A Tale of Three Sheet Metal Fabricators—All Steel, Equipto, and Lyon Metal Products
Richard Hattwick, Western Illinois University, Illinois Business Hall of Fame, August, 1976
This monograph briefly sketches the entrepreneurial histories of three outstanding business enterprises headquartered in Aurora, Illinois. The contrasts brought out by this study offer testimony to the fact that the American economic system encourages variety. Such variety is one of the strengths of the system, both from the standpoint of the business leader and from the standpoint of the consumer. This study also offers insights into the nature of business leadership in the United States. It is the hope of the Illinois Business Hall of Fame that these insights will provide inspiration to young men and women who are in the process of choosing a career.
A TALE OF THREE SHEET METAL FABRICATORS - ALL STEEL, EQUIPTO, AND LYON METAL PRODUCTS
This is the story of three sheet metal fabricators located in Aurora, Illinois. In part it is a study of the persons who created the companies and guided their growth. In part this is also a study of the contrasting methods used by American business enterprises to cope with competition and a constantly changing economic environment.
This study is divided into three major parts. Part One briefly identifies the “industries” in which the three firms compete. Part Two presents management histories of each of the three firms, and Part Three discusses some of the major lessons to be learned by studying these histories.
I. THE INDUSTRIES INVOLVED
Two broadly defined census industries are involved: the Metal Office Furniture industry (SIC 2522) and the Metal Partitions and Fixtures Industry (SIC 2542). All Steel competes in the Metal Office Furniture Industry; Equipto competes in the MetalPartitions and Fixtures Industry; and Lyon Metal competes in both industries, although over 60 percent of Lyon’s business is in the Metal Partitions and Fixtures Industry. All Steel’s 1975 employment exceeded 1,000 employees, making All Steel one of the five largest employers in the Metal Office Furniture Industry. Lyon Metal ‘s 1975 employment was approximately 1,500, making Lyon one of the largest employers in the Metal Partitions and Fixtures Industry. Equipto’s 1975 employment was approximately 500, making Equipto one of the twenty-five largest employers in the industry
Actually, the leadership positions of these three firms are more pronounced than the above statistics would indicate All Steel believes that it is the second or third largest manufacturer of Class “A” metal office furniture Lyon Metal believes that it is the largest manufacturer of steel lockers, and Equipto believes that it is one of the 5 largest manufacturers of steel shelving for use in industrial shops and warehouses.
II. ENTREPRENEURIAL HISTORIES OF THE THREE FIRMS
A. Lyon Metal Products
The firm now known as Lyon Metal Products was founded in 1901 when 25 year old Beverly Lyon Waters purchased $100 worth of equipment and set up a sheet metal shop in the basement of his parents’ home in Chicago. Within a year, B. L. Waters had been joined by his brother Frank (known as F. S.), and the firm had been moved to new rented quarters. There the two brothers plus one other employee each worked 59 hours a week turning out steel refuse cans and cuspidors. Earnings were minimal at that time. The hired employee received $16.22 per week; F. S. Waters, being single and living with his parents, received $5.00 per week; and B. L. Waters, having a wife and daughter to support, received $18.00 per week.
In addition to manufacturing, the Waters brothers engaged in sheet metal repair work. One of their early major repair contracts was with a number of elevated railroads in Chicago. But manufacturing was the Waters brothers’ preferred activity and by 1904 the company catalog listed such items as racks, shop pails, benches, boxes, tool racks, lathe pans, refuse cans, steel lockers and fireplace equipment
In 1906 the Waters brothers purchased land on the outskirts of Aurora, Illinois. A factory building and an office building were constructed on the site The headquarters of the company was moved to the Aurora site and remained there for the next 70 years. By 1910 sales had reached an annual rate of approximately $300,000 and the company began the process of setting up a national sales organization. B. L. Waters spent several months in New York City opening up the first sales offices and by 1923 there were nine such district offices scattered around the country.
The growth of the company during the first three decades in Aurora was based on the expanding sales effort on the one hand and on expanding product lines on the other All of the products were fabricated out of steel sheets. In competing for the business of factories and warehouses, the Lyon strategy was to expand or improve upon the types of products offered (tool racks, boxes, barrels, lockers, desks, tables and cabinets) A basic technique for developing new products was to look for wood products that were doing a job that steel products could do better.
Growth took place not only through expanding the services offered the original customer group (factories and warehouses), but also by adding new customer groups. In the period 1918-1924, Lyon entered the automotive market with bin systems for storing auto parts, display stands, and other products for use by auto dealers and garages. In the same period a complete line of food store fixtures was added (the A and P food chain was Lyon’s largest customer for this product line). In 1924 Lyon invaded the office equipment field with its first line of office storage cabinets. And in 1928 Lyon tried a different approach to growth by merging with one of its competitors, the Durand Steel Locker Company of Chicago.1
The Durand merger marked the beginning of the end of a management style era at Lyon. The Waters brothers had managed the company in a manner typica1 of company founders without formal business training. B. L. Waters handled sales and finance using his on-the-job experience to guide him. F.S. Waters handled the administration and managed production. “F. S. was red headed and had a temper to match. Unlike soft-spoken ‘B. L.” he was not to raise his voice in anger, often to the point it could be heard all over the small office ... He was impatient with careless or sloppy work ... An extremely hard worker himself, he expected the same from everyone else.”2 At the time of the merger, F. S. Waters was made president and he and B. L. continued to make top management decisions. But more sophisticated middle management was introduced in the person of Earl D. Power who gradually assumed responsibilities for administration and production. In 1935, F. S. Waters died and Power took over his responsibilities. In 1940, B. L. Waters retired and Earl Power succeeded him as president at Lyon. Power had studied business
1 Prior to the merger, Lyon had been called Lyon Metallic Manufacturing Company. At the time of the merger the company name was changed to Lyon Metal Products, Inc.
2 Seventy-Five years: Lyon 1901-1976, Aurora, 1976, p. 3. administration at Harvard University and under his leadership, Lyon Metal Products developed a professional, team, approach to top management decisionmaking.
3. Early in 1941, Lyon management realized that the manufacture of Steel Equipment, Store Fixtures and Automotive Bin Systems would be severly curtailed as most of the steel available would be directed toward the war effort. All Lyon advertising was directed at obtaining defense products to produce before the U.S. declared war. Lyon produced a 20-page brochure titled, ‘How One Company Tackles the War Production Problem.’ This booklet was distributed by the War Production Board to hundreds of small manufacturers to help them get into war product production when their standard products were Curtailed from 1941 to 1945, Lyon manufacturing facilities were devoted principally to producing 3,800 defense and war subcontracts. Among the products produced were Norden Bombsight Cases, tail assemblies for fighter aircraft, foot lockers and tank parts.” 75 Years— Lyon 1901-1976, p. 10.
After the war, Power and his management team resumed the Lyon growth strategy of (1) maintaining sales growth and profitability in the locker and fixtures markets through sales efforts and product improvements and (2) broadening the company’s base by entering new product areas. The first major attempt to enter new product areas had occurred when Lyon began producing store fixtures. In 1945 a second major attempt to broaden the product line occurred when Lyon entered the home furnishings field with kitchen cabinets and ironing tables and the office equipment field with filing cabinets. (The growth strategy eventually included purchasing a plant in York, Pennsylvania in 1949 and another in Industry, California in the late 1950’s in order to increase competitiveness in the East Coast and West Coast markets. In 1976 the California plant was sold partly because of more favorable freight rates from Aurora to the West Coast).
Power brought in H. B. Spackman and worked with him to develop Lyon’s marketing effort. In 1950 Power became chairman and chief executive 0fficer While Spackman became president. Power died in 1952 and at that time Spackman became chief executive officer as well as president. Under Spackman and his successor, L. D. Deal (who became president in 1957), Lyon introduced such new product lines as coat racks, sliding shelf shelving, modular type benches, book cases, cabinet type benches, office desks and tables, office machine cabinets and others.
Despite the marketing expertise possessed by Spackman, the period of his presidency witnessed decisions to discontinue the store fixtures and kitchen cabinet product lines. These were wise decisions and, in fact, reflected a high degree of professional management decision-making. In both cases changing market conditions were reducing the profit potential of the business. In both cases, Lyon management spotted the trend early; and in both cases Lyon got out of the product line soon enough to retain a satisfactory profit on the original investment.
But in exiting from these two product line areas, Lyon had to accept a narrower product base. Consequently, management began to search for a major new product line that could be added. The search was begun during the presidency of L. D. Deal, and continued under his successor, J. M. Olesen who was president from 1963 to 1969. The most logical candidate was the Class A office furniture business. Lyon decided to enter that business in 1962, but more than three more years were spent in market research, product design, plant construction and the training of a sales staff. Finally, in 1966, Lyon officially announced its entry into the new field and began commercial production of Grade “A” desks. Once again, Lyon had succeeded in broadening its base.
Unfortunately, the success was short-lived, and therein lies a lesson. Ever since the time of Earl Power, Lyon had defined its business purpose as the mass production of standardized products made of steel sheet. Consequently, Lyon had decided to enter the Grade “A” office furniture business only after market research had revealed that mass production was feasible. However, at the very moment that Lyon started production, a drastic change occurred in the nature of market demand. The change consisted of architectural firms including the design of office furniture as one of their responsibilities in designing new office buildings. This meant that office furniture manufacturers would have to work with the architectural firms in designing office furniture. Lyon would have to compete for the business by developing fashion design capabilities, the competitive bidding would be fierce and many jobs. would involve too large a volume.
Lyon faced a major decision. Should the company attempt to become a major competitor in the drastically changed market? Or should Lyon use its already installed production capacity to mass produce office equipment for that small segment of the market that was not “controlled” by the architectural firms. To become a major competitor would require Lyon to make major new investments and to develop a fashion design capability. Lyon’s professional management decided that this would not be a wise investment. Consequently, Lyon modified its plans for the office furniture business and restricted its efforts to the standardized segment. This decision was made by a management team headed by T. R. Conklin who succeeded Olesen as president and chief executive officer in 1969. Once again Lyon’s management had made a wise decision and thereby preserved the firm’s basic strengths and financial stability.
B. All Steel
Allsteelequjp Company was established by three ex-Lyon Metal employees in 1912. The three initially produced electrical cut-out boxes and shop boxes on a custom basis. In 1914, one of the three men, Charles Lembcke, joined with John Knell, the president of the Aurora Brewing Company to buy out the other two men. Knell was concerned about the future of the brewery industry and was, therefore, looking for alternative business investments.
As the new management team at Allsteelequip, Lembcke and Knell sat at facing desks, three feet apart. Knell was president and Lembcke was general manager. Their differing personalities nicely complemented one another. “Lembcke was a reserved, introverted individual, described as ‘shy’ by some associates, and occasionally moody. He drove himself hard. His partner was warm and naturally friendly, gregarious and even—tempered ... Lembcke supplied the drive, the initiative, the pressing desire to ‘get things done,’ while Knell was unhurried and content to make progress more slowly. This difference was apparent, even in things as minor as Lembcke’s rebellion against taking the time necessary to set up office standardization or systematization, which Knell accepted as necessary for even a small organization.(4. History of All Steel Equipment, Inc., Aurora, 1971, p. 3.)
In 1915, Lembcke and Knell hired Axel Erickson away from Lyon Metal and made him plant superintendant. Years later, the company would look back on Erickson’s arrival as a major factor in the firm’s eventual success, for Erickson’s insistence on high quality workmanship became one of Alisteelequip’s prominent selling points. Under Lembcke and Knell, Allsteelequip gradually expanded its product line, particularly in the non-electrical fields. Among the products added were: stoker housings, water cooler cabinets, boiler jackets (sold to Kewanee Boiler), kitchen cabinets (sold to General Electric), refrigerated food lockers, and sheet metal components for IBM’s office equipment. Office cabinets and lockers were eventually produced, and in 1936 Allsteelequip bought the Aurora Metal Cabinet Company in order to add filing cabinets to the product line. The electrical lines also expanded, particularly in 1933 when All-Steel-Equip (the spelling was changed in 1929) purchased the Roach-Appleton Manufacturing Company (RACO) in South Bend, Indiana.
During World War II, All-Steel-Equip switched its production efforts to war related products including lockers for the Navy, field repair equipment and ogives for artillery shells. When the war ended, Al1_Steel-Equip appeared ready for expansion in three different branches of sheet metal fabricating: office furniture, electrical fixtures, and lockers and shop fixtures. At this critical moment in the company’s history, president John Knell and his team made a momentous decision. They decided to concentrate on the production of office furniture at the Aurora Plant, to continue to concentrate on electrical fixtures production at the RACO plant and to phase out the shop fixture and locker businesses which otherwise would have continued to be produced in Aurora.
The decision of the Knell team was based on the belief that the Aurora plant could not simultaneously excell at office furniture and shop fixture production Two different sets of quality were involved. Specialization in one or the other was needed in order to do an effective job of producing and marketing the product line. Knell and his associates regarded the Grade “A” office furniture business as having the greatest profit potential and it was therefore decided to concentrate on that market. The RACO business was re-tained because it involved production at a separate plant, with a separate sales force and with minimal demands on the time of the management that had to guide All-Steel’s expansion in the office furniture business.
The Knell team’s strategy called for broadening the product line in order to offer customers a full line of office furniture. The first new item to be added was office desks. All-Steel’s5 plans for desks had begun prior to World War II and in 1947 the first desk appeared. The desk was twenty-eight inches long compared with the industry standard of thirty inches. However, in 1950 All-Steel introduced a fifty-inch desk which, in the words of ex-president Karl Grube, “revolutionized the industry.” Following the introduction of the office desk, All-Steel introduced book cases, telephone stands and credenzas. Then, in 1953, the office furniture line was rounded out by the introduction of chairs. In order to acquire a chair production capability, All-Steel purchased the Shepherd Chair Company of Melrose Park, Illinois.
In 1955 John Knell turned over the presidency of All-Steel to Karl Grube who had joined All-Steel in 1948 as Vice-President-Engineering. Under Grube, All-Steel became one of the largest three producers in its industry. This success was based on a working out of Knell’s original strategy and a number of innovative concepts that were introduced as the firm gained experience. More specifically, All-Steel grew and excelled by:
1. Specializing - It focused its efforts on the high quality end of the office furniture industry.
2. Emphasizing cost saving techniques in production and shipping
The very act of specializing made it possible for All-Steel to gain the experience from which came numerous cost saving ideas (Economists call this phenomenon, “moving down the learning curve”). Of particular note was the use of a honey-comb design used in the interior parts of the desk to reduce shipping weight while maintaining strength and rigidity. This idea was brought over from the aircraft industry where Karl Grube had worked as an aeronautical engineer before joining All-Steel in 1948.
3. Marketing - All-Steel held to a hard line in dealer relationships and was selective in assigning dealerships. All marketing was through manufacturers agents.
4. Innovative Design, and
5. Financial Controls — particularly in the nineteen-sixties when computerization was introduced.
During this period All—Steel also increased its cost competitiveness and service capabilities on the East Coast by building a manufacturing plant in Hazelton, Pennsylvania (1968). As All-Steel grew the thoughts of the controlling stockholders turned to the question of broadening the ownership base. For estate purposes and in order to provide capital, it was felt that All-Steel should either make a public stock offering or be sold to a publicly held firm.
The majority stockholders decided not to attempt to go public because it appeared that the public would undervalue the company’s stock. This belief was based on the fact that the price-earnings multiples of other publicly held firms in the industry were low in the opinion of the All-Steel owners. Thus, with a public offering out of the question, All-Steel’s owners began to look for an acceptable publicly held firm to which they would be willing to sell. They finally found an excellent opportunity in the form of C.I.T. Financial Corporation; and in 1966, All-Steel was sold to C.I.T. C.I.T.’s approach to managing All-Steel was to rely on All-Steel’s original management to handle production and marketing and to add C.I.T.’s financial management skills to the management process.
The company now known as Equipto was founded in Aurora by Thomas M. Dunham in 1907. Dunham’s original products were motorcycle side cars and later bodies and replacement parts for Ford automobiles. In arriving at this point in his business career, Tom Dunham had followed an unusual path. Born in Buffalo, New York on June 5, 1876, Dunham obtained a job with a company manufacturing bike lamps in 1901. He started in sales and was involved in opening a London, England sales office. But he soon developed an interest in product development. His employer did not approve of his product designs and so Dunham quit and joined another manufacturer who agreed to produce Dunham’s product and reimburse Dunham on a percentage basis. Dunham’s product sold so well that he decided to go into business for himself and selected Aurora, Illinois as the location for his business.
Dunham’s production of parts and bodies for the Ford Model I was curtailed in the early 1930’s when, in Dunham’s words, “Ford Motor Company announced to Ford dealers not to use any parts manufactured by others than Ford. That of course made the only available market what was called the Alley Garage and we were about out of the Model T parts business.”(6 Equipto pamphlet Aurora, Ill., undated). Fortunately, an alternative presented itself. As explained by Dunham, “In the meantime a buying office in Chicago, a very good customer, started a new line of motor oils, polishes, paints, etc. ... and asked us to develop a stocking rack ... We had a ‘crash’ program to develop something to fill the need and do it before they called in another manufacturer. Within days I was back with a rack of shelving 60” high, 36” wide and 8” deep, quoted a price and told them there would be no tool charge for a 5000 order. The order was placed ... We were in the shelving business in a few weeks. (7 Ibid).
This incident illustrates the role of what some would call the element of luck in the history of many successful businesses. Tom Dunham, however, had another explanation, an explanation which helps us understand the man’s character. In his words, “This development, so sudden and so badly needed was, as it has always seemed to me, a direct act of God in the affairs of Equipto. He directed me that day to make that call. He has directed my personal and business affairs and I have endeavored to seek His help and believe I have had His help.”(8 Ibid).
Tom Dunham’s son John graduated from college in 1931 with a degree in business and immediately began selling for Equipto. In 1932 he stopped in a gasoline station and by chance encountered a vice president of Western Auto. John Dunham discovered that Western Auto was planning to make major purchases of store fixtures, and he immediately went to work to make a bid for the business. Equipto’s bid was accepted and for the remainder of the Depression years, Equipto did a profitable business selling store fixtures. During World War II Equipto joined the other sheet metal manufacturers in producing war related products. These included foot lockers, and other defense products. Equipto also continued to produce tool room equipment.
In 1944 Tom Dunham decided to retire from active involvement in the business. He had undoubtedly been contemplating the move for some time, but he had not prepared his son John for the decision. One day in 1944 he walked into John’s office and told John that from that day forward, John would be the president of the company. John Dunham had sufficient experience on the sales side of the business and on the production end, but there were a number of management skills that John Dunham had to learn on the job. Hence, John Dunham took over the management of Equipto with a certain amount of anxiety. (Years later he was to look back at this period and credit contacts made at the Valley Industrial Management Club, an association of presidents of Fox Valley firms, with providing the education he needed).
But John Dunham had thought a great deal about the directions the company should take, and as soon as he became president he took two actions to prepare the company for growth. One action was the establishment of a formal research and development program. This consisted of assigning a few employees to the task of coming up with new product designs. A second action consisted of preparing the company to compete aggressively in the store fixtures market as soon as World War II came to an end. Dunham believed that a major Depression would follow the end of World War II and his experience in the nineteen-thirties showed him that the store fixtures market could be profitable even during a depression. Consequently, Equipto “tooled up” to serve the store fixtures market.
The Depression never came. Instead, manufacturing investment expanded and Equipto began to receive orders for shelving and fixtures from manufacturers. Adjusting quickly to the unexpected development, Dunham reoriented Equipto’s production to serve the growing manufacturing warehouse and shop markets. In 1946, John Dunham committed Equipto to a new long term goal-providing complete shelving and fixtures service to manufacturing shops and warehouses. In so defining his business purpose, Dunham provided the guidelines for more than thirty years of profitable growth at Equipto. It was a process of growth that saw Equipto move from the position of one of the smaller firms in its industry to one of the largest.
One key to Dunham’s strategy was new product development. In order to systematize the search for new products, Dunham supplemented his research and development unit with a procedure whereby salespersons in the field were required to identify the storage and handling needs of potential customers. In order to maintain constant pressure to develop new products, Dunham personally kept track of development work that was being undertaken and he himself periodically came up with ideas. Among the results of this developmental effort were closed panel pedestal benches for shop use (introduced in 1952), “Little Gem Drawers” for use with benches (1955); slotted angle pieces designed to “build anything” (1954); “V-Grip” heavy duty racks with a 6,000 lb. loading capacity (1967); and prefabricated stairways and mezzanines (1970).
The second key to Dunham’s strategy was a greatly expanded sales effort. This included targeting the sales effort on growth industries such as electronics and aviation. This also involved relatively heavy expenditures on advertising with the advertising stressing the ways in which storage costs would be cut through the use of Equipto products. A third key to Dunham’s strategy was capital investment. Equipto plowed most of its earnings back into the company in the form of investment (although Dunham also introduced the practice of paying a cash dividend, partly in order to give his father an income and partly to impose financial discipline on himself). Up until the mid nineteen sixties the company’s cash flow was insufficient to finance the desired investment and as a result, Equipto became a heavy bank borrower.
A fourth part of Dunham’s strategy was geographical expansion of the manufacturing facilities. A manufacturing plant was purchased in Tatamy, Pennsylvania and in 1975 a plant was acquired in Dallas, Texas. In 1973 John Dunham’s son Jack was elected president of Equipto. John Dunham became chairman of the board and continued to handle sales and finance. Unlike his father, John Dunham loved the business life too much to retire. Despite devoting more than 40 years to the business, John Dunham still derived a feeling of accomplishment out of the daily business routine.
III. LESSONS TO BE LEARNED
Taken together, the histories of Lyon Metal Products, All Steel and Equipto illustrate a number of basic business principles. There are, of course, many similarities such as the emphasis on marketing and innovation. But there are also some interesting contrasts. Among those worthy of special emphasis are: the different definitions of the business purpose, the variety of ownership patterns that were used, and the way in which management styles have changed at each company.
A. Defining the Business Purpose
Each of the three companies can attribute its success to its ability to correctly define its business purpose. After World War II, All Steel defined its purpose as producing Grade “A” office furniture. This definition caused All Steel to dispose of its other sheet metal operations at the Aurora plant and to concentrate management talent on the primary purpose. As a result, All Steel became one of the leaders in the field.
John Dunham defined the purpose of Equipto as, “Taking complete responsibility for the storage and shop equipment needs of manufacturing and institutional plants.” With this purpose in mind, Dunham broadened his product line in areas where the company’s strength resided and carefully avoided entering markets, such as office furniture, in which the company would lack expertise.
Lyon Metal Products defined its business purpose as production of standardized sheet steel products. This definition was broad enough to encourage Lyon to produce products similar to those of Equipto or those of All Steel as well as products that neither produced. The All Steel and Equipto definitions caused those firms to make long term commitments to specialized segments of the metal fabricating industry. Both All Steel and Equipto deliberately limited the range of new products they would consider producing. In contrast, Lyon Metal was willing to try a wide variety of new product alternatives as long as the profit potential looked promising. But Lyon’s strategy involved greater risks and as a result, Lyon’s professional management was prepared to phase out any of the company’s products when the profit trend appeared to be changing for the worse. While part of the Lyon success story is the introduction of new products, another part of the success story is the ability to phase out unprofitable products before those products began to impair overall profitability.
B. Ownership Patterns
The three Aurora Sheet Metal manufacturers illustrate interesting varieties of ownership patterns. All three started out as corporations whose stock was closely held by the founding families. As the three grew larger and as the founding families found a need to make their assets more liquid, each of the firms faced the question of going public. Each responded differently:
Which solution was best? The answer, as is so often the case, appears to be that each firm chose the solution that was best for that firm.
C. Management Styles
The three companies also provide illustrations of the changes that have occurred in management styles in the American corporation. All three firms started with entrepreneurial management styles. At All-Steel, John Knell and Carl Lembcke were the founders and entrepreneurial managers; at Lyon the Waters brothers were the owner-managers; and at Equipto, Tom Dunham was the founder, owner and manager. These men learned their management skills on the job. In each case the one or two founders made the major decisions and actively directed all of the major parts of the business. Because they owned the businesses and because they had been responsible for making the businesses grow and prosper, these men were able to manage effectively with this approach.
All Steel and Lyon Metal changed their management styles in the nineteen forties. In 1940 Earl Power brought a new management philosophy to Lyon Metal. It was a philosophy that was to later become the fashion in American business, and which many refer to as “professional management.” This philosophy involved the creation of a group of top executives or a management “team” that would make the major corporate decisions. Each member of the team would have a specific area of expertise (marketing, finance, engineering, production, etc.) in which that person’s knowledge far exceeded that of any other executive. Hence, no member of the team possessed the knowledge to make major decisions alone. The group of top executives had to do so. This top management team came to be known as the Executive Committee. For the next three decades the Executive Committee functioned with such a high degree of effectiveness, cohesiveness and team spirit, that it became a justifiable source of great pride to the company.
In 1976 the Lyon Metal “Executive Committee” consisted of seven members: the president, the vice president of sales, the vice president for manufacturing, the vice president for engineering, the vice president for finance, the vice president for corporate development and the vice president for personnel. The presence of the vice president for personnel is somewhat unusual and reflects the Lyon Metal emphasis on the personnel function. This is a reflection of Earl Power’s thinking. As president, Power created a full time executive position to deal with personnel matters. The man appointed to that position, Neil Ormund, was subsequently made a vice president in charge of Personnel in 1954, and remained in that position for the next two decades. During this period, Lyon developed great pride in its record of employee relations.
All Steel changed in the mid nineteen-forties when John Knell adopted the technique of using a four man management team (or, to use a modern term, “Office of the President”). In addition to Knell, there was Frank McQuown (Vice President - Sales), Karl Grube (Vice President-Engineering), and M. H. Snyder (Financial Vice President). This group operated in a manner similar to that of Lyon Metal’s Executive Committee. In the early nineteen-sixties the All-Steel management group was expanded in size.
In contrast with Lyon Metal and All Steel, Equipto’s management style has remained the same over the past one-half century. Tom Dunham made the decisions without consulting an “executive committee.” John Dunham made his decisions without the use of a top management team. John Dunham did begin to share decision-making with his son, Jack, in the mid nineteen-sixties; but this, of course, was part of the process of preparing Jack Dunham to take over the chief executive officer’s job.
Which management is best? Management textbooks tell us that the Lyon Metal and All Steel approach represents the most advanced management style. For organizations as large as these two, it is almost impossible to avoid the team approach since few individual top executives are able to keep abreast of all of the functional management areas. However, the Equipto approach is the most efficient approach for small businesses where the volume of business is small enough to allow one person to keep abreast of all of the company’s major functional areas. What is perhaps surprising about Equipto in 1976 is that, despite its substantial size, John Dunham and his son Jack have been able to continue to use this “small business management style,” and to do so effectively.
This brief look at three Aurora sheet metal manufacturers has only touched the surface of the histories of these three firms. However, it is hoped that the reader now has an overall view of what these firms and their managements have accomplished, who their key managers were, and (to some extent) why they were successful. Each of the companies has reason to be proud of its contribution to the Aurora economy. And Aurora’s citizenry has reason to be proud of the “native Sons” who have managed these firms so well.
Concluding Notes by Dave Hipp
Lyon Metal was the only one of the three companies to become a publicly-owned company. However, in 1984, Lyon purchased the stock in a public offering with funds borrowed from the Lyon Retirement Fund and operated as an ESOP. Within a few years, the management bought out the employee ownership. The key management in this process were Peter Washington and Gerald Gosselin. In 2005, Gerald Gosselin retired and was bought out, leaving Peter Washington as the primary owner. Lyon operated in the same markets from 1975 through 2005, although in 2005, it transferred the locker line to a non-union plant in Watseka, Illinois, while retaining the corporate headquarters in Montgomery.
John Dunham at Equipto turned the day-to-day management of the company to his nephew in the early 1990’s. By the end of the 1990’s, the decision was made to close the Aurora facility and move the product and corporate center to Dallas, Texas.
In All Steel’s case, the sale to CIT resulted in the continuation of the operation in Montgomery until 1993 when the product line was moved to Muscatine, Iowa and the plant was closed and sold. Both Equipto and All Steel’s facilities have been redeveloped and serve a location for numerous small companies.