Cooper Cameron Corporation - Company Profile, Information, Business Description, History, Background Information on Cooper Cameron Corporation

515 Post Oak Boulevard
Suite 1200
Houston, Texas 77027

Company Perspectives:

Cooper Cameron Corporation is a leading international manufacturer of oil and gas pressure control equipment, including valves, wellheads, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications. Cooper Cameron is also a leading manufacturer of gas turbines, centrifugal compressors, integral and separable reciprocating engines, compressors, and turbochargers.

History of Cooper Cameron Corporation

Cooper Cameron Corporation is a diversified, international manufacturing company divided into two main segments: compression/power equipment and petroleum production equipment. To protect itself from the highly cyclical nature of the energy industry, Cooper Cameron, then operating as the privately held Cooper Industries, embarked in the mid-1960s on an aggressive program of acquiring manufacturing companies with high growth potential and reputations for high quality. In 1995, the company held its initial public offering and reorganized. While the company has proved itself expert at acquiring and managing low-technology companies, it does not hesitate to use high-technology equipment and production methods as well as sophisticated accounting, inventory, and quality-control techniques to streamline operations and maximize earnings.

Ohio Origins

Brothers Charles and Elias Cooper built a foundry in their hometown of Mount Vernon, Ohio, and called it the Mt. Vernon Iron Works. Soon better known as C. & E. Cooper Company, their first products were plows, maple syrup kettles, hog troughs, sorghum grinders, and wagon boxes. Charles Cooper was the stronger leader. Aggressively anti-slavery and a dedicated prohibitionist, he became a respected community leader, even though many of his views differed greatly from those of his neighbors. When Elias Cooper died in 1848, Charles Cooper took a succession of partners, and with each the company name changed accordingly.

Mount Vernon was linked to the rest of the nation by the railroad in 1851 and the following year Cooper was able to ship its first steam-powered compressors for blast furnaces. Cooper's relationship with the railroad had its difficulties, however. When the Sandusky, Mansfield, and Newark Railway was delinquent in paying for woodburning locomotives from the company, Charles Cooper was driven to chain the wheels of a locomotive to the track, padlock it, and stand sentry until he was paid in full.

By the time of the Civil War, Cooper products included wood-burning steam locomotives and steam-powered blowing machines for charcoal blast furnaces. After Charles Gray Cooper, son of Elias, served in the Union army and attended Rensselaer Institute, he became a partner with his uncle.

Post-Civil War Development

In 1869 Cooper became the first company in what was then the West to produce the new, highly efficient Corliss engine. Six years later, it offered the Cooper traction engine, America's first farm tractor. Throughout the rest of the century, the Corliss engine was Cooper's principal product.

The company was incorporated as the C. & G. Cooper Company in 1895, and Frank L. Fairchild, a respected salesman of the Cooper-Corliss engine, was named its first president. Fairchild so enjoyed selling that throughout his 17-year presidency he continued to serve as sales manager.

By 1900 gas was being discovered in new fields and shipped more than 100 miles through primitive pipelines. At the same time, the oil industry was also beginning to develop. Not long after Charles Cooper's death in 1901, it became clear that steam turbine engines were destined to replace the Corliss engine. Cooper management recognized the necessity of focusing on a small segment of the market, and in 1908 it wisely chose to make a gradual change to natural-gas internal-combustion engines, which were being used successfully at the compression stage of pipeline transmission.

Fairchild died suddenly in 1912 and Charles Gray (C. G.) Cooper, took his place. One story describes C. G.'s famous bluntness particularly well: C. G. once visited a procrastinating client and without any preliminary niceties asked, "Do you want to buy a steam engine?" The man said he did not want one just then. "All right, then you can go to hell," C. G. said and stormed out abruptly.

From Steam to Gas, TransitionFollowing World War I

During World War I, Cooper built high-speed steam-hydraulic forging presses for government arsenals, munitions plants, and shipyards, as well as giant gas engines and compressors and triple-expansion marine engines. The company's wartime production demands slowed its transformation from a producer of steam to gas engines, since steam engines were needed for the war effort. But after the war, it became clear that the company had chosen its direction wisely when it set its sights on developing gas internal-combustion engines. The old Corliss was quickly becoming outmoded by competition from steam turbines and gas-powered engines.

In 1919 C. G. Cooper became chairman and Desault B. Kirk, the company's treasurer, became president. Just a year later, Cooper began a long-range program for growth, and the directors elected Beatty B. Williams president. Although he'd married the boss's daughter, few credited Williams's rise to simply marrying into the family. Serving as vice president and general manager during the war years, Williams was singleminded in his dedication to the company's success and directed Cooper (and subsequently Cooper-Bessemer) with great energy and foresight for 22 years. Always mindful of what he called "an aloofness" that could develop between office and factory workers, Williams held conferences in which factory workers were invited to air their views and offered evening courses in production and management in which any employee could enroll.

Natural gas was gaining growing importance in the manufacture of steel and glass and in the emerging petrochemical industry. Cooper field service engineers were often on hand for months at a time to oversee the installation of huge four-cycle Cooper engines and compressors in compressor stations as new pipelines were routed through West Virginia, Louisiana, Arkansas, Oklahoma, and Texas.

Within just a few years, Cooper became the country's leading producer of pipeline compression engines. Although Cooper also produced smaller two-cylinder engines used in natural-gas fields to extract gas as it came from the well, the Bessemer Gas Engine Company of Grove City, Pennsylvania, dominated that field.

Founded in 1897, Bessemer had produced oil-pumping engines for most of its existence and had invested heavily in diesel engine development during the 1920s. While Cooper and Bessemer had some product overlap, their major strengths were in different areas.

By 1929 Cooper needed additional production facilities to meet the mounting orders for large natural-gas engine compressor units. Bessemer, after its lengthy period of diesel development, badly needed new capital. Both companies had posted nearly identical average earnings for the previous three years. The companies negotiated a merger for several months, and the Cooper-Bessemer Corporation came into being in April 1929. The merger made the company the largest builder of gas engines and compressors in the United States. Soon afterward it was listed on the American Stock Exchange.

Cooper-Bessemer's business boom was brief. The company continued the Bessemer line of diesel marine engines, and since most ships were built or converted on the East Coast, Cooper-Bessemer soon decided to open a sales office in New York. The office was opened on October 23, 1929, however, at the very beginning of the Great Depression.

Depression and Recovery, the 1930s

Two years later, annual sales had dropped more than 90 percent, reflecting the almost total halt of construction on long-distance pipelines and in American shipyards. Half of all sales that year were for repair parts. Along with thousands of other American companies, Cooper-Bessemer was forced to lay off workers.

Cooper-Bessemer slowly revived in the middle and late 1930s by continuing to improve products and by entering new markets. The company was convinced that the diesel would replace steam-powered railroad engines and it developed one for the new market.

World War II Production Spurs Growth

Charles B. Jahnke was elected president in 1940 and Williams moved to chairman of the board, but Jahnke died a year later and Williams returned to the presidency for two more years. Only when Cooper-Bessemer embarked on a wartime production schedule in 1941 did its sales figures surpass their pre-Depression level. The company had sold engines to several branches of the military before the war and was thus in a favored position to receive large orders during World War II. It became a major producer of diesel engines for military vessels of all kinds and also increased production of locomotive engines. At the peak of its wartime production, Cooper-Bessemer had 4,337 employees working in round-the-clock shifts.

In 1941 Cooper-Bessemer's net sales jumped to an all-time high, and just two years later they had more than tripled. The company was listed for the first time on the New York Stock Exchange in 1944.

Gordon Lefebvre was elected company president in 1943. He had previously served as vice-president and general manager. Formerly the head of General Motors's Pontiac division, he had a background in engineering and was energetic, likable, and a tough negotiator.

After World War II, Cooper-Bessemer became increasingly interested in selling its products worldwide. It formed an international sales office and announced its first sales-service branch outside the United States, in Caracas, Venezuela, in 1945. Later in the decade, it expanded warehouse facilities in Canada and established a subsidiary sales unit, Cooper-Bessemer of Canada, with three offices, and received its first postwar orders from the Soviet Union.

Cooper-Bessemer had developed its innovative "turbo flow" high-compression gas-diesel engine in 1945, and two years later it introduced the GMW engine, which delivered 2,500 horsepower and could be shipped in one assembled unit. In these postwar years Cooper officials began to discuss diversification, which Lefebvre defined as "finding new markets for old products and new products for old markets, rather than moving into fields with which we are not familiar."

In 1951 Cooper-Bessemer's sales of $52 million surpassed its wartime high by nearly $10 million. Business that year was boosted by the Korean War; company shipments were almost solely to markets supported by the war effort, such as the petroleum, aluminum, chemical, and railroad industries.

Strike--Takeover Attempt--New Leadership, the 1950s

A combination of internal and external circumstances in 1954 led to a startling 38 percent decrease in net sales and Cooper-Bessemer's first net loss since 1938. The company's problems included a seven-week strike at the Grove City plant and a nationwide recession, but the main difficulty was the U.S. Supreme Court's decision in the Phillips Petroleum case, which ruled that producers selling gas to interstate pipelines had to submit to the Federal Power Commission's jurisdiction. This decision produced upheaval and uncertainty among pipeline operators, and therefore for Cooper-Bessemer.

While the company was rebuffing a 1955 takeover attempt by a private investor named Robert New, Lefebvre resigned unexpectedly, and Lawrence Williams, Beatty Williams's son, became president. He served beside his father, who was chairman of the board. Lawrence Williams had already served the company in many capacities and had taken early retirement to pursue other interests; he considered his return a temporary one. The takeover attempt had shaken management. In an attempt to bring an infusion of young talent to the company, Williams made a number of top management changes, including elevating Eugene L. Miller to chief operating officer. Due to revitalized demand, sales bounced back in 1956 to a record high of $61.2 million, but it was becoming increasingly clear that Cooper-Bessemer needed to diversify in order to avoid the cyclical pitfalls of energy-related manufacturing.

In 1957 Gene Miller was elected president. At 38, he was the youngest man to hold the position since the company's original founder. Miller had begun at Cooper-Bessemer in 1946. A year after he became president, the company acquired Rotor Tool Company of Cleveland, the makers of pneumatic and high-cycle electric portable tools.

Over the next few years Cooper-Bessemer struggled to develop an engine to meet the challenge of General Electric's new combustion gas turbine engine, which threatened to supplant several of Cooper's engines in the pipeline transmission market. Its efforts resulted in the world's first industrial jet-powered gas turbine, introduced in 1960.

Under Miller's leadership, the distinction between Cooper-Bessemer administrative and operational management grew more pronounced, as was happening in companies throughout the country. Innovations such as computerization, fluctuations in worldwide monetary exchanges, increased government controls, and changing tax structures had made operating a large business increasingly complicated. In recognition of this, Miller moved the corporate offices from the Mount Vernon plant to offices on the city square to "establish a corporate group capable of administering many relatively independent divisions."

Meanwhile, Cooper-Bessemer's international division was also growing. By the end of the 1950s Cooper had sales agents in 10 countries, licensees in three, and franchises in two. In 1964 it opened an office in Beirut and also formed a wholly owned British subsidiary, Cooper-Bessemer (U.K.), Ltd.

Cooper-Bessemer was no exception to the trend toward large conglomerates during the 1960s, but it did try to limit its acquisitions to those that could be mutually beneficial. In the early 1960s, it acquired Kline Manufacturing, a producer of high-pressure hydraulic pumps; Ajax Iron Works, which built gas engine compressors and a water flood vertical pump for oil and gas production; and the Pennsylvania Pump and Compressor Company. Between 1960 and 1965, the company's sales grew from $68 million to $117 million.

Cooper had grown into a large, diverse company. To better reflect its nature, it changed its name to Cooper, Inc. in December 1965. Two years later it moved its corporate headquarters to Houston, to be more in the geographic mainstream of American business.

Cooper acquired Lufkin Rule Company of Saginaw, Michigan, in 1967. It was the first of many acquisitions for what Lufkin president William G. Rector called a "tool basket"--a high-quality hand tools manufacturing group. Subsequent hand tool-related acquisitions included Crescent Niagara Corporation (wrenches) in 1968, Weller Electric Corporation (soldering tools) in 1970, Nicholson File Company (rasps and files) in 1972, Xcelite (small tools for the electronics industry) in 1973, J. Wiss & Sons Company (scissors) in 1976, McDonough Company's Plumb Tool subsidiary (striking tools) in 1980, and Kirsch Company (drapery hardware) in 1981.

Charles Cooper, the last Cooper family member to be associated with the company, retired in 1968. The grandson of Elias, he had served as a vice-president and board member.

The company branched out into aircraft services in 1970 by acquiring Dallas Airmotive, and later acquired Southwest Airmotive Company in 1973 and Standard Aircraft Equipment in 1975. While these acquisitions performed satisfactorily, the company sold its airmotive segment to Aviation Power Supply in 1981 because it did not see much potential for further growth.

The 1973 oil embargo threw many industrialized nations into an uproar. Cooper's Ajax division struggled to keep up with orders from domestic crude-oil producers and Cooper received a large order for its Coberra gas turbines for the Alaskan pipeline.

After having served as president and chief operating officer since 1973, Robert Cizik was named chief executive officer in 1975. Lured to the company from Standard Oil New Jersey (now Exxon) in 1961, Cizik started his career at Cooper as executive assistant for corporate development.

Cizik stepped up the company's acquisition program. After satisfying a Justice Department challenge, Cooper acquired the White Superior engine division, a heavy-duty engine maker, from the White Motor Company in 1976, and in 1979 Cooper realized a dream of acquiring the Dallas-based Gardner-Denver Company, a company roughly the same size as Cooper. Although Forbes described Gardner-Denver as "a company notorious for lack of planning or cost controls," Cooper was confident the company's three energy-related business segments could be successfully merged into its own energy-related manufacturing operations. Forbes reported at the time that the merger was one of the 10 largest in U.S. history. That year the company passed the $1 billion sales milestone, only three years after it had reached a half a billion dollars in sales.

Cooper has been criticized for handling acquisitions coldheartedly. After acquiring Gardner-Denver, it closed the company's corporate headquarters, decentralized it, reduced employment, and cut benefits. But many analysts defended these actions, noting that Gardner-Denver had been full of operational problems and very poorly managed.

Cooper is known for its manufacturing efficiency and willingness to make capital investments to improve production or market position. For instance, when the last domestic producer of the very hard steel needed to manufacture files stopped making it, Cooper developed a process for making its own steel that was different from the traditional method but still suitable for making files, at half the cost.

In 1981, Cooper acquired the highly respected Crouse-Hinds Company of Syracuse, New York, makers of electrical products, after a long battle in which Cooper played white knight, rescuing Crouse-Hinds from Inter-North Corporation. Cooper also acquired the Belden Corporation, a wire and cable manufacturer that Crouse-Hinds had been in the process of purchasing. This acquisition expanded Cooper's size by 50 percent. Shortly after the merger, Cizik explained to Business Week that he had entered the electrical components business because "we needed to be in a business that looked beyond the 1980s and even the year 2000 for growth." When demand for gas and oil began to slump in 1981, Cooper's diversification paid off. Sales of the company's energy-related products dropped by 60 percent but its other two divisions were hurt far less.

Acquisitions Culminate in 1995 Merger

Cizik continued to look for new acquisitions. Cooper's next bold move was a 1985 merger with McGraw-Edison Company, a manufacturer of electrical energy-related products for industrial, commercial, and utility use. The merger nearly doubled Cooper's size and made the company one of the largest lighting manufacturers in the world. Cooper's 1985 sales passed $3 billion.

Since the McGraw-Edison acquisition, most Cooper acquisitions have been on a somewhat smaller scale. In 1987 they included the molded rubber products division and the petroleum equipment and products group from Joy Technologies. In 1988, Cooper acquired RTE Corporation, a Wisconsin-based manufacturer of electrical distribution equipment, and Beswick, a manufacturer of fuses and related products in the United Kingdom. But in 1989, Cooper made yet another major acquisition, of the Champion Spark Plug Company, the world's leading manufacturer of spark plugs for combustion engines. Champion, based in Toledo, Ohio, was also known as a major producer of windshield-wiper blades. And in late November 1989, Cooper also acquired Cameron Iron Works, a Houston-based maker of oil tools, ball valves, and forged products with annual sales of $611 million.

Reorganization and Public Offering, 1995

Cooper, before its initial public offering in 1995, manufactured more than a million products in 145 plants, 41 of them in foreign countries. Its annual revenues exceeded $4 billion. But the company had divisions that were performing badly, resulting in a backlog of debt that ate away at the impressive figures. In early 1995, the company faced a net loss for the year of $500.1 million. It was time for a reorganization and, that July, with its initial public offering, the corporation became the publicly traded Cooper Cameron Corporation.

The new corporation took dramatic steps in its first months. It sold the Wheeling Machine Products division for $14 million and used that to help pay down the company debt. It also sold its foundry in Richmond, Texas. Plants and facilities were combined in the United States, Mexico, the UK, and France, and employees were offered severance packages. The number of employees plummeted from 43,300 to 8,500.

The new corporation poured itself into a new mold and created three divisions: Cameron, Cooper Energy Services, and Cooper Turbocompressor. Cameron, headquartered in Houston, was the petroleum production equipment side of the house, and was organized into 4 business units, each reporting to a vice president. The first three units were geographical: Eastern (Europe, Africa, former Soviet Union), Western (U.S., Canada, Mexico, Central and South America), and Asia-Pacific-Middle East. The fourth group was established to interface with valve customers, and was called Cooper Cameron Valves. Cooper Energy Services, headquartered in Mt. Vernon, Ohio, concentrated on compression and power equipment for the energy industry. Cooper Turbocompressor, headquartered in Buffalo, New York, sold specialized compressors. In 1996, Cooper Cameron cleared a profit of $64.2 million on earnings of $1.4 billion. Nearly 60 percent of its business was conducted overseas.

In June 1996, the company acquired Ingram Cactus Corporation, a manufacturer of oil and gas production valves and actuators. The $100 million company was folded into the Cameron division and retained its brand name. Tundra Valve & Wellhead, a Canadian firm, was also acquired, along with some of the assets of ENOX Technologies, for a sum of $13,431,000. The company's revenue was up 21 percent over 1995 levels, with the Cameron segment individually seeing a 23 percent increase. The Cooper Energy Services/Cooper Turbocompressor segments were up 19 percent over 1995.

A Look to the Future

In the future, Cooper Cameron foresees establishing itself even more firmly in the profitable and hazardous oil platforms of the North Sea. The company competes against industry giants such as General Electric, and other well-established firms such as European Gas Turbines, Caterpillar Inc., and Vetco Gray Inc. The company intends to push strongly into turbine and compressor markets in Canada, Europe, the Middle East, and the Far East. After declaring a two-for-one stock split in May 1997 and seeing its stock price rise from $20 to $70 per share in two years, the company was confident of a profitable future.

Additional Details

Further Reference

Keller, David N. Cooper: 1833-1983, Athens, Ohio, Ohio University Press, 1983.

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