltd., a world leader in the manufacture of stainless-steel and silver-plated flatware.

Unfortunately, under Maytag, Blodgett changed from a thriving enterprise into a troubled, money-losing company by the early 2000s. John Briggs reported in the Burlington Free Press in early 2003 that according to Selim Bassoul, who later headed up Blodgett under new ownership, "Blodgett had become 'bloated' under Maytag, driven off longtime customers with poor service, and made 'inadvisable product choices.'" Maytag had intended to follow up its purchase of Blodgett with that of other commercial appliance makers, in order to gain a major presence in that market. But it was never able to complete another deal in that sector, most notably being a losing bidder in 1999 for Scotsman Industries, Inc., a leading producer of commercial refrigeration, ice-making, and food-storage products (the winner was Enodis plc with a $712 million offer). This left Blodgett in the position of comprising an extremely small part of Maytag's overall operations, its revenues accounting for only about 3 percent of Maytag's total sales of more than $4.2 billion. Another factor in Maytag's eventual decision to sell Blodgett was the lack of sufficient synergies between the firm's home-appliance and commercial-appliance operations.

2001–2002

In March 2001 Blodgett announced plans to build a new headquarters building and factory near its existing main office in Burlington. Just two months later, however, Maytag announced that it was exploring the sale of Blodgett in order to sharpen its focus on its core home appliances. An additional impetus for the divestiture came in June when Maytag agreed to buy the Amana line of refrigerators and microwave ovens.

Purchase by Middleby: 2001

Maytag thereupon agreed in August 2001 to sell Blodgett Holdings and subsidiaries to The Middleby Corporation. The deal closed in December of that year with Middleby paying $74 million in cash and $21 million in notes. Based in Elgin, Illinois, Middleby, like Blodgett, was a major manufacturer of commercial foodservice equipment, including Middleby Marshall conveyor ovens, Toastmaster toasters and sandwich grills, and Southbend ranges, ovens, broilers, steamers, and grills. Middleby had annual sales of about $127 million, so the purchase of Blodgett effectively doubled its revenues.

Following completion of the deal, Bassoul, the president and CEO of Middleby, was named acting president of Blodgett. He immediately concentrated on returning the firm to profitability: plans for the new headquarters/factory were shelved; two Blodgett factories in Williston and Shelburne, Vermont, were closed; and the workforce was cut by about 100 employees. During 2002, Blodgett turned a profit for the first time in several years. New product development was given a boost under the new ownership, with the introduction of the Blodgett Range, a premium, heavy-duty commercial range in late 2002 to further leverage the well-known Blodgett name. Another innovation was a new Blodgett Combi model that could steam without a boiler, simplifying cleaning and maintenance.

Blodgett appeared to have a bright future as a Middleby subsidiary, as it continued to be the market leader in both combination ovens and convention ovens, with Pitco holding onto the number two position in fryers. Although the U.S. fast-food industry was fairly saturated, limiting the potential for future sales in that core sector, Blodgett--and Middleby--were targeting two main opportunities for growth: the rapidly growing "fast-casual" restaurant sector and overseas sales, particularly based on the international expansion of major U.S. restaurant chains.