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

2030 Inverness Center Parkway
Birmingham, Alabama 35242

History of McWane Corporation

Birmingham-based McWane Corporation is a holding company with an extensive network of interests in the manufacture of ductile iron pipe, water valves, pipe couplers, and fire hydrants, as well as an array of other products, including liquid propane (LPG) cylinders, fire extinguishers, and fire-suppression systems. A publicity-shy company ranking 441 on the Forbes list of private companies, McWane is largely owned by the McWane family, and former CEO Phillip McWane remains the company's chairman. The company is run by CEO John J. McMahon, Jr., and president Ruffner Page. Growing through acquisition, some of McWane's holdings were former competitors; others have taken McWane into different product markets and to new geographical regions of the United States as well as to Canada and overseas.

1920s Origins

The history of the McWane enterprise can be traced to 1921 in Birmingham Alabama, when James Ransom (J.R.) McWane left his post as president of the American Cast Iron Pipe Co. to establish his own business, McWane Cast Iron Pipe Co. The company prospered, and the city of Birmingham became known as a foundry and metal-casting hub. J.R. McWane reportedly helped finance the casting of a 56-foot metal sculpture of Vulcan, the god of fire and the forge, which was placed atop Red Mountain, overlooking the city of Birmingham.

McWane acquired Kennedy Valve of New York in 1925, and five years later McWane was reorganized as a holding company and reincorporated as McWane Inc., owner of Kennedy Valve and the McWane Cast Iron Pipe Co.

Kennedy Valve, one of the oldest companies in the McWane empire was founded as The Kennedy Valve Mfg. Co. in Elmira, New York, in 1877. Kennedy produced specialty valves and manufactured its first fire hydrants in the 1890s, spiral type hydrants that were manufactured until the 1930s, when the company adopted a new design.

An even older company, M&H Valve Company, was added to McWane's holdings in the 1980s, when McWane made a major expansion move through the acquisition of large, well-established companies. In 1984 it purchased M&H Valve Company, an Anniston, Alabama business that traced its origin back to 1854, when its founders, McNab and Harlin, started the company in New York City. M&H moved to Patterson, New Jersey, in 1872, seeking a larger facility. Over the next half century, M&H became an important name in various fields, but in the 1920s ran into both financial and familial problems which led to its breakup. In 1925, the division of the company that made cast iron valves was relocated to Anniston and incorporated as M&H Valve & Fitting Company. Although it struggled through the depression of the 1930s, it continued to grow. It also was bought and sold twice, first by the Walworth Valve Company of New York, which bought it in 1955, then by Dresser Industries, which bought it in 1961 and, in 1984, sold it to McWane.

It was in the next year, 1985, that McWane acquired Clow Corporation, purchasing all of its stock and making it a wholly-owned subsidiary. McWane retained two of Clow's operations: Clow Water Systems Company, with its plant in Coshocton, Ohio; and Clow Valve Company, with its valve plant in Oskaloosa, Iowa.

Clow Corporation was also a long-established business, one that traced its origin back to 1878, when it was founded as James B. Clow & Sons, a Chicago plumbing supply distributor and jobber of wrought iron pipe and other foundry products. In 1890, the company added fire hydrants and water work valves to its line when it became a distributor for the Eddy Valve Company of Waterford, New York. Its Ohio plant in Coshocton was begun in 1909. In 1922, that plant manufactured the first centrifugal cast iron pipe sold in the U.S. Then, in 1928, in order to acquire the rights to Dimitri Sensaud de Lavaud's process of casting iron pipe, Clow bought the National Cast Iron Pipe Company, located in Tarrant, Alabama. In the 1940s, Clow & Sons also acquired the Eddy Valve Company and the Iowa Valve Company of Oskaloosa, a move which helped further its expansion. To reflect its status as a national company, in 1967 James B. Clow & Sons changed its name to Clow Corporation. It continued to grow in the 1970s, acquiring Rich Manufacturing Company of Corona, California in 1972. That purchase added the wet barrel fire hydrant to Clow's line. In 1977, it also began producing ductile iron pipe.

After becoming subsidiaries of McWane Corporation, both Clow Water Systems and Clow Valve Company continued to operate as private entities. Clow Valve Company would also expand. In 1996 it would acquire the Waterworks Division of Long Beach Iron Works and add significantly to its fire hydrant line. It would also continue to operate the Oskaloosa and Corona plants.

McWane did not hold on to all of its acquired divisions or subsidiaries, even when profitable. In 1987, for example, it sold Waterworks Equipment Company, one of its divisions, to Davis Water & Waste Industries, Inc. At the time, Waterworks was operating in Nevada, Utah, and Arizona as a provider of water distribution equipment and supplies. Its net sales for 1986 were $24.0 million, and its assets were valued at approximately $6.7 million.

1990s: Renewed Expansion and Diversification

McWane's expansion continued in the 1990s. In 1995, after creating a holding subsidiary named Random Industries LP as the purchaser of record, it acquired one of its principal competitors, the Tyler Pipe Company of the Tyler Corporation. That company was founded in 1935 in Tyler, Texas, as the Tyler Iron and Foundry Company, and over its history expanded both its operations and product line. It also moved its main operation to Swan, Texas, just north of Tyler. In 1959, the company introduced the industry's first ten-foot soil pipe. Tyler's most notable innovation was its TY-SEAL compression gasket, a coupling device that virtually eliminated the use of molten lead joints for joining pipe sections. The compression gasket was introduced in 1961 and won general industry acceptance by 1963, the same year in which Tyler purchased Wade, Inc. and began marketing a full line of plumbing and drainage specification products. In 1964, the year in which Tyler purchased East Penn Foundry Company of Macungie, Pennsylvania, Tyler began producing No-Hub pipe and fittings. In 1968, then called Tyler Pipe Industries, the company became a subsidiary of Tyler Corporation.

President John McMahon of McWane described Tyler as "a good, old American foundry," one for which McWane as Ransom Industries paid $85 million. At the time Ransom purchased the company from Tyler Corporation, Tyler Pipe had foundries in Texas and Pennsylvania and a coupling/gasket manufacturing facility in Missouri. Like McWane, it made pressure fittings, but it had also just started generating castings for agriculture and automotive businesses. In 1996, Tyler Pipe acquired ANACO, giving it a West Coast market share and new products for its soil-pipe division. Ransom would go on to add a "sister" company for Tyler by acquiring the Union Foundry Co. of Anniston, Alabama, from the Mead Corporation. Union, in business since 1912, manufactured ductile iron pressure pipe fittings for the water and sewer industry. During its history it had various owners before McWane, Inc. bought it and reorganized it as a subsidiary of Ransom.

In 1999, McWane acquired two more companies: Manchester Tank & Equipment of Brentwood, Tennessee; and Amerex Corp of Trussville, Alabama. Manchester, founded in 1945 by Ed Reifschneider, was the largest North American manufacturer of cylinders and tanks for holding compressed air, propane, and various chemicals. At plants located in seven states, and in Australia and Canada, Manchester employed close to a 1,000 workers and produced over five million cylinder and tank units annually. In 1996, the Reifshneider family sold a majority of its shares to AEA Investors Inc. of New York. In turn, although the company was logging record sales, in 1999, AEA put Manchester up for sale.

According to Manchester's president, Darrel Reifshneider, Manchester fit well as a McWane subsidiary. He noted that McWane strongly supported "two-step distribution" and did not attempt to manage or interfere with the day-to-day operations of its divisions and subsidiaries. Instead, he said, "they supply the resources to help each of their divisions to grow, to achieve market expansion, both nationally and internationally." In fact, soon after its sale to McWane, Manchester signed a letter of intent to purchase APA Limited of Sydney, Australia for $15 million. APA Limited, a division of APA Industries Ltd., is a major manufacturer of gasoline tanks and propane cylinders. At least temporarily, the deal fell through, but Reifshneider indicated that an agreement with APA could eventually be ironed out, merging Manchester's Australian operation in the state of Victoria (Echua) with APA's. McWane also gave the green light to other Manchester expansion plans, including a 20 percent increase in the size of its 200/420 pound cylinder manufacturing plant in Virginia and its joint-venture agreement with Blue Rhino Corp. of Winston-Salem, North Carolina to build and operate a cylinder refurbishing plant in the Winston-Salem area.

Amerex Corp., the second major company that McWane acquired in 1999, was the world's largest manufacturer of fire extinguishers and fire-suppression equipment and systems. It was founded in 1971 by Ned Paine and his partner, George Baureis, who died in 1992. At the time of the sale, Amerex had 570 employees at its Trussville, Alabama plant, and the year before had grossed $80 million in revenue. In 1999, deciding to retire and sell the company, Paine stipulated that Amerex had to be sold to a local, family-run company, a provision that McWane, in Paine's estimate, fully met.

In the next year, 2000, McWane acquired the Cedartown, Georgia, LPG cylinder manufacturing facility from Trinity Industries Inc. of Dallas. Neither company disclosed the terms of the sale. The Cedartown plant produced 200 and 400 lb. DOT (Department of Transportation) cylinders for residential uses. In accordance with its usual policy, McWane elected to maintain Trinity's operation with the same management and workforce.

Challenges in the Early 2000s

In 2003, McWane became the focus of controversy when The New York Times, the PBS program Frontline, and the Canadian program The Fifth Estate made public the results of a nine-month study of the company's safety and environmental records. Citing a high number of sometimes fatal accidents and high pollution levels at some McWane plants, the findings suggested that McWane ran "a dangerous business." Specifically, investigators blamed the company's strict management style and an insistence on high productivity levels as fostering an atmosphere in which concern for worker safety and the environment was actively discouraged.

The notoriously private McWane family refused to be interviewed for the published story and broadcast, but management did issue a response indicating that it was financially committed to training programs that had dramatically improved working conditions at its plants. Management also noted that the steel industry itself was an inherently dangerous business, and that worker safety in the United States remained superior to that of other countries even at the expense of industry market share.

McWane remained unwilling to divulge information about its future prospects or plans. It has been a very successful company, however, and provides an array of products within an inherently stable industry. As its century-closing acquisitions indicated, McWane was still in a growth cycle.

Principal Subsidiaries: Atlantic States Cast Iron Pipe Co.; Clow Valve Company; Clow Water Systems Co.; Empire Coke Co.; Kennedy Valve; M and H Valve Co.; McWane Cast Iron Pipe Co.; Pacific States Cast Iron Pipe Company; Ransom Industries LP.

Principal Competitors: American Cast Iron Pipe Co.; Citation Corporation; Intermet Corporation; McJunkin Corporation.


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