Welbilt Corp.

1864–2000

Welbilt Corp., through its subsidiaries, is the largest manufacturer of cooking and warming equipment in North America. Its customers include fast-food chains, institutional accounts such as schools and hospitals, full-service restaurants, and retail stores, including supermarkets and convenience stores. The company also distributes products in more than 65 countries. In the mid-1990s Welbilt had a dozen subsidiaries in the United States. It was acquired in 1995 by Berisford plc, a British firm. Welbilt's goal at that time was to increase its business to $1 billion by the year 2000.

The Years before 1955

Henry and Alexander Hirsch founded Welbilt Stove Co. in 1929, primarily to make residential gas ranges. The privately owned company's factory was in the New York City borough of Queens. Welbilt Stove added electric ranges, range hoods, household-incinerators, and home air conditioners in later years.

In 1955 the company acquired Detroit-Michigan Stove Co., a company with a much longer pedigree. Founded in 1864, incorporated in 1866, and reincorporated in 1907 as Detroit Stove Works, this closely held public corporation was, in 1920, manufacturing stoves and furnaces in Detroit under the "Jewel" name. W. T. Barbour was its president and J. A. Fry its secretary and general manager; later they advanced to chairman and president, respectively. In 1923 the company acquired Art Stove Co. and in 1925 Michigan Stove Co., changing its name to Detroit-Michigan Stove Co. The combined enterprise now, in addition to stoves and furnaces, made gas ranges for homes and heavy-duty heating and cooking appliances for hotels, clubs, restaurants, and institutions under the "Garland" and "Laurel" as well as "Jewel" and "Detroit Jewel" names. In 1927 the company placed a giant, 30-ton replica of an old-fashioned kitchen range on the roof of its factory near the approach to Detroit's Belle Isle Bridge. Originally built for the 1893 World's Fair in Chicago, this replica was billed as the "largest stove in the world."

Fiscal 1926 (ended July 31, 1926) was Detroit-Michigan Stove's best year for a long time, with net sales of $8.1 million and net profits of $1.2 million. During the Depression decade of the 1930s annual net sales fell as low as $2.3 million, and the company lost money each year from 1931 through 1934, and again in 1938. In fiscal 1940, however, when the firm had a net profit of $210,000 on net sales of $3.1 million, it was prosperous enough to begin paying dividends. The company dropped furnaces in the mid-1930s.

Detroit-Michigan Stove raised its revenues considerably by acquiring A-B Stoves, Inc. of Battle Creek, Michigan, in 1945. It also added a metal-fabricating division turning out parts for automotive and other manufacturers. Net sales reached a high of $21 million in 1948 and net profit nearly $2 million. By mid-century the company's Detroit plant consisted of 23 buildings, and its products included electric as well as gas ranges for homes. Sales dropped by nearly half in 1949, however, and did not rise significantly thereafter. The company lost more than $1 million in 1953 and more than $1.6 million in 1954 on sales of only $9 million.

In fiscal 1940, however, when the firm had a net profit of $210,000 on net sales of $3.1 million, it was prosperous enough to begin paying dividends.

1955–1989

Merged Company, 1955-1976

When Welbilt Stove acquired Detroit-Michigan Stove in 1955, the consolidated company became Welbilt Corp., a public corporation that inherited Detroit-Michigan's listing on the New York Stock Exchange. Net sales in 1955 were $22.8 million, and the company had net profit of $1.5 million. The Hirsches sold A-B Stoves in 1955 and closed the Detroit plant in 1957 but soon acquired four companies. The purchase of Consolidated Industries, Inc. in 1958 returned Welbilt to the furnace-making business, and that of Wedgewood-Holly Corp. in 1959, added a West Coast producer of higher-priced ranges. In 1960 the company acquired American Coils Co., an air-conditioning manufacturer, and Unagusta Manufacturing Co., a furniture maker. By the end of 1960 Welbilt had plants in four states and Canada as well as the Queens factory, where a new building was erected in 1964 for the manufacture of air-conditioning equipment as well as kitchen ranges.

Welbilt reached a peak of $56.8 million in sales in 1969 but lost money for the next five years: a total of $10.4 million. In 1971, 29-year-old Richard Hirsch succeeded his father Henry as president. It became clear to him that the company could not survive by making and marketing consumer goods. The biggest drain was Unagusta, which, after losing almost $6 million during 1971 and 1972, was sold for $5 million the following year. Wedgewood-Holly was sold in 1972. A lamp manufacturing operation that Welbilt had formed and the refrigeration-distributing division were scrapped in 1974. The following year Welbilt closed its Queens plant, transferring its production of cooking ranges, range hoods, air conditioners, and microwave ovens (introduced in 1973) to its remaining U.S. plants in Freeland, Pennsylvania, and Lafayette, Indiana.

Welbilt's stock fell as low as three cents a share in 1974. Stripped to the bone, its sales dropped to $15.8 million in 1975, yet it still lost $2.4 million that year. With total assets of only $6 million and an average $2.2-million loss for the previous three fiscal years, it lost its listing on the New York Stock Exchange. "The really dynamic growth of the company began in the late 1970s when the restructuring was completed and a decision made to expand our commitment to food service equipment," Hirsch told an Appliance editor in 1989. "We reviewed our goals and set new directions for the future. We had closed 12 divisions, retained Garland and shrunk the company to a critical mass."

A Star in the 1980s

Hirsch's downsizing enabled Welbilt to return to financial health. After three straight profitable years it ended 1979 with net sales of $32.5 million and net income of $2.8 million. The company resumed paying dividends in 1981 after a decade-long drought. Hirsch and executive assistant Larry Gross--his old college roommate--now began acquiring manufacturers of products that could be sold to fast-food chains. In 1982 they bought four food-service Sunbeam Corp. subsidiaries, including Frymaster, Belshaw Brothers (a bakery equipment manufacturer) and Mile High, a producer of ice-making machines. New equipment was created for these firms, with an emphasis on reducing labor costs. Frymaster, for example, sold fryers for chicken and french fries that adjusted cooking time and temperatures, cleaned themselves, and shut themselves off. By 1989, largely due to other acquisitions, Belshaw systems were making about 65 percent of all the doughnuts in the world.

1982–1994

Company sales rose fourfold between 1982 and 1986. Between 1984 and 1988 Welbilt's compound annual earnings growth rate was 54 percent. During this period about 70 percent of Welbilt's sales and slightly more of its profits were coming from commercial food-service equipment, including not only ranges, ovens, and appliances, but also ventilators, grease filters and extractors, and exhaust fans. The remainder came from domestic appliances, including the manufacture and sale of residential gas-fired furnaces, the sale of residential ranges, the sale and distribution of refrigerators, and the distribution of freezers and oil-filled unit heaters. In 1984 Welbilt sold its Queens facility for $7.6 million and moved its executive offices to New Hyde Park, Long Island.

The company ended 1987 with net income of $12.8 million on revenues of $234.3 million. It had 16 subsidiaries, 11 factories (including plants in Canada and West Germany) and was doing business in almost 100 countries. The stock, once as low as 12 cents a share, traded for as high as $28.25 in 1988. Revenues came to $273.6 million and earnings to $6.2 million that year.

Private, then Public Again, 1988-1994

Welbilt went private in 1988, being acquired in a leveraged buy out by a group led by Kohlberg & Co. that included Richard Hirsch and his brother David (the company's treasurer and chief financial officer) for about $265 million. The new private company assumed a long-term debt of $187.7 million to help pay for the deal. While remaining as committed to Welbilt as ever, Hirsch espoused corporate autonomy. "The profit and loss centers are the responsibilities of the various divisional presidents," he told Appliance. Moses Shapiro, a director and one of the owners, added, "We're interventionist in terms of assistance and aid. We're hands off in terms of day-to-day activities....The day-to-day operations are contained in a budget that then becomes the agreed-upon bible, which determines how the divisions work and are measured."

In April 1989 Welbilt acquired six divisions of Alco Standard Corp.'s Foodservice Equipment Group. These were Cleveland Range, a producer of steam-cooking equipment; Dean Industries, a manufacturer of gas and electric fryers and related equipment; Merco Products, a maker of food-warming equipment and broilers; Savory Equipment, a producer of countertop cooking appliances; U.S. Range, a manufacturer of commercial ranges, ovens, and broilers; and Alco World Trade, a marketer of food-service equipment.

Not all Welbilt products ignored the home consumer. Welbilt Appliance Inc., for example, was marketing several bread machines at retail and, according to industry sources, commanded almost half of this category by late 1991. This company also was producing other specialty kitchen appliances, compact refrigerators, and microwave ovens for the home, but only when the products dovetailed with the parent company's manufacturing and distribution of commercial food equipment. A company executive told HFD, for example, that such mainstream products as coffee-makers and toasters were not of interest "unless the product makes the coffee, toasts the bread, and fries an egg, all at the same time." Welbilt Appliance introduced just such a machine, called Breakfast Express, in 1993. In 1994, however, the parent company left the consumer-products field entirely by selling Welbilt Appliance to a Manhattan-based investment group.

1990–1996

Marion H. Antonini was appointed chairman and chief executive officer of Welbilt in the fall of 1990. He continued the corporate policy of allowing the subsidiaries to identify opportunities to enhance core product lines and develop their own new concepts. Company headquarters were moved from New Hyde Park to Stamford, Connecticut. Welbilt suffered a loss of $13.8 million on sales of $357 million in 1991 but returned to profitability the following year and had net income of $6.6 million on sales of $426.5 million in 1993.

In November 1993 Welbilt went public again, offering common stock at $18 a share. Some of the proceeds were used to reduce the long-term debt, which was $126.2 million at the end of the year. Investors responded favorably to the offering, and in 1994 the stock rose as high as $33.50 a share. That year the company acquired Lincoln Foodservice Products, a manufacturer of ovens, commercial kitchen supplies, and other food-service equipment. In January 1995 Berisford International plc, a British firm, acquired Welbilt for $33.75 a share. The Kohlberg family held almost 47 percent of the stock at this time.

Welbilt in the Mid-1990s

In 1996 Welbilt was essentially a holding company for 12 subsidiaries or lines: Belshaw, Cleveland, Dean, Frymaster, Garland, Ice-O-Matic, Lincoln, Merco, Savory, U.S. Range, Varimixer, and Vent Master. The Garland Group consisted of units making Garland-brand, premium-line cooking equipment and distributing Welbilt products abroad; U.S. Range produced low-cost ranges and ovens and such countertop equipment as broilers and griddles; Vent Master offered a product line including exhaust and recirculation systems. The Cleveland Group consisted of Cleveland, with a line of steamers and ovens, mixer kettles, tilting skillets, and cook/chill systems, and Merco/Savory, specializing in food-warming equipment, including toasters and rotisseries.

Frymaster was producing fryers and filtration systems and also overseeing Dean fryers and Varimixer mixing equipment. Lincoln, the world's largest manufacturer of commercial and institutional aluminum food-service utensils, also produced ovens, marketed kitchen cutlery, and imported and sold stainless-steel cookware with aluminum-clad bottoms. Belshaw was turning out 20 basic doughnut-making machines. Mile High was producing ice-makers under the Ice-O-Matic and Mile High brand names. Welbilt also had a center for developing new equipment.

The Garland Group had headquarters in Freeland, Pennsylvania, where it also operated a manufacturing plant. Additional plants were located in Gardena, California, and Mississauga, Ontario; it maintained a distribution center in Hayes, England. Merco/Savory was based in Lakewood, New Jersey. Frymaster and Varimixer were in Shreveport, Louisiana, and Dean in Gardena. Lincoln was in Fort Wayne, Indiana, and Belshaw in Seattle. Mile High was in Denver. The development center was in Tampa, Florida.