The Coleman Company, Inc.

1871–1914

The Coleman Company, Inc. is one of the most famous and successful manufacturers of camping equipment and outdoor recreational products. The well-known Coleman lamp was invented by 1909 and the lantern in 1914, and since that time more than 50 million of the lanterns have been sold throughout the world. Coleman is the market leader in lanterns and stoves for outdoor recreational use, and it has created a loyal consumer following for a broad range of insulated food and beverage containers, sleeping bags, backpacks, tents, outdoor folding furniture, portable electric lights, and other recreational accessories. The company's Powermate unit produces portable generators and portable and stationary air compressors. Coleman also makes and markets book bags, backpacks, and related products under the Eastpak and Timberland brand names. Coleman products are sold in more than 100 countries worldwide, with international sales accounting for about one-third of overall revenues. Although its stock is publicly traded, the Coleman Company is controlled by Sunbeam Corporation, which owns 79 percent of the company.

Bright Beginnings

The founder of the company, William Coffin Coleman, was born to a young couple who migrated west to Kansas from New England in 1871. Coleman became a schoolteacher in Kansas and later entered the University of Kansas Law School. Shortly before receiving his degree, however, Coleman ran out of money, and he became a traveling typewriter salesman. Working the southern part of the United States, he found himself in Brockton, Alabama, a poor coal mining community with dirt streets and wood sidewalks.

According to company lore, as Coleman was taking an evening walk down one of the town's streets, he noticed the intense white glow of a lamp in a drugstore window. The lamp, which was powered by gasoline, was so bright that even with his bad eyesight Coleman was able to read under it easily. Since most people at that time used flickering gaslights, smoky oil lamps, or dim carbon filament light bulbs, Coleman immediately saw the lamp as an important step forward.

Coleman arranged to sell this new type of lamp for the Irby-Gilliland Company of Memphis, and traveled to Kingfisher, Oklahoma, to begin his new venture. Unfortunately, he had sold only two lamps at the end of the first week. The lack of sales dismayed him, but he soon discovered that another salesman had previously sold dozens of lamps to the town's shopkeepers. Since the lamps could not be cleaned, they clogged with carbon deposits which snuffed the light out after a short time. The salesman had left a bit too quickly, and the shopkeepers felt swindled.

Unable to sell his lamps, Coleman hit upon the idea of leasing them for $1 per week and servicing them himself. If the lamps failed, the customer did not have to pay. Revenues skyrocketed. In order to remain competitive almost all the town's shopkeepers purchased his lighting service. The business flourished as Coleman reinvested profits and branched out into neighboring communities. Not long afterward, he founded the Hydro-Carbon Light Company.

With the demand for his lamps and lighting service increasing, Coleman received $2,000 from his two brothers-in-law for an eight percent interest in the company. In 1902 requests for his lighting service were so numerous that he decided to move the business to Wichita, Kansas, and establish a permanent headquarters. One year later, Coleman bought the rights to the Efficient Lamp, improved its design, and began selling it as the Coleman Arc Lamp. Ever on the lookout for original ways to market his lamps, Coleman in 1905 arranged for the Arc Lamps to provide the lighting for a night football game.

In 1932 the company's sales totaled a mere $3 million, but a small profit was made.

1909–1942

Wartime Contributions

By 1909 Coleman had invented a portable table lamp with a gasoline tank designed as a small fount with a flat base. Bug screens were later added to protect the mantles during outdoor use. In 1914 the company developed the Coleman gasoline lantern for use in inclement weather. When World War I broke out, the Allies requested U.S. wheat and corn to replenish their food supplies. Realizing the need for a reliable, bright, and portable light for farmers carrying out the tasks necessary to aid the Europeans, the American government declared the Coleman lamp essential for the wartime support effort and provided Coleman with both money and materials to produce the lanterns. During World War I, the company made over one million lamps for American farmers.

The company grew steadily in the 1920s. Although electricity came to the smaller towns across the United States, most rural areas had to wait. Coleman thus found its largest markets in rural areas, with ever increasing sales of gasoline stoves, used both as camp stoves and cook stoves, and lamps and lanterns. The company also established international operations with a manufacturing plant and headquarters in Toronto. Locating an office in Canada was a smart move on the part of Coleman, since the British Commonwealth gave preferential tariffs and duties to products made in member nations. By the end of the 1920s the reputation of the Coleman lantern was firmly established, and various accounts of its use were reported: Admiral Byrd used the lantern on his trip to the South Pole; on Pitcairn Island the descendants of British mutineers from the Bounty and their Tahitian families illuminated primitive homes with Coleman lanterns; and Coleman lantern-lit runways in the Andes made emergency landings possible.

The company was not entirely successful in developing new products and markets. During the late 1920s, Coleman made a line of waffle irons, coffee percolators, toasters, and electric irons. Coleman could not, however, compete with Westinghouse Electric Corporation and General Electric Company and withdrew these product lines quickly. William Coffin Coleman (known as W.C. to the rest of the company) designed a coffee maker for restaurants and hotels. Although it brewed excellent coffee, the machine was complicated to handle and difficult to clean. It was commercially unsuccessful and the company halted its production.

Coleman was hit very hard when the stock market crashed in 1929. During the next two years, the Great Depression severely affected almost every industry in the nation. The demand for Coleman products declined rapidly, mainly due to the searing poverty and inability of many people in rural areas to purchase anything other than food. Inevitably, the company experienced financial losses, but a good working relationship with a number of banks helped Coleman to overcome the worst years of the depression. In 1932 the company's sales totaled a mere $3 million, but a small profit was made.

After Franklin Delano Roosevelt was elected to the U.S. presidency in 1932, he launched a massive program for rural electrification, and Coleman was faced with a decline in its market for gasoline stoves and lights. Nevertheless, Coleman found two potentially profitable markets, oil space heaters and gas floor furnaces, and by the end of the decade the company was the leading manufacturer of both products. At the same time, Coleman's portable stove and lantern business was making headway in the camping equipment market, and the international operation was beginning to reap significant profits. In 1941 the company reported annual sales of $9 million.

When World War II began, Coleman was called upon to manufacture products for the various branches of the U.S. armed services, including 20-millimeter shells for the Army, projectiles for the Navy, and parts for the B-29 and B-17 bombers for the Air Force. In June 1942 the company was notified by the Army Quartermaster Corps with an urgent request--field troops needed a compact stove that could operate at 125 degrees above and 60 degrees below zero, was no larger than a quart bottle of milk, and could burn any kind of fuel. Moreover, the Army wanted 5,000 of the stoves delivered in two months.

1941–1977

Coleman worked nonstop to design and manufacture a stove to the Army's specifications. The end product was better than the Army had requested: the stove could work at 60 degrees below and 150 degrees above Fahrenheit; it could burn all kinds of fuel; it weighed a mere three and one-half pounds; and it was smaller than a quart bottle of milk. The first order for 5,000 units was flown to U.S. forces involved in the November 1942 invasion of North Africa. Ernie Pyle, the famous World War II journalist who wrote about the common man's experience in the war, devoted 15 articles to the Coleman pocket stove and considered it one of the two most important pieces of noncombat equipment in the war effort, the other being the Jeep.

When the war ended, Coleman's business boomed. Since the company had been manufacturing products for the armed services during the war, there was an enormous backlog of demand for its regular products, which had been off the market. Sales rose to $34 million by 1950, while profits also substantially increased. At the start of the decade, there were four main divisions of Coleman products: oil space heaters accounted for 30 percent of sales; gas floor furnaces, 30 percent; camp stove and gasoline lanterns, 20 percent; and military contracts to supply Boeing Co. with airplane parts for the B-47 bomber, 20 percent.

Camping and Recreational Product Focus: 1960s-70s

In the early 1950s, Coleman was the leader in sales in each of its civilian product lines. At the end of the decade, however, sales for oil heaters and gas floor furnaces alone dropped a whopping 85 percent, and by 1960 the company suffered an overall loss of 70 percent in sales volume. The U.S. military had also phased out Coleman's contracts for airplane parts. In response, Coleman developed its camp stove and lantern products into an extensive line of camping equipment. The company's portable ice chests and insulated jugs quickly became leaders in the field of outdoor recreation products. Coleman also expanded its line of oil, gas, and electric furnaces to manufacturers of mobile homes, and began designing air conditioning equipment and furnaces for onsite homes.

During the 1960s, Coleman continued to expand its product lines in the field of camping, adding sleeping bags, tents, and catalytic heaters; Coleman soon became the leading manufacturer of camping equipment. Growing along with the mobile home industry, Coleman supplied 40 percent of the specialized furnaces and 50 percent of the air conditioning equipment for mobile homes. Sales grew from $38 million in 1960 to $134 million by 1970, and during the same period net profits increased dramatically from $278,000 to $7 million.

The two leaders of the company were Sheldon Coleman, who replaced his father as chairman of the board in 1941, and Lawrence M. Jones, a longtime employee of Coleman who possessed a doctorate from Harvard University. Sheldon had hired Jones as president of the company in 1964, and the two men collaborated on product development and market strategy. Their joint effort resulted in the manufacture of adjustable backpack frames, a compact cooler, a small backpack stove, canoes made from a petroleum-based substance that created a quieter ride than aluminum, Crosman air guns, and camping trailers. In 1977 Coleman's success continued unabated, with sales reaching $256 million. The company's outdoor recreation business seemed to be recession-proof, and profits from its mobile home products kept increasing.

Ownership Changes: 1980s-90s

1988–1998

For more than three-quarters of a century, Coleman had worked hard to establish and maintain a reputation for high quality products sold at reasonable prices. This reputation paid off handsomely during the 1980s as both profits and sales increased steadily. According to Fortune, however, the Coleman family, who owned 25 percent of the company's stock, began withdrawing profits rather than reinvesting for product development and market expansion. Sheldon Coleman, Jr., replaced his father as chairman of the board in 1988, and only one year later he decided to privatize the company in order to reap an even larger profit--the pension plan of the company was overloaded by approximately $30 million.

The new chairman floated an offer of $64 per share for the company's stock. The bid proved too low, and ill-timed as well. Instead, New York financier Ronald Perelman entered the scene and purchased Coleman for $545 million, or $74 per share, in a 1989 leveraged buyout through his company MacAndrews & Forbes Holdings Inc. Together, Perelman and Jones sold the heating and air-conditioning business, shut down an obsolete factory, and implemented a strategy that improved efficiency and ultimately reduced inventory costs by $10 million.

Through a comprehensive restructuring of its operations, the company increased productivity significantly in 1991, and Coleman's sales reached $346.1 million by the end of the year. In 1992 sales increased to $491.9 million, proof that the company's concentration on manufacturing products in growing recreational markets was paying off. Perelman took Coleman public again during 1992 but retained an 82.5 percent stake in the company. In late 1992 Coleman reacquired the Coleman Powermate line of gasoline-powered electrical generators and high-pressure power washers. The following year the company aimed to bolster its overseas sales through acquisitions. Coleman had encountered difficulty over the years in Europe selling its propane-based camping appliances because Europeans generally preferred products running on butane gas. The purchase of British and Italian camping equipment makers in late 1993 led to the launch of dozens of Coleman brand butane products in Europe.

At the beginning of 1994 Jones retired and was replaced as chairman and CEO by Michael N. Hammes, who had been vice-chairman of the Black & Decker Corporation and president of its worldwide power tools and home products group. Acquisitions continued under the new executive. Added in 1994 were Sanborn Manufacturing Company, whose portable and stationary air compressors were folded into the Powermate division; and Eastpak, Inc., a maker of book bags, daypacks, and related products. The following year Coleman purchased Sierra Corporation of Fort Smith, Inc., maker of portable outdoor and recreational folding furniture under the Sierra Trails brand. In early 1996 the company expanded its Eastpak division by licensing the Timberland brand for a new line of packs. Coleman also acquired the France-based Application des Gaz, a leading European camping equipment maker under the Camping Gaz brand. Meanwhile, the 50 millionth Coleman lantern rolled off the assembly line in 1995.

The company's aggressive pursuit of acquisitions did not come without a cost. By 1996 Coleman had shown tremendous growth since being acquired by Perelman, as revenues reached $1.22 billion, three-and-a-half times the level of 1991--but the company also posted a net loss of $41.8 million. The loss was largely attributed to higher than expected costs related to integrating overseas sales forces following the purchase of Camping Gaz. Another key factor was mounting debt stemming from the string of acquisitions--the debt level having reached $583.6 million by the end of 1996.

On the heels of the announcement of the 1996 loss, Coleman replaced Hammes, installing Jerry W. Levin as acting CEO in February 1997. Levin had previously run the company from 1989 to April 1991 when he became CEO of Revlon Inc., another Perelman-controlled company. Under Levin's leadership, Coleman moved quickly to turn its fortunes around through a number of cost-cutting initiatives. The company closed its administrative headquarters in Golden, Colorado, and a regional headquarters in Geneva, Switzerland. The 7,000-person workforce was cut by ten percent. Four factories, three domestic and one international, were closed. Certain noncore product areas were divested, including power washers and portable spas. Finally, one-third of the company's SKUs were eliminated, greatly streamlining its product offerings.

In March 1998, with the company verging on a turnaround, Perelman sold his 82 percent stake in Coleman to Sunbeam Corporation for $1.6 billion plus the assumption of about $440 million in debt. At the same time Sunbeam announced two other purchases: Signature Brands USA Inc., maker of such household products as Mr. Coffee coffee makers and Health-o-meter scales; and First Alert Inc., a maker of residential safety products, including smoke alarms and fire extinguishers. Charges of accounting irregularities and misleading earnings reports led to the ouster of Sunbeam's CEO, "Chainsaw Al" Dunlap, in June 1998. Soon thereafter, Perelman, who had gained a 14 percent stake in Sunbeam as part of the sale of his Coleman stake, installed a new team at Sunbeam, including naming Levin as CEO. Dunlap had evidently laid plans to sell off Coleman's backpack and compressor businesses, plans that were quickly abandoned once Levin took over at Sunbeam. Nevertheless, with its new parent in extremely shaky financial condition, including being burdened by $2.2 billion in debt, Coleman faced a very uncertain future at the dawn of the 21st century.