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

302 Peoples Avenue
Rockford, Illinois 61104

Company Perspectives:

As Gunite approaches its 150th year of operation, it continues to have a rich history of innovation as it sets milestones in the art of manufacturing products for the heavy-duty trucking, off-highway, and bus markets.

History of Gunite Corporation

Gunite Corporation manufactures wheel-end components for medium- and heavy-duty trucks. The company's products--which include automatic slack adjusters, brake drums, disc brake rotors, disc wheel hubs, spoke wheels, and disc and spoke wheel assemblies for trailers--come as standard equipment on many North American-made trucks.

Origins in the 19th Century

Gunite is based in Rockford, Illinois, where it is believed to be the city's oldest manufacturing operation. The company originated from the efforts of Duncan Forbes, who was born in Scotland. Duncan came to Troy, New York, with his son Alexander Duncan Forbes in 1842, and the two became involved in the foundry business. By 1854, the men had migrated to Rockford and established a partnership called Duncan Forbes & Son on Forbes Street. Their foundry was located in the city's Water Power District, where a dam had been constructed across the Rock River to provide power for industry. According to an early historical profile of the company from the mid-1950s, "The operators had to be content with high water in the spring and shallow water in the summer. At times the foundry had to shut down and everyone went hunting and fishing. The diary of Alexander Forbes is filled with notations of going fishing or hunting at almost any time of the year."

According to the same historical profile, father and son arrived in Rockford during the month of March. Within six months, "they had leased a building, constructed a cupola, connected water power for the blast fans and drawn up a partnership agreement and were advertising in local newspapers the products they were making." The partnership produced a variety of products from gray iron, including small cast iron stoves, kettles, branding irons, water and steam pipes, fireplace grates, chain pump wheels, railing, wagon wheel axel hubs, plow castings, and sled runners. During the mid-1850s and 1860s, production shifted from gray iron to malleable iron, which the company sold in large quantities to farm implement manufacturers.

During these early years, the Forbes partnership operated under several different business names. According to different sources, the enterprise was called Forest City Foundry, D. Forbes & Son, Proprietors; Eagle Foundry; and Forbes Malleable Iron Works. Duncan Forbes died in April of 1871, but his descendants carried on in his footsteps. That year, Alexander Forbes established a new partnership called A.D. Forbes & Co., which existed until the company was finally incorporated as Rockford Malleable Iron Works in 1890.

Continued Growth in the 20th Century

By the dawn of the twentieth century, the foundry had grown to employ about 150 people. In 1906, it relocated to a 38-acre tract of land on Peoples Avenue. It was around this time when the company began to benefit from the burgeoning U.S. transportation sector. In only a few short years, the railroads became its top market for malleable iron, which was used in the manufacture of freight cars. A period of rapid growth followed, and the foundry's workforce grew to about 550 by the spring of 1917. At that time, Rockford Malleable Iron established a bureau of employment and welfare to look after the interests of its growing employee base, in the event employees were hurt or became ill.

The railroads provided a steady stream of business until approximately 1920, by which time the foundry had been serving the emerging automobile market for five or six years. In addition to the passenger transportation industry, the company found a niche in the commercial sector and began marketing cast iron brake drums for trucks in 1924. By this time, five generations of the Forbes family had been involved with the company.

When Ford Motor Co. ceased production of the Model T in 1927, the decision had a grave impact on Rockford Malleable Iron, significantly reducing business. However, the Forbes family did not give up. It was amidst these disappointing and challenging conditions that Duncan Patterson Forbes, great-grandson of founder Duncan Forbes, defined the enterprise's future. According to an early newspaper account, after experimenting with the properties of gun iron in a college metallurgy class, Duncan inspired the company's engineers to conduct further research into the high-strength metal, which had been used mainly in the production of large field artillery. This ultimately led to the birth of a new product called Gunite--a variety of processed gray iron--and the establishment of a new subsidiary called Gunite Corp.

Following the development of Gunite, the parent company consolidated its operations with Northwestern Malleable of Milwaukee in 1928 and adopted the name Rockford Northwestern Malleable Corp. In 1931, John A. Forbes was promoted from vice-president and general manager to president, replacing Duncan P. Forbes, who became chairman. The following year, the Gunite subsidiary was assimilated into the parent company, which then changed its name to Gunite Foundries Corp. In addition to products made of malleable iron, the newly named company offered a variety of products made from Gunite and a metal known as Z-ron. These included heavy-duty truck wheels made from cast iron, along with bolts, clutch pressure plates, wrenches, connecting rods, and brake drums.

When the 1940s arrived, rising freight costs prompted Gunite to stop casting production for the automobile industry. World War II followed, and the company's resources were devoted to wartime production. Specifically, Gunite began making steel castings, as well as gray iron castings, that were needed for the production of machine tools. After the war ended, Gunite's capabilities with steel were used to make truck wheels that complemented the iron brake drums it began manufacturing in the mid-1920s.

By the mid-1950s, Gunite had achieved steady growth through 100 years of operation. It employed roughly 700 workers with an annual payroll of about $4 million. The company's production workers were unionized. As an early historical profile of Gunite explains, the company weathered more than one rough period during its first 100 years, including a number of nationwide financial panics and periods of economic depression.

According to the August 17, 1955 Rockford Morning Star, at this time various types of commercial castings constituted approximately one-third of Gunite's production. The remainder of the foundry's output was devoted to truck brake drums, as well as truck wheels that included brake drums. Gunite shipped anywhere from 16,000 to 18,000 of the latter item every month. The article called Gunite "a classic example of private initiative, courage and freedom of enterprise" and said its strong, lightweight wheel had "an enviable reputation" because it allowed trucks to carry heavier loads on roads and highways with weight restrictions.

Changes and Challenges: Mid-1950s to Late 1980s

After 91 years, Gunite ceased to make malleable iron castings in August of 1955. High labor costs made this type of casting non-profitable. The company continued to make castings from its namesake Gunite, as well as from steel and gray iron. By spring of the following year, a $1 million expansion program had been announced. The program included planned facilities upgrades like a new electric furnace that would enable Gunite to double its production of steel. In November of 1956, President Duncan P. Forbes succeeded John A. Forbes as Gunite's chairman, while E.C. Fales was named president and general manager. Together, all of these changes may have seen somewhat drastic. However, they paled in comparison to those that were around the corner.

In July 1960, Noble J. Schmidt replaced Fales at the helm of Gunite and was named president and CEO. A long-time employee, Schmidt had served Gunite in a variety of capacities since 1906. A little more than two months later, the company announced that it had agreed to be purchased by Kelsey-Hayes Co. of Detroit, which at the time was the nation's largest automobile brake drum manufacturer. Kelsey-Hayes saw Gunite as a strong complement to its existing automobile operations, since Gunite attributed 75 percent of its business to truck manufacturers like Chrysler, Diamond T., Dodge, Ford, General Motors, and White, and the remainder to companies like Baldwin Locomotive and Caterpillar.

By November 1960, Gunite Foundries Corp. officially became the Gunite Foundries Division of Kelsey-Hayes Co., and Noble Schmidt announced that he would retire in December. Responsibility for the division was given to William H. Shinn, who had been with Gunite for nearly 20 years. Gunite's new owner increased the foundry's size and introduced new products for trucks and trailers including aluminum spoke wheels and a skid control system modeled after one found in the aircraft industry. Sales climbed more then 300 percent between 1960 and 1968, when the company announced a $1.8 million addition that included a new iron melt shop and systems for environmental regulation compliance.

In 1972, Kelsey-Hayes turned Gunite into a manufacturing plant and removed the element of local control. At this time, president and general manager William Shinn left the company. In November of the following year, Kelsey-Hayes became a subsidiary of truck trailer manufacturer Fruehauf Corp. At the same time, the gradual physical expansion of Gunite that had been underway since the early 1960s received a big boost. The foundry revealed $20 million plans to increase its 500,000-square-foot facility by approximately 25 percent. In the November 1, 1973 Rockford Register Republic, Gunite general manager Kenneth Schroeder described some of the planned improvements, which included a new iron foundry with the capacity to melt 35 tons, an expanded machine shop and steel melt department, and an additional steel automated molding line.

In late 1978, reorganization at Kelsey-Hayes returned local control to Gunite, and William Shinn returned to manage the foundry. By November 1979, Gunite's workforce had grown from 700 employees to 1,100, and the foundry had grown to occupy 1 million square feet. The company continued to invest in the future. It ordered $4 million in new equipment, some of which was devoted to produce a new line of wheel hubs for customers like General Motors, which signed a contract with Gunite worth $3 million per year. However, bad times loomed on the horizon. In 1982 an economic recession, coupled with a sluggish trucking industry, resulted in large-scale layoffs.

Conditions started to improve in 1983, when federal weight restrictions on trucks were reduced. By 1984, Gunite was benefiting from the development of new products at Kelsey-Hayes, including a new disc brake system. However, by this time a mere 500 workers remained in Rockford. In addition, Gunite announced plans to move some 200 machinists jobs from Rockford to Elkhart, Indiana, by 1986. In September 1987, a new Oak Brook, Illinois-based firm called Truck Components Inc. purchased Gunite, as well as Fabco Automotive Corp., from Kelsey-Hayes. At this time, Gunite was officially named Gunite Corp.

A major win for Gunite came in 1988, when Navistar International named the foundry as its only supplier of wheel-end components on medium- and heavy-duty trucks. Another important contract came from Ford Motor Co. As reported in the May 17, 1988 Rockford Register Star, Ford opted to include Gunite's automatic slack adjusters, which helped breaks to wear in a more even fashion, as standard equipment on all of the automaker's "medium- and heavy-duty chassis with air brakes starting with the 1989 model year."

Labor Troubles and a New Parent Company: 1990s and Beyond

Gunite started the 1990s under new leadership. Thomas Cook was named the foundry's president in April 1991. Cook had previously served as president and CEO of automotive part manufacturer Redlaw Industries, and came to Gunite with more than 30 years of experience in the metals industry. By 1993, the company's employee base had returned to previous levels, totaling approximately 724 workers. Of these, 263 employees worked at the Rockford plant. That year, the U.S. Department of Labor's Occupational Health and Safety Administration proposed that Gunite be fined $216,000 after an investigation revealed it had violated 62 safety regulations. The proposed fines came in the wake of two employee deaths that happened between 1991 and 1993.

In May 1994, Gunite's parent company, Truck Components Inc., was purchased by New York-based Castle Harlan Inc. for $170 million. As part of the deal, Cook became CEO of Truck Components. The following year, company ownership changed once again when Truck Components was acquired by Chicago-based Johnstown America Industries Inc.

In 1998, union workers at Gunite's Rockford plant went on strike in an effort to obtain better pay and more agreeable working conditions. In the April 29, 1998 Rockford Register Star, a representative for the United Auto Workers explained, "It's not your normal strike, where it just amounts to pure economics. It's hard to say how long the strike will last because the membership was upset with the morale in the plant. It's pretty low. They have to work long hours, ... and it's a hot, dirty job." After approximately two weeks, the workers reached an agreement with Gunite that required them to work fewer hours on weekends. In addition, Gunite agreed to bring in a third-party consultant to improve relations between the foundry and its workers.

By the late 1990s, Gunite continued to struggle with safety issues. From 1990 through 1998, the November 24, 1998 Rockford Register Star revealed the foundry had paid actual fines of $88,125 for various safety violations. However, these paled in comparison to proposed OSHA fines that totaled $407,000 in late 1998. Of this large sum, $140,000 was related to charges that Gunite exposed its workers to silica dust, which causes a condition called silicosis. The remainder was "for 35 other alleged violations, including the company's failure to provide annual hearing tests, to inspect respirators, and to properly maintain a clean work environment."

In June 1999, Johnstown America Industries Inc. was re-named Transportation Technologies Industries Inc. (TTI) as the company sharpened its focus on the transportation industry. By 2002, Gunite remained one of several key TTI companies, which together resulted in annual revenues of more than $500 million. Despite challenges in the areas of safety and labor relations, Gunite has been recognized for excellence within its industry. According to the company, in addition to receiving QS-9000 certification, Gunite has received the Q-1 award from Ford Motor Co. and Freightliner's Masters of Quality award. However, perhaps its most remarkable achievement of all is surviving and thriving after more than 150 years of continuous operation.

Principal Competitors: ArvinMeritor Inc.; Citation; INTERMET.


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