Albany International Corporation - Company Profile, Information, Business Description, History, Background Information on Albany International Corporation

P.O. Box 1907
Albany, New York 12201

Company Perspectives:

Technological innovation, long a hallmark of Albany International, remains at the forefront of our strategies to move the company forward. We are committed to bringing our customers leading-edge solutions that deliver value by improving their products and processes. We intend to accelerate our efforts and use technology to drive profitable growth.

History of Albany International Corporation

Albany International Corporation plays a key role in papermaking as the world's leading designer and producer of paper machine clothing (PMC)--large, continuous belts of custom designed and engineered fabrics that are installed on paper machines to carry paper stock through the three primary stages of the paper production process. With facilities in 15 countries, the company controls 30 percent of the global PMC market. Through its Engineered Fabrics business segment, which includes its PMC operations, the company provides custom engineered wires, belts, and fabrics to the nonwovens, pulp, and building industries. The firm also manufactures industrial doors through its Albany Door Systems division and a host of patented materials through its Applied Technologies unit.

Company Origins: Understanding PMC

PMC comes in fabric sizes more than 30 feet wide and 200 feet long and has a useful life of one to 15 months, depending on the type of clothing and its use. A paper machine may require one million dollars of clothing a year and is needed for making all paper, from the finest writing paper to tissue to containerboard.

Demand for PMC is dependent on the health of the papermaking industry. According to Fortune magazine, U.S. paper manufacturing grew by only about 3 percent a year in the 1990s. To maintain healthy growth, Albany International spends as much as 3 percent of sales on research and development of new products, a very high rate for the industry. Because of its technological advances and its reputation for producing quality materials, it has grown to become the world leader in market share.

Albany International has been an innovator in PMC technology, developing many specialty materials and even licensing competitors to produce them. To follow the history of Albany International, it is helpful to understand more about the role of Albany's products in the production of paper. There are three major phases to paper production--forming, pressing, and drying--and each phase requires different clothing for the gigantic papermaking machines, some of which are as long as a football field.

During the forming stage, a thin mixture of 1 percent cellulose fiber and 99 percent water is sent through the machine, riding on the machine clothing. As the clothing moves, it works almost like a strainer, with water draining out and pulp fibers remaining on top of the clothing. This phase reduces the water content to about 83 percent, and it is at this phase that the paper's characteristics are set. The forming fabrics last from two to four months.

During the pressing stage, the paper is carried on the press fabric through rollers that, like a wringer washer, squeeze water out until the paper is 60 percent water. The pressing fabric must be capable of absorbing large amounts of water, then quickly getting rid of that water through pressure, centrifugal force, or vacuum. The pressing paper also influences the finish of the paper because the paper is still mostly water when it enters this phase and the rollers exert great pressure. A press fabric lasts only one to three months. Ideally, as much water as possible is removed at this stage, as the last phase requires high energy usage.

In the drying stage, the paper rides the drying clothing around huge heated cylinders so that most of the remaining water evaporates. Drying fabric can last nine to 15 months. According to Albany International, the use of paper machine clothing worldwide was about 35 percent forming clothing, 45 percent pressing clothing, and 20 percent dryer clothing in the 1990s. The company estimated that 85 percent of the fabrics it produced in the 1990s had not even existed ten years before. Of course, the technology had changed quite a bit since the company's early days, when its name was Albany Felt Company and it was producing only press felts made from wool.

Incorporation of Albany Felt Company in 1895

Albany Felt Company was incorporated in 1895 by Parker Corning, James W. Cox, Jr., and Selden E. Marvin, with a total investment of $40,000. Corning's father, Erastus, who was a banker and industrialist, may have been the person who thought of starting the company because of a variety of circumstances: the feltmaker from the nearby F.C. Huyck & Sons had been released from employment and was available for hire; the Huyck mill had burned down in 1894; and Parker's father thought the paper machine felt business might be just the project his son needed after his graduation from Yale in 1895.

Parker Corning became vice-president of Albany Felt Company, and partner James Cox served as president from 1895 to 1918, when Corning succeeded him. Two years later, Corning bought Cox's shares, thus securing control of 72 percent of the company shares. Marvin, president of Albany Savings Institution and Corning's uncle by marriage, died in 1899.

Cox managed a 30-person staff the first year. Within six years, Albany Felt had outgrown its original site and the company built a new plant on a six-acre lot in Menands, a town near Albany. A staff of 150 worked at this new building, constructed to withstand the tremendous vibrations of the felt-making machines. By 1907 the president's salary had been raised to $5,000 a year, and the vice-president's to $4,000.

In 1908 the Albany Company expanded its markets to Europe, Canada, Japan, and Mexico. The company continued to prosper in the 1920s and even during the Depression of the 1930s. Its facilities did not expand beyond the Albany area, however, until 1945, when it acquired a mill in North Monmouth, Maine. This plant was used to expand the company's production of flannel for baseball uniforms. Albany Felt also produced felts for other purposes. It became the leading producer in the United States and the world of Sanforized Blankets; Sanforizing is a patented process invented by Sanford Cluett for preshrinking cloth.

In 1952 Albany Felt became an international company when it established Albany Felt Company of Canada. This led to growth in its worldwide market. The firm's president, Lewis R. Parker, also saw great opportunity in the South. During his tenure Albany Felt built a new mill in St. Stephen, South Carolina.

Growth and Diversification During the 1960s

Parker died in 1957, and John C. Standish, who had been hired in 1921 as a feltmaker, became president. Under his leadership, Albany Felt became the pacesetter in the design and manufacture of needled press felts and moved into dryer fabric manufacture and development. In 1961 Standish became chairman of the board. Under the presidency of Everett C. Reed, Standish's successor at that position, the 1960s proved to be a decade of growth, diversification, and innovation for Albany International. It developed an innovative forming fabric that was actually multilayered and more efficient than the woven metal wire cloth that papermakers had been using prior to the 1960s. This became the standard for the industry. During the 1990s, Albany International maintained forming fabrics plants in the United States, Canada, Mexico, Australia, Norway, Sweden, Finland, Germany, The Netherlands, and France.

Albany International produced dryer fabrics in the 1960s, with its introduction of an open-mesh synthetic fabric for the third section of the paper machine. Heavy canvas cotton and asbestos had been the standard drying clothing until Albany introduced a monofilament fabric from which water evaporated more quickly, lowering energy costs and allowing the machine to be operated at higher speeds.

That same decade, it acquired Woven Belting Co. of Buffalo, as well as wire and plastics companies. It also acquired a felt company in France to gain entrance to the felt market there. By 1966 Albany Felt employed 2,500 people and had 19 plants in six countries. In 1969 the company bought Nordiskafilt in Sweden, as well as mills in England and Brazil. It also built new mills in Holland, Finland, and Australia.

The company successfully defended itself from a hostile takeover in the late 1960s. In 1944 Clark Estates Inc., an investment company, had purchased a large block--32 percent--of Albany stock. In 1967 Clark sold its shares to Deering Milliken. That company's head, Roger Milliken, soon informed Albany Felt that it was sending tender offers to stockholders in order to acquire a 51 percent share of the company. Six Albany directors, however, owned 42 percent of the shares, and they informed shareholders that they did not think purchase by Deering Milliken was in the company's best interests. A syndicate of directors and a local businessman offered stockholders the option of selling their shares to this syndicate at whatever price Deering Milliken offered. Deering Milliken tendered at $27 per share, then $37, and finally $50. Most shares that were tendered were purchased by this syndicate.

In 1968 the company, still under control of the management syndicate, engineered the purchases of Appleton Wire Works Corp., International Wire Works Corp., and Crellin Plastics in exchange for shares of Albany stock. Under state law, however, the company needed shareholder permission to increase the number of capital shares. Deering Milliken was unable to muster enough votes to block approval, and with the increased shares created, Milliken's stake dropped from 32 percent ownership to 20 percent. In 1972 Milliken sold its Albany International shares in a public offering.

Adopting a New Name in 1969

In 1969 Albany Felt was renamed Albany International to reflect its new identity with facilities and markets around the world. In the 1970s Albany International moved its offices from the plant it had occupied since 1902 to Fernbrook, a former estate. During this decade, Albany also launched a new division called Albany Engineered Systems to produce auxiliary equipment to maintain and improve clothing performance. Albany Engineered Systems manufactured high-pressure showers for keeping the clothing clean, drainage elements such as vacuum foils blades, doctor blades for removing the paper sheet from the roll on the machine, and vacuum systems for improving water removal.

In the 1980s Albany developed and patented an on-machine seamed press fabric that was safer, quicker, and easier to install than previous press fabrics. This saved paper companies time and money since it substantially reduced the length of time that the machine had to be shut down for installation of a new pressing cloth.

In 1983 Albany International became a private company through a leveraged buyout by a group of its managers. They sold all of the businesses that were not related to papermaking, including a division that produced tennis ball covers and another that made plastic tubes. Albany International's status as a private company was short-lived, though. Four years later, with record sales of $402 million, it once again was listed on the New York Stock Exchange.

New Product Development in the Late 1980s

By the late 1980s, the company had begun to diversify again as research into new fabrics for its core business led to the production of synthetic fabrics for other applications. Company researchers developed a synthetic goose down that the company called Primaloft, which they claimed had all the advantages of goose down and none of the disadvantages. Goose down provides great protection against frigid temperatures but when wet absorbs 160 percent of its weight, while some other synthetics absorb as much as 1000 percent of their weight. According to Albany International, Primaloft, which it developed for the U.S. Army, maintains its warmth even when damp and absorbed only 30 percent of its weight after being submerged for half an hour. Leading manufacturers of winterwear, sleeping bags, and clothing for mountaineering began using Primaloft in their products.

Albany International had supplied material for America's space shuttle program since the 1970s. In 1989 Albany International further expanded its involvement in such high technology manufacturing, selling a lightweight, noncombustible insulation material used in automotive, plastics, and aerospace applications.

Using technology developed while engineering fabrics, the company also came out with a high-speed industrial door that rolled up and down like a window shade and was used in airports and carwashes. The subsidiary, Nomafa Door Division, had factories in four countries.

In late 1989 Albany International moved its headquarters back to its roots--the 450,000-square-foot factory complex with its various additions--that Albany Felt had occupied almost 90 years before in Menands. Four million dollars later, it had been transformed into contemporary, efficient office space. A new, multimillion-dollar press fabric facility was erected in 1988 across the river in East Greenbush.

Battling Turbulent Economic Times in the Early 1990s

The company reported a relatively unsuccessful year in 1990, citing the poor state of the world economy and its own high overhead costs. It initiated a cost reduction program, reducing its salaried workforce by about 10 percent and cutting other operational costs. That same year, it started up a new fabrics plant in Sondrum, Sweden, replacing the Nordiskafilt plant three miles away. It also built new plants in Finland and The Netherlands. In addition, the company acquired Wallbergs Fabriks A.B., a paper machine clothing maker founded in 1823 in Halmstad, Sweden.

During the 1990s the papermaking industry was consolidating globally, increasing the competition and consolidation within the paper machine clothing industry as well. As the largest clothing supplier, however, Albany International said that it would benefit from consolidation in both industries, reasoning that large papermaking concerns would find it more efficient to work with one company that could supply clothing for all three phases.

The world's papermaking industry remained depressed in 1991 and 1992, and Albany International's sales reflected this, as they rose only slightly. The company continued to put substantial resources into research and development. The American paper industry had a goal of manufacturing 40 percent of all U.S. paper from recycled fibers by 1995, and to achieve this goal, Albany International worked closely with its customers in the paper industry as well as with makers of paper machines.

In 1993 Albany International strengthened its position in the market for dryer clothing by acquiring Mount Vernon Group for $51 million. This company, with plants in North Carolina and South Carolina, produced clothing for forming, pressing, and drying; by acquiring it, Albany moved from third place to second in the dryer cloth market.

Albany International's operating environment picked up in the mid-1990s. Sales in 1993 increased to $546 million, and then to $567 million and $652 million in 1994 and 1995, respectively. Net income also rebounded, a sure sign that the firm had weathered the economic downturn of the early 1990s effectively.

Remaining a Leader in a Consolidating Industry in the Late 1990s and Beyond

Indeed, Albany International had taken advantage of the industry's consolidation trend by making key acquisitions and creating new products that left it a step ahead of its competitors. With six international research and development facilities, the company's dedication to new product development remained a crucial part of the firm's long-term strategy. In fact, company CEO Frank Schmeler claimed in a 2000 PIMA's North American Papermaker article that the firm "expected that tomorrow's paper machine clothing will be decidedly different than the products offered today. It is our objective to bring these opportunities to our customers as soon as possible."

By 2000, the number of major PMC suppliers had shrunk from eight to just four. Instead of consolidating along with the industry, however, Albany International had expanded its operations. In 1999, the firm completed its $250 million acquisition of the Geschmay Group, a PMC firm with operations in both the United States and Europe. The firm also purchased Jansen Tortechnik, a Germany-based manufacturer of overhead doors. During this external growth spurt, Albany International began a $50 million internal restructuring effort in 1998 that included job cuts, changes in marketing and selling, and the disposal of certain assets. The efforts appeared to pay off. Sales increased from $722 million in 1998 to $852 million in 2000.

During the fall of 2000, company management--led by chairman and CEO Schmeler--adopted a new growth plan that focused on revenue enhancement, capital management, cost reductions and process improvements, information systems implementation, and R&D project management--specifically new product development. The firm also was focused on paying down debt that it had incurred during the Geschmay purchase.

The global economy weakened once again in 2001. This forced the company to launch another cost-cutting restructuring effort, this time to the tune of $25 million. The firm discontinued production of PMC at its plants in Italy and also reduced its manufacturing capacity in Mexico and the United States. Sales in 2001 fell to $836.6 million while net income fell by 15.5 percent over the previous year.

Sales continued to slide during the first half of 2002, mostly due to weakening demand brought on by the sluggish economy. As such, the firm continued to analyze its operations, cut costs, and focus on debt reduction. Although the economic climate remained uncertain, company management remained confident that the firm would achieve future success. As the world's largest PMC manufacturer, Albany International did indeed stand well positioned for growth in the years to come.

Principal Subsidiaries: Albany International Corp.; Albany International Holdings One, Inc.; Albany International Holdings Two, Inc.; Albany International Research Co.; Albany International Techniweave Inc.; Geschmay Corp.; Albany International Pty., Ltd. (Australia); Nomafa Gesellschaft GmbH (Austria); Albany Nordiskafilt GmbH (Austria); Albany International Feltros E Telas Industrials Ltds. (Brazil); Albany Engenharia de Sisternas Industria e Com. Ltda. (Brazil); AI Finance Canada, Inc.; Albany International Canada Inc.; Geschmay Canada, Ltd.; M&I Door Systems, Ltd. (Canada); Albany International (China) Co., Ltd.; Schieffer Skandinavien A/S (Denmark; 67%); Albany Fennofelt OY (Finland); Metco Form OY (Finland); Albany International France, S.A.S.; Albany International S.A.S. (France); Cofpa S.A. (France); Nomafa S.A.R.L. (France); Nomafa GmbH (Germany); Albany Door Systems GmbH (Germany); Albany Germany GmbH & Co. KG; Albany International Verwaltungs GmbH (Germany); AI Financial Services Company (Ireland); Albany International Italia S.p.A.; Albany International S.p.A. (Italy); Albany Nordiskafilt Kabushiki Kaisha (Japan); Albany International Korea, Inc.; Telas Industriales de Mexico, S.A. de C.V.; Albany International de Mexico S.A. de C.V.; Martel Wire S.A. de C.V. (Mexico); Albany International B.V. (Netherlands); Nomafa B.V. (Netherlands); Albany Nordiskafilt AS (Norway); Schieffer Polska Sp. zo.o. (Poland; 65%); Nevo-Cloth Ltd. (Russia; 50%); Geschmay Asia Private Limited (Singapore); Nordiskafilt S.A. (Proprietary) Ltd. (South Africa); Beier Albany and Company (Proprietary Limited) (South Africa; 50%); Albany Nordiska S.A. (Spain); Albany International AB (Sweden); Albany Door Systems AB (Sweden); Portsam AB (Sweden); Nomafa AG (Switzerland); Loading Bay Specialists Limited (U.K.; 50%); Albany International Ltd. (U.K.; 28%).

Principal Competitors: Cardo AB; J.M. Voith AG; Tamfelt Corp.


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