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

1332 Blue Hills Avenue
Bloomfield, Connecticut 06002

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History of Kaman Corporation

Kaman Corporation develops and manufactures high-tech products and provides technical services for government, industrial, and commercial markets. Its operations are broken into three primary segments: Aerospace, Industrial Distribution, and Music Distribution. The company's Aerospace division, which serves U.S. defense, foreign government, and commercial markets, produces helicopters and niche-market products for aircraft applications. Kaman's Industrial Distribution division produces parts and equipment for virtually every sector of U.S. industry. The company's Music Distribution division is one of the world's largest distributors of guitars and other musical instruments and accessories. Kaman has a rich history that parallels the classic American success story of its namesake founder.

An Early Love of Aviation in the 1930s

Kaman is the progeny of American paragon Charles H. Kaman, an inventor, entrepreneur, musician, humanitarian, and visionary. He was born in 1919 and raised in Washington, D.C. His father, a German immigrant, was a construction supervisor who managed work on the Supreme Court building and Union Station. Charles Kaman demonstrated an early interest in aviation design. During the 1930s, he competed in the city's model airplane design contests held at the local playground. He also showed an enthusiasm for music. Kaman became an accomplished guitar player as a teenager and even turned down an offer to play with the Tommy Dorsey band for an alluring $75 per week.

Kaman continued to pursue his interest in aviation during college. For a contest held in Washington, D.C., he made a model plane, which took more than 100 hours to build, was made of balsa wood, covered with an ultra-thin film, and driven by a rubber band. Kaman wound the propeller 1,500 times and asked the judge to clock his warm-up flight. After setting an unofficial record for time aloft, Kaman became determined to surpass his own record. He decided to wind the propeller 3,500 times, using an eggbeater. At about 3,000 turns the band snapped and the plane imploded. Nevertheless, the episode cemented his desire to become an innovator in the burgeoning aviation field.

Kaman graduated magna cum laude with a Bachelor of Aeronautical Engineering degree in 1940 from Washington's Catholic University. Although he had dreamed since childhood of becoming a professional pilot, a severe infection following a tonsillectomy that left him deaf in one ear made that an impossibility. Instead of piloting flying machines, Kaman decided to build them. After college, he accepted a position with aviation pioneer United Aircraft (the forerunner of United Technologies Corporation). He went to work in the company's helicopter division, Hamilton Standard, which was marshaled by renowned inventor Igor Sikorsky. Kaman was told to help design propellers.

The chief dilemma facing helicopter engineers during the industry's inception was stability and control. Engineers were challenged to figure out how to devise a machine that could be easily maneuvered and landed, particularly in high winds. Aside from stability and control, helicopters in the early 1940s suffered from several problems. Vibration was a major obstacle. Because of the way in which the rotor was controlled from its hub, the entire aircraft would vibrate, putting stress on the machine that reduced its durability and dependability.

Kaman's contributions were quickly recognized at United, and by 1943 he had become head of aerodynamics. Despite his success at United, Kaman became frustrated by the company's lack of attention to his ideas. Specifically, Kaman had suggested an improvement that might increase the stability of United's helicopters. He wanted to put flaps on the main rotor and scrap the tail rotor altogether to improve control. On his own time, Kaman built a homemade rig to test his theories. He fashioned the contraption in his mother's garage using junk parts, including an engine from a 1933 Pontiac, the rear end of an old Dodge, and a bathroom scale.

Kaman's initial designs failed. But after several weeks of experimenting he was able to build a device that incorporated his revolutionary servo-flap rotor control system. The new design significantly reduced vibration. It also required much less force by the pilot to maneuver the aircraft, thus improving stability and control. Excited by his discovery, Kaman approached the manager of engineering at United and even demonstrated his rotor blade test rig. "Charlie, we have our inventor at United Aircraft," explained his supervisor. "His name is Igor Sikorsky. We don't need another one."

Going It Alone: 1940s-50s

Because United was not interested in his ideas, Kaman decided to go to work for an employer who would put his theories into practice—himself. With $2,000 and some rudimentary laboratory equipment, Kaman started a company that would become a multimillion-dollar corporation, a leader in aviation technology, and, among other accomplishments, a guitar supplier to rock stars. Kaman shaped his new enterprise around the contraption he made in his mother's garage. He raised development funds by holding weekend flying shows with his homemade aircraft, the K-125, at Bradley Field, where he solicited observers to invest in his idea.

Kaman was able to generate enough capital to build a new helicopter, the K-190, by 1948. It incorporated a dual-rotor system (but no tail rotor) and was touted as the most stable, easy-to-fly helicopter ever built. To reinforce his claim of stability, Kaman conducted a public relations coup in November 1948 at Bradley Field. Ann Griffin, a young housewife with virtually no flying experience, jumped into the cockpit of the exotic contraption and flew it for ten minutes before an astonished audience. The stunt was widely publicized and resulted in an infusion of capital into Kaman's company. Most important, it helped Kaman to get his first helicopter orders.

Kaman, like many of his helicopter industry contemporaries, had grand visions for his flying machines. Many engineers believed that the helicopter would eventually replace the automobile as the vehicle of choice for families. Each family would have a helicopter in its back yard or on its roof. People would zip to work, to the grocery store, or even to vacation destinations in a matter of minutes or hours. Unfortunately, physical realities emerged that made the concept infeasible given 20th-century technology. Thus Kaman determined that the immediate future of his company was in the commercial and defense markets.

Kaman achieved important technical breakthroughs during the late 1940s and 1950s. In 1951, for instance, he designed the world's first gas-turbine powered helicopter. The innovation became a major industry influence on the design of helicopter power systems through the mid-1990s. Despite technical advances, though, Kaman Aircraft realized spotty financial success. Kaman was unsuccessful at marketing his K-225 (successor to the K-125) as a crop duster. In addition, although descendants of the K-190 and K-225 models were purchased for use in search and rescue missions in the 1950s, his servo-flap design never found a mass market.

Kaman's helicopters, which became known as synchropters, had many advantages over other machines. Their chief drawback, however, was slowness. As the military increased its emphasis on speed during the 1950s and 1960s, synchropters lost favor to speedier designs that were more appropriate for battle. Kaman's machines still found demand in a variety of military applications, however, that required improved control and stability (search and rescue operations and heavy lifting jobs, for example), particularly during the Korean War.

One of Kaman Aircraft's crowning achievements in the helicopter industry was its creation of the UH-2 utility helicopter. Kaman won the contract to design the machine in a contest. The project posed a formidable challenge because of the extremely demanding requirements set forth by the Navy. It wanted a vehicle that could fly at night for several hundred miles with no external navigation. It also had to be able to pick up downed pilots at sea under icy conditions and then return to a different location. Because of the complexity of the instrumentation, Kaman found that the machine also had to have less than one-tenth of a G of vibration to make the display panel readable for the pilot. Kaman's UH-2 met the requirements and was introduced into service in 1963.

In addition to the UH-2, other successful Kaman helicopter designs included the H-43 Husky and the SH-2. The former was used during Vietnam to rescue downed pilots, and was the first helicopter to perform with no loss of life or accidents attributable to the aircraft. The SH-2, an antisubmarine aircraft, still was being used by the Navy in the early 1990s. Throughout the 1950s and early 1960s, Kaman Aircraft's inventions relating to airplanes, rotors, drones, and other technologies made pivotal contributions to the field of aviation. Among its most notable contributions were the first servo-controlled rotor, gas-turbine helicopter, twin-turbine helicopter, all-composite rotor blade, and remotely controlled helicopter. Kaman also set numerous records related to time-to-climb, altitude, as well as other factors.

Although Kaman managed to show a profit every year during the 1950s and early 1960s, its sales fluctuated because of its dependence on military contracts. In the early 1960s, President John F. Kennedy's administration ordered 220 Seasprite helicopters from Kaman. Five days later, however, Kennedy was assassinated. President Johnson rescinded the order and Kaman's helicopter division was devastated.

Diversification and Expansion: 1960s-80s

The detrimental impact of the loss of the large Pentagon contract was diminished by Kaman's other operations. Since the late 1950s, Kaman had been trying to reduce its dependence on defense contracts, particularly related to helicopters. The board of directors determined that Kaman should have three basic elements to its business: defense, industrial, and commercial. Over time, they decided, each division would be built to approximately one-third of company sales. In the 1950s, Kaman began expanding into aerospace parts manufacturing, aerodynamics subcontracting, and advanced nuclear research, among other defense and industry-related activities. As a result of its diversification, Kaman continued to post profits throughout the 1960s and 1970s.

One of Kaman's most intriguing ventures away from the helicopter business involved musical instruments. In part because of his own interest in playing the guitar, Kaman had long been interested in the music business. In the early 1960s, he set out to develop his own guitar. He sought help from Martin, a Pennsylvania-based manufacturer of acoustic guitars. Kaman was surprised at the primitive methods that Martin and other companies were still using to produce the instruments. He believed that he could improve both the guitars and the production process by incorporating modern manufacturing techniques and aerospace technology.

The owners of Martin refused to sell their company, so Kaman started his own operation. He drew on his knowledge of harmonics, which he gleaned from building helicopter rotors, to build a guitar with composites that still had a natural sound. "In a helicopter, you take vibration out," Kaman explained in the July 26, 1993 Business Week. "In a guitar you put it in." The end result of Kaman's early efforts was the Ovation guitar, a top industry seller distinguished by its round-back design. Kaman Music Corporation met with success during the late 1960s and particularly beginning in the 1970s by developing new products and acquiring other manufacturers. In 1974, Kaman's son, C. William Kaman II, started his career making guitars at Kaman Music Corporation. He became president of that division in 1986.

Kaman continued to build its consumer and defense-related businesses throughout the 1960s and 1970s. In addition, it expanded into several industrial segments through merger and acquisition beginning in 1971. In that year, Kaman purchased three industrial distribution businesses, launching a buying spree that would propel Kaman Corporation into the Fortune 500 by the 1980s. Kaman purchased more than 30 industrial companies during the 1970s and 1980s, making its Kaman Bearing and Supply subsidiary the third largest U.S. industrial distributor. By 1989, that division accounted for roughly half of Kaman Corporation's revenues. Kaman Bearing and Supply had 156 offices in the United States and Canada and supplied more than 750,000 different parts to every major industry.

Charles Kaman had success integrating the companies that he acquired into a cohesive whole. When appraising buyout candidates, Kaman looked for situations in which both companies stood to gain from each other's competencies. A musical instrument manufacturer, for example, might benefit from Kaman's marketing and distribution channels while Kaman would get access to new production facilities or patented processes or products. In addition, he applied years of experience in determining the integrity and substance of the candidate. "After 45 years I just walk through and I've got it in about 10 minutes, maybe half-an-hour," Kaman told Enterprise. "You can read it. ... When we visit a military base I can tell you what the base commander is like by the attitude of the sentry at the guard house—are we greeted with smiles, does he know what's going on?"

At his home office Kaman set the leadership example that permeated his organization. Kaman was his company's major stockholder, but unlike most executives he had purchased all of his stock on the open market rather than receiving it as compensation, reflecting his faith in the company. In addition, he paid himself a relatively low salary compared with other chief executive officers of companies of similar size, and much of it was tied to the company's performance. Kaman believed in direct communication and candor and advocated empowering workers and recognizing their contributions. "There's no politicking, no vying for power around here," stated Kaman in Enterprise. "It's just straight-arrow stuff." Kaman Corporation was recognized for its acute management team and fruitful working environment.

Kaman continued to diversify into new markets and expand its defense, industrial, and consumer divisions during the 1970s and 1980s. Significantly, Kaman reopened its helicopter production line in 1981. It began manufacturing an updated version of its old Seasprite helicopter called the SH-2F, or LAMPS (Light Airborne Multi-purpose System) for the Navy, which wanted to use it as a submarine hunter and utility craft. The SH-2F had Kaman's original servo-flap system as well as a tail rotor. Renewed interest in the servo-flap design was partially a result of new technology and materials that made it more feasible for integration into new helicopters.

As Kaman expanded into new markets and revived old ones, its revenues continued to swell during the 1980s. Sales topped $380 million in 1983, about $6.4 million of which was net income. Receipts increased to $556 million by 1985 and then past $760 million in 1988 as net earnings rose past the $25 million mark. Likewise, Kaman's workforce increased from 4,800 in the early 1980s to nearly 6,500 by 1989. Although sales of musical instruments languished, defense-related work boomed. Kaman continued to be a powerful influence in the high-tech defense arena. One of the company's projects in 1986 was an $8.5 million contract to build an electromagnetic coil gun, a high-tech cannon that used synchronized magnetic waves to fire projectiles at a velocity of 2.5 miles per second.

Ongoing Humanitarian Initiatives and a New Kaman President by 1990

Besides his lauded achievements in aviation and technology, Kaman was also well known for another of his passions, breeding guide dogs for the blind. When a blind boyhood friend had his life improved by a guide dog, Kaman became interested in guide dogs. To improve blind people's access to the dogs, Kaman and his wife launched the Fieldco Guide Dog Foundation, a nonprofit foundation that bred and trained dogs for the blind, in 1960.

Kaman handled his dog breeding operation in the same way he managed his business affairs. He applied rigorous breeding standards and was able to gradually weed out genetic defects, particularly susceptibility to certain disease strains that traditionally plagued guide dogs. The Kamans opened their own school in 1981 to match dogs with owners. The school provided dogs to recipients for $150 in the early 1990s, a mere fraction of the $17,500 training cost. In 1990, Fieldco launched an initiative to begin matching 100 owner and dog teams annually over the next decade.

Charles Kaman stepped aside as president of Kaman Corporation in 1990 at the age of 71, but remained chief executive and chairman of the board. He was succeeded by Harvey S. Levenson. Levenson took the reins just as the company was slipping into a downturn. After doubling its sales between 1980 and 1989, Kaman suffered setbacks primarily attributable to defense industry cutbacks. Several of its contracts ran out and new federal defense spending programs were capped in the wake of the post-Cold War military transition. Net earnings dropped to $8.7 million in 1989 and the rampant revenue growth achieved during much of the 1980s waned.

Adapting to Defense Spending Cutbacks in the 1990s

As defense dollars ebbed, Kaman adjusted to the new environment by restructuring and cutting its workforce to about 5,300 employees by 1993. The company posted a disappointing loss in 1993, mostly as a result of restructuring costs, and total revenues remained below $800 million. Nevertheless, Kaman's strong performance in its industrial technologies, distribution, and music businesses had allowed it to remain profitable between 1990 and 1992. Furthermore, the company held a strong technological edge in its core markets and was solidly positioned for future growth. Virtually every mass-produced aircraft in the world already utilized Kaman parts, which secured its dominant market presence.

Kaman Music became the largest independent distributor of musical instruments in the United States with more than 13,000 products when it acquired Hamer Guitars, a $100 million guitar manufacturer, in the early 1990s. Boosting that segment's credibility was a long list of star performers who were using Kaman's guitars (and other equipment), including Glen Campbell, Richie Sambora of Bon Jovi, and Phil Collins. By 1993, in fact, music and consumer products comprised about 20 percent of Kaman's total sales. Industrial products and distribution activities represented about 43 percent and defense-related goods and services comprised the remainder of sales.

Kaman offset its defense-related losses by repositioning its helicopter products for use in commercial markets. In 1994, the company's breakthrough K-MAX helicopter was certified by the Federal Aviation Administration. The K-MAX was touted as an "aerial truck" and was designed specifically for repetitive heavy lifting. The K-MAX could lift three tons, more than its weight, and was particularly suited to logging in environmentally sensitive areas, fire fighting, construction, heavy equipment transportation, and a variety of specialty and industrial uses. The helicopter sold for $3.5 million or could be leased for $1 million per thousand hours of use. Kaman's latest helicopter represented the culmination of a lifetime of industry experience. By the end of 1995, the K-MAX was operating in the U.S., Canadian, European, and South American markets.

At the end of 1995, the company's president and COO, Harvey Levenson, retired. Charles Kaman, who still held the positions of CEO and chairman, reassumed the office of president that he had vacated just five years earlier. The second half of the 1990s was marked by a series of honors and awards for the company leader. In 1995, the Department of Defense awarded him its Distinguished Public Service Medal, and in 1996, he was both inducted into the Naval Aviation Hall of Honor and awarded the National Medal of Technology. During the following two years, Kaman received the National Aeronautic Association's Wright Brothers Memorial Trophy and was awarded the Spirit of St. Louis Medal by the American Society of Mechanical Engineers.

As the 1990s progressed, Kaman Corporation continued to focus on building smaller, lightweight aircraft that could nonetheless carry heavy loads. One of its most notable successes was the decision to refurbish its SH-2 Seasprite helicopters and market them to overseas navies. The company took the original SH-2s, which the U.S. Navy has ceased to purchase, and retrofitted them with new avionics, engines, and cockpits. In 1996 and 1997, Kaman won $1 billion in orders for the refurbished Seasprites from Egypt, Australia, and New Zealand. The contracts helped boost Kaman's income substantially, allowing it in 1997 to top $1 billion in annual revenue for the first time in company history.

Another major source of the record revenue for fiscal 1997 was the company's sale of its 40-year-old Kaman Sciences subsidiary. Kaman sold the subsidiary, which provided software support and research to government agencies, to ITT Industries for $135 million.

Changing of the Guard at the End of the 20th Century

By 1998, Charles Kaman was nearing 80. Speculation about who would replace him was pervasive, but the company was offering no information on its succession plan. In August 1998, one possible successor—Kaman's son C. William Kaman II—retired from his position as head of the company's music division, announcing that he would no longer be involved in the day-to-day operations of the business. That same month, the elder Kaman suffered a mild stroke and spent the remainder of the year convalescing. In December 1998, the company announced that it would begin searching for a new CEO. Kaman continued to serve as CEO while the search was conducted.

In July 1999, the company announced that Paul Kuhn would become Kaman Corporation's new CEO. Kuhn had served previously as senior vice-president of operations for the aerospace engine businesses of Coltec Industries.

Kaman relinquished his seat as CEO, but kept his position as chairman of the board. Charles Kaman's health soon became an issue for the company again. In June 2000, the 81-year-old was hospitalized with pneumonia. In August, his condition led the company to transfer his majority voting power to two committees, which included Kaman family members. In March 2001, the company announced that its founder and leader for more than half a century would not be seeking reelection to its board of directors. Kuhn was elected chairman of the board.

Looking Ahead to the 21st Century

At the beginning of the new century, some industry analysts and Kaman shareholders believed that the company had become a melting pot of businesses that did not belong together, and anticipated a breakup and sale. In Kaman's annual meeting held in April 2001, however, Kuhn told shareholders that he did not plan to sell off any of the company's businesses. Rather, he announced, he intended to seek acquisitions, especially in the aerospace sector. Kuhn also said that he planned to expand Kaman's industrial and music distribution operations in geographic areas where its presence was weak.

Principal Subsidiaries: Kaman Aerospace Corporation; Kamatics Corporation; Kaman Industrial Technologies Corporation; Kaman Music Corporation.

Principal Divisions: Aerospace; Industrial Distribution; Music Distribution.

Principal Competitors: United Technologies Corporation; General Dynamics Corporation; Raytheon Company; Lockheed Martin Corporation; Bell Helicopter; Yamaha Corporation; Gibson Musical Instruments; Fender Musical Instruments Corporation; C.F. Martin & Co., Inc.


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Further Reference

Birchard, Bill, "The Art of Acquisition," Enterprise, Fall 1989, p. 9.Gertzen, Ian, "Kaman Tightening Workforce," Norwich Bulletin, September 10, 1993, p. 1.Kaman, Charles, in Rotor Wing International, May 1991.Lehrer, Linda, "Charles Kaman, Who Founded His Own Fortune 500 Company, Now Takes Time Out to Raise and Train Dogs That Help the Blind," Trump's Guiding Light, September 1990.Nagy, Barbara, "Inventor, Musician, Businessman, Samaritan: A Half Century After He Founded It, Where Will Charlie Kaman Lead His Company Next?," Hartford Courant, November 17, 1997, p. D10.North, Sterling, "A Defensive Move: Kaman Corp. Turns from Whirlybirds to Star Wars," New England Business, November 17, 1986, p. 53.Rose, Peter, "Kaman Industries Goes High-Tech," Idaho Business Review, May 2, 1994, p. A10.Smart, Tim, "What Do Dogs, Guitars, and Choppers Have in Common?," Business Week, July 26, 1993.Stuller, Jay, "The Taming of the Copter," Air & Space, December 1990, p. 92.Valvo, Vincent Michael, "Kaman: Innovation and Ovation," Intercorp, May 29, 1987, p. 1.

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