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

835 Hillcrest Drive
Charleston, West Virginia 25311

Company Perspectives:

Our Business is currently going strong with its original motto from the 1920s, "The house that service built," as a guideline.

History of McJunkin Corporation

Located in Charleston, West Virginia, McJunkin Corporation is a major distributor of carbon steel; stainless steel and corrosion-resistant pipe, valves and fittings; instrumentation and controls; tubular goods and other drilling supplies; mining supplies; and electrical supplies. Originally established to serve the oil and gas industry, the privately held company now offers 70,000 products to a range of industries, including automotive, chemical and petrochemical, construction, food and beverage processing, mining, pharmaceutical, power companies, pulp and paper, and refining processes. In addition, McJunkin offers its customers value-added solutions such as storeroom management; systems engineering; the rebuilding, cleaning and actuation of valves; project services to determine the optimal amount of materials needed for a job; integrated supply services; and portable material distribution facilities for use in shutting down plants or other special projects. McJunkin maintains 100 locations in 28 states and operates in Mexico and Latin America through the joint venture Trottner-McJunkin. McJunkin is still owned by the founding families and is now headed by a third generation.

Forming the Company in 1921

Brothers-in-law Jerry McJunkin and H. Bernard Wehrle established McJunkin Supply Co. in Charleston, West Virginia, in 1921 to serve the oil and gas industry in the Appalachian Mountains. They set up shop in a corner of the town's Arcade building. After two years, another brother-in-law, George Herscher, joined the business. According to company lore, the founders were enamored with the color red, constantly wearing red ties, painting the fenders of company vehicles fire-engine red, and going so far as to require the two women working for the company to have red hair. One, Lillian Mairs, was a natural blonde, who had to dye her hair red to keep her job.

Through the prosperous 1920s, McJunkin thrived and expanded its operations. A branch was opened in Paintsville, Kentucky, in 1924, the same year that sales topped the $1 million mark. By the end of the decade the company added a machine shop and blacksmith shop. But with the stock market crash in October 1929 the good times came to an end, the country was soon mired in the Great Depression, and like most businesses McJunkin faced some difficult years.

Sales dipped to $700,000 by 1934, but McJunkin was fortunate that Union Carbide came into being in Clendenin, West Virginia. McJunkin expanded into the chemicals industry and Union Carbide became a major customer. With business once again on an upswing, McJunkin was able to grow sales to $1.2 million by 1938, and by the end of the decade, the company was able to add branches in Hamlin and Grantsville, West Virginia, and Allen, Kentucky. McJunkin decided to share its prosperity with its employees. In 1941 the company made the first contribution to what would become one of the most generous profit-sharing plans in the United States.

Second Generation Becoming Involved in the Postwar Years

Like many companies during World War II, McJunkin did what it could to support the war effort. The company's shops were converted to turn out amphibious vehicles as well as 500-pound bomb casings. With the close of the war, McJunkin grew at an even greater pace, spurred by a booming economy. A second generation also became involved in the running of the business. In 1946 Henry D. Wehrle, Jr., went to work for the company, after serving in the U.S. Navy following his 1943 graduation from Princeton University, in New Jersey. He would later be joined by his brother, Russell Wehrle. The company's first industrial supply branch opened in Marietta, Ohio, in 1947, a move that also marked the first time that McJunkin expanded beyond the Appalachian region of West Virginia and Kentucky. By the end of the decade the company also had built a new facility in Charleston, a combination headquarters and warehouse, allowing McJunkin to escape the Arcade building, which had been shabby some 30 years earlier when the company was launched.

The 1950s and 1960s brought further changes to the business. In March 1951, McJunkin Supply Company became McJunkin Corporation. The following year, branches were opened in Columbus, Ohio; Louisville, Kentucky; and Atlanta, Georgia, bringing the total number of branches to 12. In addition to other greenfield operations the company would open in the ensuing years, McJunkin also expanded through acquisitions. In 1957, it moved into the Pittsburgh market by purchasing Chandler-Boyd Supply. Additional sales from this operation helped McJunkin to reach $26 million in total revenues. In 1964 there was a turnover in leadership when Henry D. Wehrle, Jr., became president and CEO of the company. A year later the company opened a branch in Beaumont, Texas, to serve the state's all-important oil and gas industry. Now operating 18 branches, the company enjoyed a significant growth spurt to close out the 1960s. Branches were opened in Philadelphia and Chicago, and McJunkin became involved in electrical supplies by acquiring Charleston Electrical Supply. By the close of the decade, the company boasted 29 branches located in 18 states.

At the start of the 1970s annual sales exceeded the $75 million level and the company had 900 employees. During the 1970s McJunkin became increasingly committed to the refining and petrochemical industries. To support this sector new branches were opened in the Gulf Coast Region and on the West Coast. During this period, McJunkin also moved into the mining sector by designing, developing, and manufacturing light products suitable for mining purposes. The company also looked overseas for the first time. In 1976 McJunkin opened a sales office in Brussels, Belgium.

Because of McJunkin's dependence on oil and gas customers, a major slump in the oil and gas industries in the 1980s had an adverse impact on the company's fortunes for much of the decade. As a result McJunkin had to cut staff and implement other cost-saving initiatives. But by the late 1980s the company was once again looking to expand. In 1987 McJunkin acquired Grant Supply Co., adding 11 branches in the Southwest. Also of note, in 1989 the company merged its oil and gas division with Appalachian Pipe, creating McJunkin Appalachian Supply Co. Despite a difficult stretch, by the end of the 1980s McJunkin, with estimated annual sales in the $500 million range, cracked the Forbes list of the 400 largest privately owned companies in the United States. The decade also was marked by the death of Russell Wehrle in 1987, an event that led to the installation of a third generation into leadership positions. W.B. "Bernie" Wehrle III became president of the company and his cousin Michael Wehrle was named chief financial officer.

McJunkin grew on a number of fronts during the 1990s. In January 1992 it made a major acquisition, buying Republic Supply Co. of California. Republic was older than McJunkin, formed in 1910. It distributed industrial supplies, valves, pipe and fittings, and oilfield specialty items to oil, energy, and natural resources companies. Republic generated $96 million in annual sales in 1988, the last public estimate before it was brought together with two other companies in 1990 to form Earle M. Jorgensen Co. Reportedly, due to difficult economic conditions, Jorgensen concluded that Republic, the smallest of three operations, was expendable, and its sale would help to pay down debt incurred in the buyout. For McJunkin, picking up Republic added 18 centers, of which 14 were located in California and 15 were new markets. Existing McJunkin branches in Bakersfield, Los Angeles, and San Francisco were incorporated into Republic operations, which possessed larger warehouses.

McJunkin and Rival Firm Joining Forces in 1994

McJunkin also achieved growth in the 1990s by way of joint ventures. In 1994 the company joined forces with rival Charleston distributor Cameron & Barkley Company to form McJunkin-Cambar. The new company distributed electrical and electronic products and industrial mill supplies, the goal being to pursue markets where the parent companies were not operating. In addition, McJunkin and Cameron & Barkley established a distributor consortium, International Supply Consortium, dedicated to selling integrated supply and systems contracts for MRO (maintenance, repair, and operations) and construction products. The venture was soon supplemented by the addition of Bearings, Inc., adding more than 300 locations. In 1998 McJunkin established another 50-50 joint venture, this time to do business south of the U.S. border. McJunkin's partner was Mexico City-based Casa Trottner, which led a group of Mexican partners. The resulting company, Trottner-McJunkin SA de CV, would help McJunkin on more than one level. Finding a cultural partner like Trottner allowed McJunkin to better serve customers with Mexican and Latin American operations. Moreover, the parent companies looked to combine their complementary inventories and reputations to enter new Latin American markets through the joint venture, rather than going it alone. In addition to spurring growth through partnerships during the 1990s, McJunkin also added automated products to its slate, creating McJunkin Process Automation Controls to handle the business.

The pipe and valve business entered a period of consolidation, with larger distributors swallowing smaller operations. In order to keep pace, McJunkin completed several acquisitions in the early years of the new century, four in 2001 alone. In that year, McJunkin in alliance with Cameron & Barkley and the McJunkin-Cambar joint venture acquired 18 Fairmont Supply Co. sites. For its share, McJunkin added locations in the eastern and southwestern United States. Also in 2001 McJunkin acquired Toledo, Ohio-based M.P. Wilkins Supply Co., the leading PVF (pipes, valves, and fittings) distributor in northwest Ohio with more than 50 years in business. As part of the deal, the Wilkins Supply management team agreed to stay on to run the company, which would now be known as "Wilkins- McJunkin Supply, a Division of McJunkin Corporation." Furthermore, in 2001 McJunkin augmented its Controls Division (the devices and instruments that remotely activate and monitor the performance of valves used by oil refineries, chemical plants, and paper mills), by purchasing virtually all of the assets of Automation & Controls Specialists Inc., a Dublin, California, company that served northern California and western Nevada. Finally, in 2001 McJunkin acquired Joliet Valves Incorporated, based in Minooka, Illinois. Joliet Valves was founded in 1971 and had evolved into a leading PVF distributor in the Midwest and Great Plains markets. The company brought with it 17 locations in Illinois, Indiana, Iowa, Minnesota, and North Dakota. As had been the case with Wilkins Supply, the management team would stay on after closing. The business would operate under the name "Joliet Valves-McJunkin, a Division of McJunkin Corporation."

McJunkin underwent some management changes in 2002. In May of that year Henry B. Wehrle, Jr., essentially retired, although he retained the title of chairman of the board emeritus. He was replaced as chairman by his nephew, Michael Wehrle, who also served as senior vice-president and chief financial officer. His son, Bernie Wehrle, in the meantime, was re-elected as president and chief executive officer. Also of note in 2002, McJunkin bought out its Mexican partner to acquire a 100 percent interest in Trottner McJunkin Venezuela. In addition, McJunkin sold its interest in McJunkin-Cambar to its joint venture partner Cameron & Barkley, which in the years since the business was launched had been purchased by Hagemeyer North America. Because of its acquisitions, Hagemeyer had emerged as a competitor to its partially owned subsidiary. It made sense to both parties that McJunkin sell out to Hagemeyer and allow the joint venture, renamed Hagemeyer/CamBar, to continue in business with a single corporate parent. By all accounts, the split was amicable and integrated contracts were fulfilled.

In 2003 McJunkin completed a pair of acquisitions. First, it bought Valvax, Corp., a Cincinnati-based valve products distributor and fabricator, focusing on the chemical process, food, HVAC, pharmaceutical, power, and pulp and paper industries. Valvax had offices in Columbia, Ohio; Charleston, West Virginia; Evansville and Indianapolis, Indiana; and Pittsburgh, Pennsylvania. The addition of Valvax fortified McJunkin's ability to provide a wide range of valve solutions to its customers. Several weeks later, McJunkin reached another agreement, this time to purchase virtually all of the assets of Indianapolis-based Cigma, LLC, a major provider of industrial pipe, pipe fittings, meters, regulators, valves, and related products to the natural gas industry. Cigma also brought with it sales offices in the Cincinnati area and Kansas City. The addition of Cigma strengthened McJunkin's growing gas products segment.

After more than 80 years in business, McJunkin was generating in excess of $800 million in annual sales. With a large number of descendants from the founding families involved at all levels of the organization, the company was positioned to remain a private, family-run company for the foreseeable future, one that was likely to enjoy continued growth.

Principal Subsidiaries: McJunkin-Appalachian; McJunkin Controls; McA Target Oil Tools.

Principal Competitors: American Cast Iron Pipe Company; Cooper Cameron Corporation; Tyco International Ltd.


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