WHEELABRATOR TECHNOLOGIES, INC. - Company Profile, Information, Business Description, History, Background Information on WHEELABRATOR TECHNOLOGIES, INC.



3003 Butterfield Road
Oak Brook, Illinois
U.S.A.

History of WHEELABRATOR TECHNOLOGIES, INC.

Wheelabrator Technologies is one of the leading 'resource recovery' enterprises in the United States, essentially converting garbage into electrical energy and steam heat, and patenting new disposal processes. The company has based its growth on the exhaustion of cheap garbage landfill resources, offering relatively clean incineration as an alternative method of disposal.

Wheelabrator originated in Mishawaka, Indiana, in the early 1930s. The company manufactured a 'wheelabrador,' a rotating three-sided wheel that sprayed shot onto a surface to abrade away paint, plaster, rust, or other substances. The wheelabrador collected dust and other particulate matter resulting from the process in a baghouse enclosure which kept the air clean. When the company took its name it was not permitted to copyright a generic term, and altered the spelling to Wheelabrator for use as a company moniker. The company logo is a representation of the triangular device.

Wheelabrator remained a small manufacturer of these and other devices well into the 1960s. In anticipation of Clean Air Act legislation, the company expanded interest in environmental products by acquiring a license for electrostatic air cleansing technologies from the German company Lurgei. This led to the establishment of the Wheelabrator Clean Air Company in Pittsburgh, which manufactured systems that electronically removed dust, soot, and other particles from flue gas.

Wheelabrator was then acquired by a small conglomerate called the Equity Corporation. The company was paired with another subsidiary, Frye Copy Systems, a manufacturer of printing inks and carbon paper. Equity encountered severe financial problems in the mid-1960s. The company was taken over and reorganized by a New York investor group led by Michael Dingman of the Burnham securities firm. Dingman eliminated the Equity company and merged the Wheelabrator and Frye units.

In 1968 the company, now called Wheelabrator Frye, procured Rust International from Litton Industries. Rust was a construction engineering firm that held an exclusive license to the technologies of von Roll, a Swiss engineering company. The von Roll technologies included highly efficient mechanical processes which Rust applied to incinerator designs.

With the engineering expertise of Rust, and with exclusive access to the Lurgei and von Roll technologies, Wheelabrator built its first waste-fueled energy plant at Saugus, Massachusetts. The plant came on line in 1972, at the height of the first environmental movement in the United States. A second plant was not built until 1983, when more efficient plant designs made incineration cheaper.

Wheelabrator Frye was acquired by The Signal Companies in 1983, for $1.5 billion. Dingman, chairman of Wheelabrator Frye, was subsequently named president of the new parent company. Wheelabrator, its name changed to Signal Environmental Systems, continued to develop new resource recovery systems in areas where landfills were nearing capacity and garbage dumping fees were rising. As a result of the Signal merger, the unit took on numerous engineering operations of the parent company, including engineering services for the petroleum, paper, metals, and chemical industries.



In August of 1985, Edward Hennessy, chairman of the chemical giant Allied Corporation, engineered a merger with Signal--then an aerospace, electronics, and engineering company. Three months later, Allied-Signal resolved to spin off all operations not related to the core businesses. The company identified 35 units to sell, including Frye and the Wheelabrator environmental systems unit. Rather than dispose of the companies individually, a process that would take more than two years, Allied-Signal created a holding company under Michael Dingman. Dingman, a rowing enthusiast, named the new corporation after the English rowing mecca, Henley. One of the largest subsidiaries of the new Henley Group was the environmental systems unit, which took the name Wheelabrator Technologies.

As an independent organization, Henley was run more as an investment company than an operating company. In 1987 as Henley's Wheelabrator, Fisher Scientific, and other manufacturing groups prospered, Dingman engineered a series of creative schemes to maximize shareholder value. He took each of the units public, selling non-controlling interests to shareholders, simultaneously raising cash for other investments while gaining independent stock valuation. Shareholders paid a premium for the opportunity to directly share the risk of operating single-industry divisions with the parent company.

After dabbling with substantial investments in the Santa Fe South Pacific Corporation during 1988, Dingman turned Henley's focus back to revaluation schemes. In a so-called 'reverse spin-off,' he created two independent companies, Wheelabrator Group and a new Henley Group, which divided the assets of the old Henley company. Over the next three years, Henley's investment in Wheelabrator dwindled to less than 10 percent of the company's shares. Phillip Rooney took over as head of Wheelabrator.

While Dingman was ringing up his successes with share value maximization, he oversaw a significant series of events in the structural development of Wheelabrator. Shortly after being spun off from Allied-Signal, Wheelabrator exchanged 22 percent of its shares for the underperforming waste incineration assets of rival Waste Management, Inc. The agreement was more of a business arrangement than the result of a competitive battle. Waste Management had established an incineration business purely as a defensive measure against competitors such as Wheelabrator and the Ogden Corporation, but lack of engineering know-how and pressure from various forms of public opposition hindered Waste Management's ability to enter the business on a significant and profitable basis. The deal with Wheelabrator included exclusive rights to dispose of incinerator fly ash at Waste Management facilities and other transferred properties--essential for Wheelabrator's growth as new incineration plants could not be built without guaranteed ash disposal resources.

Meanwhile licensing for disposal sites had become nearly impossible to gain due to strong public opposition. Wheelabrator responded by conducting excellent public education campaigns and proposing to work with any public advocacy group that opposed Wheelabrator incinerators. The company sponsored several series of public hearings, offering to answer any question, and taking every opportunity to demonstrate the environmental advantages of incineration over landfills. In addition, as landfill charges rose to more than $50 per ton and incineration costs fell to $30, Wheelabrator could demonstrate growing economic advantages to its methods of disposal. Once public approval was gained for construction of an incinerator, Wheelabrator would conduct regular tours of the site, inviting the public to inspect the operation personally and ask questions. By maintaining an honest and open relationship with the public, Wheelabrator managed to neutralize the NIMBY, or 'not-in-my-backyard' syndrome.

Wheelabrator plants were placed strategically near landfills that were nearing capacity and where power cogeneration would yield profitable electricity sales. Those in the north were equipped to provide electricity in the summer and industrial heating steam in the winter. Plants were built near large metropolitan areas in California, Florida, Maine, New Hampshire, Massachusetts, and Maryland.

While more economical and environmentally friendly than landfills, incinerators still had their problems. Highly toxic materials, such as car batteries, were frequently put into the furnaces. To guard against further environmental harm from acid gas and dioxins, Wheelabrator fitted its plants with calcium sprayers and fabric filters that 'scrubbed' harmful emissions from the exhaust.

Wheelabrator once shared offices with the Henley Group in Hampton, New Hampshire, but relocated to suburban Chicago in 1992. Its association with Dingman's Henley Group continued, but Wheelabrator's business relationship with Waste Management grew: Wheelabrator controlled 12 percent of Waste Management stock; Waste Management, in turn, controlled more than 50 percent of Wheelabrator common shares and its board of directors.

With its experience in operating 14 incinerators and designing pollution control systems, Wheelabrator was established as a leader in building water and air purification systems. The company's Rust International subsidiary was the sixth largest engineering and construction contractor in the United States in 1992. In addition to engineering strengths Wheelabrator differed from its main competitor, Ogden, in its offering of fully integrated plants based on exclusively licensed technologies built by Rust International. This standardized approach enabled the company to maintain consistently high performance from its plants.

Wheelabrator Technologies was well poised for further growth in the early 1990s and was often cited by analysts as a promising company. Virtually no other company had as much experience in gaining public support for waste disposal systems or as much expertise in designing them as Wheelabrator did. With virtually no alternative to landfills, a growing number of cities were likely to seek large-scale waste disposal solutions from Wheelabrator.

Principal Subsidiaries: The Wheelabrator Corporation; Rust International Corporation; Envirotech Operating Services.

Additional Details

Further Reference

Luoma, Jon R., 'Using New Incinerators, Cities Convert Garbage into Energy,' New York Times, August 2, 1988.Jantzef, Monica F., 'Bresco, Three Years Later,' Waste Age, October 1988.Cook, James, 'Not in Anybody's Backyard,' Forbes, November 25, 1988.Cook, James, 'Garbage into Gold,' Forbes, January 22, 1990.Tritschler, Don, 'Public Schools, Private Interests,' Worcester Business Journal, January 6-19, 1992.Hepp, Mark P., and John M. O'Sullivan, 'Improving Efficiency of Energy Production From Wastes,' Solid Waste & Power, January/February 1992.Zemba, Stephen G., and Laura C. Green, 'Perspectives on Mercury,' Solid Waste & Power, May/June 1992.

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