Esselte Pendaflex Corporation - Company Profile, Information, Business Description, History, Background Information on Esselte Pendaflex Corporation

71 Clinton Road
Garden City, New York 11530

History of Esselte Pendaflex Corporation

Esselte Pendaflex Corporation is one of the oldest American manufacturers of office filing supplies and a North American market leader. The company makes general filing products and filing supplies, labeling systems and supplies, report covers and portfolios, bound books, binders and loose-leaf supplies, plastic office accessories, and document binding systems and supplies. Well known for its Oxford brand of filing supplies and for its Pendaflex hanging folders, Esselte Pendaflex also markets other leading brands such as Boorum & Pease, Amberg, and Dymo. Approximately 90 percent of the company's products are manufactured at the company's own production facilities in Syracuse, New York; Parsippany, New Jersey; Union, Missouri; Los Angeles, California, and other U.S. cities, as well as in Toronto, Canada. Owned by the Swedish company Esselte AB, one of the three largest suppliers of office products in the world, Esselte Pendaflex accounts for approximately 17 percent of its parent company's sales. Esselte Pendaflex markets primarily in the United States and Canada, though its presence in the Mexican market is increasing. A small percentage of the company's sales include exports to the Caribbean, South and Central America, the Middle East, and Asia.

The company was founded in Manhattan in 1882 by two brothers, Charles S. Jonas and Richard A. Jonas. Their company, Charles S. Jonas and Brother, at first operated in the specific field of paper ruling, providing the service of ruling lines on paper provided by its customers. After the turn of the century, businesses began to keep files using index cards and file folders, and Charles S. Jonas and Brother began to manufacture these items. This was the company's first venture in making its own products. The product line, at first limited to index cards and guides, gradually expanded, and sales began to cover a larger territory. The company was renamed Record Card Company in 1909, reflecting the new manufacturing bent.

In 1918, the Record Card Company first registered the Oxford brand name. The success of Oxford led the company to change its name in 1921 to the Oxford Filing Supply Company. The firm continued to specialize in filing supplies, introducing many new items which contributed to the growth of the filing industry. In 1929, the company began making expanding envelopes and introduced the convenience of file folder labels in rolls, as well as corrugated board transfer files in a drawer style. The company's most significant advance, however, was the Oxford Pendaflex hanging file folder. This was the now familiar filing pouch that hooked over the sides of a file drawer. Smaller files placed inside the hanging file allowed the drawer to be easily subdivided. The company called its Pendaflex hanging file the greatest development in filing since the evolution of the filing folder. The Pendaflex added significantly to the Oxford product line.

Oxford Filing Supply gradually expanded its operations beyond the New York City environs, establishing a midwestern base in 1934, with a factory in St. Louis. Its main plant moved in 1948 from Brooklyn to Garden City, New York. The company built a West Coast manufacturing facility in 1953 in Los Angeles, and the St. Louis and Los Angeles plants were expanded several times in the 1960s. Also during this time, the company opened new facilities in Augusta, Georgia, and in East Rutherford, New Jersey, while establishing an equipment division in Long Island, which later moved to larger quarters in Moonachie, New Jersey.

Oxford Filing Supply Company changed its name in 1969 to reflect its leading brand, and the company became the Oxford Pendaflex Corporation. Business continued to grow, and, during the early 1970s, Oxford Pendaflex expanded its New Jersey, Missouri, Georgia, and California facilities. By 1976, the company had subsidiaries in Mexico, Costa Rica, and Venezuela, employed a work force of 1,200, and had a marketing organization supplying approximately 5,500 dealers and 60 wholesalers across the United States and Canada.

The company's comprehensive North American marketing organization was an attractive asset, and, in 1976, the Swedish office supply firm Esselte AB made a lucrative offer for Oxford Pendaflex. Oxford Pendaflex shares had been trading on the New York Stock Exchange for between $13 and $14 a share, and Esselte offered $23 a share to take over the American company. The two companies announced an agreement in March, and Oxford Pendaflex became part of the Swedish company's Esselte Business Systems group. Esselte was a much larger firm than Oxford Pendaflex, with 1975 sales of approximately $350 million, compared to an estimated $60 million for the American firm. Esselte was founded in Sweden in 1913 from the merger of ten small printing works. The company expanded into office supplies and equipment, which it marketed internationally, and in Sweden the company also engaged in printing, publishing, and consumer packaging. Esselte began an acquisition spree in 1974, buying up eleven companies including one in West Germany, one in England and another in Brazil, before acquiring Oxford Pendaflex in 1976. Esselte had positioned itself as one of the world's leading companies in office equipment, and it was willing to pay a high price for Oxford Pendaflex in order to gain access to the American and Canadian market.

Sales grew in the years after the takeover, reaching close to $75 million by 1978. That year Oxford Pendaflex, backed by parent company Esselte, took over the California company Dymo Industries, which was well known for its Dymotape labelling equipment. Dymo had revenues of close to $210 million, and more than half of its sales came from foreign operations. Esselte AB already distributed some of the Dymo line in Europe, and it paid out $43.5 million for the company. Although Dymo initially resisted the takeover, by July 1978 Oxford Pendaflex controlled 94 percent of Dymo's stock. Oxford took over the Dymo product lines, which included Ideal accounting books and the Sten-C-Labl addressing system in addition to Dymotape.

The next year, Oxford Pendaflex changed its name to Esselte Pendaflex Corporation and continued to expand through acquisitions. In 1981, Esselte Pendaflex took over the operation of its parent's U.S. pricemarking division by integrating with the Esselte subsidiary Esselte Meto. Esselte Meto had been formed out of the pricemarking operations of Dymo and that of a 1980 acquisition, Primark. The company's next major addition was the Boorum & Pease Company in 1985. Boorum & Pease, based in Elizabeth, New Jersey, manufactured and marketed office supplies, record-keeping supplies, and information storage and retrieval products, and was a leading manufacturer of blank books and looseleaf binders. The company had revenues of $70 million in 1985, and Esselte Pendaflex paid $40 million for it. That year, Esselte Pendaflex also acquired a Los Angeles firm called Universal Paper Goods. This company had a West Coast business manufacturing custom order folders and office supplies.

Esselte Business Systems, of which Esselte Pendaflex was a division, continued to pursue growth through acquisition. The company bought up nine firms in 1987 alone, with a total combined annualized sales of around $85 million. The three divisions of Esselte Business Systems, which included Esselte Pendaflex for office supplies, a division specializing in graphic arts supplies, and a retail supply division, posted record sales and profits in 1987. Esselte Pendaflex also named a new president that year, Theodore V. Kachel.

In the early 1990s, however, the U.S. market for office supplies weakened significantly. Parent company Esselte AB was forced to institute a stringent cost-cutting plan that included large bouts of lay-offs in 1990 and 1991, in order to make up for the deteriorating market conditions in the United States, as well as in some European markets. Sales for Esselte Pendaflex dropped off steeply between 1989 and 1990, and revenue remained relatively static over the next few years. Operating income also shrank drastically between 1989 and 1990, and in 1993 the company posted a loss.

The company's difficulties were attributed in part to changes in the North American office supply market overall. Distribution became more concentrated as stores consolidated through mergers and acquisitions and new superstores became more important players. Competition was intense between the large distributors, and prices overall were forced down. By 1993, Esselte Pendaflex had a smaller pool of customers than in past years, though the customers on the whole were larger. Another change in the market lay in the declining number of white collar workers within major corporations. And though more people were working from their homes, with an estimated 39 million home offices in 1992, this did not altogether offset the loss of corporate workers.

Esselte Pendaflex was aware of these changing conditions and took steps to keep pace. However, the company's operating costs were very high in the early 1990s, and many of its products had low profit margins. This led to a disappointing drop in income. The company appointed a new divisional president in April 1993, Alan Wood. His mission was to reorganize the company for cost efficiency. Esselte Pendaflex expected to make major transitions through 1993 and 1994. Despite recent changes in the market, the company still saw opportunity for growth and predicted improved profitability over the coming years.

Additional Details

Further Reference

Dullforce, William, "Esselte Buys Control of Oxford Pendaflex," Financial Times, March 31, 1976, p. 28."Dymo's Defense," Business Week, May 29, 1978, p. 36."Esselte AB Subsidiary Sets $40 Million Offer for Boorum & Pease," Wall Street Journal, June 28, 1985, p. 26."Esselte AB," Wall Street Journal, June 26, 1991, p. A6."Esselte Business Systems Inc.," Barron's, February 22, 1988, p. 56."Esselte Business Systems Inc.," Wall Street Journal, May 4, 1988, p. 30."Esselte Business Systems Lifts Initial Issue to 3 Million Shares," Wall Street Journal, August 22, 1984, p. 38.Lascelles, David, "Swedish Take-Over Bid for Dymo Inds," Financial Times, May 16, 1978, p. 35."Oxford Pendaflex Merger Pact Signed," Journal of Commerce, March 31, 1976, p. 4."Shipper Profiles: Esselte Pendaflex Corp.," Global Trade, October 1991, p. 40."Sweden's Esselte AB to Buy Remainder of Its U.S. Subsidiary," Wall Street Journal, November 9, 1989, p. A8.

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