CertainTeed Corporation - Company Profile, Information, Business Description, History, Background Information on CertainTeed Corporation

750 East Swedesford Road
Valley Forge, Pennsylvania 19482

Company Perspectives:

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History of CertainTeed Corporation

CertainTeed Corporation is a leading U.S. manufacturer and distributor of commercial and residential building materials. Specifically, the company designs and manufactures a large variety of materials including: ceiling systems; insulation; roofing shingles; clay roofing tiles and slates; vinyl siding and accessories; vinyl windows; vinyl fencing; decking and railing; ventilation products; fiber-cement siding; injection molded products; PVC pipe and foundation products; and retractable awning and canopy systems. The company also manufacturers fiberglass reinforcements. CertainTeed maintains 45 manufacturing facilities in North America and sells its products in building supply stores nationwide. In 1988 the company became a wholly owned subsidiary of Compagnie de Saint-Gobain, the world's largest manufacturer of building materials.

A Turn-of-the Century Roofing Company

Among the rapidly changing landscape of 20th century America, people were moving to metropolitan areas and manufacturing was replacing farming as the principal source of income. New railroads stretched across the country, and the automobile replaced the horse and wagon. A young man named George M. Brown from East St. Louis, Illinois, predicted that all of this change would lead to a surge in the sale of building materials. With $25,000 in capital, Brown started his own roofing manufacturing business in 1904; he had a military background, and he chose to reflect this status in the new business name: General Roofing Manufacturing Company. Brown spent his first few years in business developing two varieties of asphalt roofing materials: a smooth-roll type and a grit-surface-gravel type. He then gave his roofing material products military-sounding brand names, such as Major, Sergeant, Corporate, and Guard, which he hoped would project quality and strength. With only a few employees, a small roofing plant, and a small dry felt mill, Brown built his business into a success.

Although the U.S. economy had taken a turn for the worse in 1910, General Roofing flourished and Brown decided it was time to expand. He purchased paper mills in Marseilles, Illinois, and York, Pennsylvania, and converted them to felt mills. He then built manufacturing plants near the felt mills and produced his roofing materials there. In 1912 General Roofing published its first annual report; the company reported an impressive $3 million in assets and a net income of $201,949. The report stated that General Roofing aimed 'to secure its place as the world's largest manufacturer of roofing and building papers.' In 1913 General Roofing began producing asphalt shingles, which cost less than wooden shingles and were more durable and flame resistant.

By the onset of World War I, General Roofing was establishing a sales presence in some foreign countries. While its overseas sales were halted with the outbreak of World War I, its domestic sales rose steadily. By 1914, General Roofing was opening offices throughout the United States, and its factories worked around the clock. Company headquarters were then moved from East St. Louis, Illinois, to St. Louis, Missouri.

Over the next few years the company continued to expand and began to manufacture paints. By 1917 it had established itself as a leader in the production and distribution of 'asphalt roofing, insulating papers, paints, and varnishes.' Also in 1917 the company incorporated, reorganized, and changed its name to Certain-teed Products Corporation, forming the name Certain-teed from its motto: 'Quality made CERTAIN ... Satisfaction GuaranTEED.' In 1918 the company began trading on the New York Stock Exchange.

Diversification and Great Depression Challenges

The years following World War I were difficult for Certain-teed. For the first time in the company's history, it failed to reach its projected volume and profits. Despite its troubles, management refused to shutter plants or lay off workers, believing that the company would bounce back and eventually profit from its employees' experience. This gamble proved sound. In 1919 Certain-teed's sales reached an all-time high of over $10 million. The next year the company began producing floor coverings using the same felt material it was using to manufacture roofing materials, and in 1923 again expanded its product line when it began manufacturing gypsum wallboard, a type of plasterboard. Around the same time the company moved its headquarters once again, from St. Louis to New York City. Investments of some $1.7 million were made during this time to improve and expand the company's existing facilities and acquire new facilities in Pennsylvania, Oklahoma, Texas, New Mexico, Oregon, Michigan, and Wyoming.

On October 24, 1929, the bottom dropped out of the stock market and, by 1930, one out of every three American workers was unemployed. Like most other companies during this time, Certain-teed was forced to lower prices, cut salaries, and shut down some of its plants. Certain-teed remained determined to weather the storm, however, and the company's managers remained optimistic about its future. The company reported that 'compared to its competitors, its products were more popular than ever' during this time. By 1935 Certain-teed had begun to turn a profit once again, and Brown retired from his posts as president and CEO of Certain-teed.

Even during the economic downturns, Certain-teed continued to develop new and innovative building materials. In 1938 the company developed the WOODTEX shingle, a heavy asphalt roofing shingle with a texture similar to real wood. Certain-teed's commitment to research and development had, in fact, helped it become the world's largest manufacturer of roofing materials and the third largest producer of gypsum materials by the late 1930s. In 1938, the year in which company founder Brown died, Certain-teed was acquired by Celotex Corporation of Chicago, which gained control by purchasing a majority of the company's outstanding stock.

National Defense and Postwar Expansion

Under new parentage, Certain-teed continued to pursue innovations in gypsum wallboard construction until, like most manufacturing concerns, it was called upon to assist in the war effort. During World War II Certain-teed manufacturing facilities were converted for wartime equipment production. In 1942 the company was awarded a contract that included its consulting services, equipment procurement, installation inspection, and personnel training. From that time until the end of the war, Certain-teed produced war equipment at its Pantex Ordnance Plant and received the Army Navy 'E' Award for its contributions to the war effort.

During the next few years, Certain-teed regained control of its operations from the Celotex Corporation, when a group of investors, led by Rawson G. Lizars, waged a proxy bid for control. Lizars succeeded and was named president and chairperson at Certain-teed. In 1946 the company started paying dividends on its stock, something it had stopped doing during the Depression. Certain-teed also began developing fiberglass insulation, a product that would be a significant part of its operation in the future.

Certain-teed spent more than $11 million for expansion during the 1950s and continued to add new products to its existing product line. In 1951 it introduced 'Fire-Stop Gypsum Wallboard,' which had a better fire rating than previous gypsum wallboards. The next year Certain-teed opened its first research and development center, in Paoli, Pennsylvania. The research and development center was the highlight of the company's year; intense price competition, a long, costly strike at the Certain-teed's gypsum plant in Texas, as well as a serious flooding of a gypsum mine, resulted in low sales for the company in 1952.

By 1954 the company was back on the expansion track again. It acquired Wm Cameron & Co., a large building supplies wholesaler and retailer with distribution facilities throughout the southwestern United States. During the same year, Certain-teed acquired controlling interest in Valspar Corporation, a manufacturer of house and commercial paints, but divested this interest in 1959. Other acquisitions included the Gold Seal Asphalt Roofing Company of Chicago Heights and a large gypsum deposit in Nova Scotia. The discovery of the gypsum deposit enabled Certain-teed to develop gypsum products on the East Coast. Certain-teed stockholders approved a spin-off of a new company: the Bestwall Gypsum Company.

By the end of 1959, Certain-teed had developed the first fully automatic shingle packaging machine, which helped boost its sales to over $100 million that year. The following year Certain-teed organized the Institute for Essential Housing (IEH), a wholly owned subsidiary that built low-cost homes for Americans. IEH built economy homes under contract throughout the United States and provided special services such as financing. However, in 1962--the year of the Cuban Missile Crisis--a poor economy resulted in many foreclosures, and Certain-teed was left with a surplus of repossessed homes. A few years later it stopped selling housing.

A Focus on Fiberglass in the 1960s

In the 1960s Certain-teed decided to expand the fiberglass portion of its business. Fiberglass was used to make insulation used in pipes, tanks, and walls, and the company's decision to focus on the product was a good one, as energy conservation emerged as an important consideration in the country. In 1964 the company acquired the fiberglass manufacturing facilities of Pall Corporation in Mountaintop, Pennsylvania, and after the acquisition production at that plant tripled.

In 1966 Certain-teed merged with Gustin-Bacon Manufacturing Company, a leading producer of fiberglass products. This merger enabled Certain-teed to enter commercial and industrial markets for fiberglass insulation for homes. The following year, Certain-teed formed a partnership with Compagnie de Saint-Gobain Industries in France, the world leader in glass technology with a long history that included having made windows for King Louis XIV. The two companies formed the Certain-teed Saint-Gobain Insulation Corporation (CSG), a company which combined Saint-Gobain's technical knowledge with Certain-teed's marketing experience. CSG was a strong competitor in the U.S. insulation market.

Other acquisitions during this time included the pipe division of Ambler-Pennsylvania-based Keasbey and Mattison Company, the second largest producer of A/C pipes in the United States. In 1969 Certain-teed acquired the Bowles & Eden Supply Company and the Rohan Company; these acquisitions greatly increased Certain-teed's capacity to produce PVC pipes. Around the same time Certain-teed began producing vinyl siding and fiberglass reinforced bathroom components.

Changes in Technology and Ownership in the 1970s-80s

During the energy crisis of the 1970s, CertainTeed became known as 'The Energy Saving Company' because it focused on producing thermal insulation, roofing, PVC piping, vinyl siding, and acoustical insulation--materials that helped reduce the consumption of fossil fuels. The company enjoyed steady growth during this decade and concentrated on developing new manufacturing and materials technologies.

The year 1971 marked Certain-teed's purchase of Saint-Gobain's American, Canadian, and Mexican patents for fiberglass and foam, as well as the first year Certain-teed earned a profit from its fiberglass insulation. In 1975 Certain-teed began to manufacture PVC resin, a material used in the production of PVC pipe and vinyl siding. The following year the company shortened its name from Certain-teed Products Corporation to CertainTeed Corporation.

During the late 1970s and early 1980s the company's sales and profits slid. Moreover, organizational problems led to a high employee turnover, even among managers. Product quality dropped, and customers complained of poor service. To help turn the company around, Michael Besson was hired as president and CEO of CertainTeed in 1980. Besson was CertainTeed's fourth chief executive in five years. According to an article in the Philadelphia Business Journal, Besson realized the company was in trouble, but he knew it had a strong management team. He believed that with effective leadership and quality products his managers could set the company straight once again. Its partnership with Saint-Gobain was both an asset and a liability. Management was split in its loyalties toward the French industrial giant, and Besson hoped to better unite CertainTeed and Saint-Gobain. Prior to becoming president of CertainTeed, Besson--a Frenchman--had run Saint-Gobain's paper and packaging division, so he was on good terms with the company, and he assured management that he would run CertainTeed as an American company. Besson's efforts were successful. The Philadelphia Business Journal named Besson, his management team, and CertainTeed's board of directors the corporate winners of its 1986 Enterprise Awards. In 1988 Saint-Gobain acquired all of the remaining shares of CertainTeed. The company stopped trading on the New York Stock Exchange and became a subsidiary.

Diversification in the 1990s

In 1995 the company developed a plan for future growth called 'Strategy 2000.' Part of the plan included the unveiling of its K-21 line, the world's largest fiberglass insulation manufacturing line. According to an article in Ceramic Industry, the K-21 line spanned the length of three football fields and cost the company more than $100 million. Located in CertainTeed's existing Kansas City plant, the K-21 line was unveiled in 1999.

Realizing that windows were a natural extension of its product line in the early 1900s, CertainTeed began contracting vinyl window companies to fabricate windows bearing the CertainTeed name. Then, in the mid-1990s, it began buying these companies, among them B & K Window Manufacturing Inc. of Woodville, Washington, a fabricator of vinyl windows for new construction and remodeling markets that had been fabricating windows for CertainTeed since 1991. CertainTeed also purchased the assets of Fashonwall Products Inc. of Wixom, Michigan, a fabricator of CertainTeed vinyl high-performance vinyl windows, and acquired Bufftech Inc., of Buffalo, New York, a supplier of fabricated and extruded PVC fencing for residential, commercial, and agricultural markets. In 1997 CertainTeed bought the assets of Horizon Windows, of Elizabethtown, Kentucky, another of its window fabricators.

In 2000 the Vinyl Institute recognized CertainTeed Corporation's PVC plant in Sulphur, Louisiana, as one of the industry's top safety and environmental performers for the ninth consecutive year. Winners of the award were honored for their efforts to improve worker safety and protect the environment. With the full support of Saint-Gobain, its parent company, CertainTeed's future seemed secure. In 1999 Saint-Gobain's sales reached $24.5 billion, with CertainTeed contributing some $2 billion to that figure. In 2000 Certain-Teed planned to actively pursue new markets while more extensively penetrating existing markets. CertainTeed hoped, according to company literature, to 'gain market share in product areas such as fiber cement and to increase awareness of the Saint-Gobain name in North America.'

Principal Competitors: Armstrong Holdings, Inc.; Elcor Corporation; Owens Corning; Lafarge S.A.


Additional Details

Further Reference

'CertainTeed Acquires Fencing Company,' company press release, September 4, 1996.'CertainTeed Acquires Window Company,' company press release, August 1, 1996.'CertainTeed Acquires Window Fabrication Company,' company press release, November 18, 1996.'CertainTeed Fires Up the World's Largest Fiber Glass Insulation Line,' Ceramic Industry, September 1999, p. 46.75th Anniversary: CertainTeed 1904-1979, Valley Forge, Penn: CertainTeed Corporation.Sullivan, Brian P., 'Among the Rubble, CertainTeed's Michael Besson Finds a Jewel,' Philadelphia Business Journal, March 24, 1986, p. 20.Urey, Craig, 'CertainTeed Buys Assets of Horizon,' Plastics News, August 4, 1997, p. 9.'Vinyl Institute Recognizes CertainTeed as One of the Industry's Top Safety and Environmental Performers for 1999,' company press release, June 7, 2000.

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