We see Ray O’Connell after his WWII years teaching at the Naval Academy at Annapolis, spending a lifetime at Torrington, being instrumental in the sell-out to IR and serving his last seven years as President, being summarily replaced by Tom Bennett in 1981. Bennett would end up heading Torrington for the next ten years (1981- 1991).
I need help here comparing or assessing the performance of each. I retired from Torrington in 1987 and to this day receive a small pension and health insurance coverage having been grand fathered under some old defined plans after serving there close to 25 years. I missed out on the last years of Bennett’s reign at Torrington and those of subsequent leaders. Therefore, your input is requested.
I do know, in contrast to O’Connell, Bennett had absolutely no knowledge of the bearings business when he started. His education was in marine engineering and background in the manufacture of heavy equipment, IR products, with long lead times, manufactured a few at a time. Torrington’s products, on the other hand, were small, of high volume, quite intricate and produced with very short lead times.
There is an axiom that says you don’t have to know anything about what you are managing as long as you are a good manager. If you believe that, then Torrington didn’t skip a beat taking Bennett on board. I personally feel Torrington lost a lot of knowledge and experience when it lost O’Connell.
To solve his problem, Bennett hired and relied on consultants, spending millions of dollars for their advice. What is the general feeling for the role of consultants in a corporate atmosphere ? Did we get our money’s worth? Did they turn us on to things that we wouldn’t have come across on our own? Were there long term benefits to Torrington of having Bennett and of having consultants?
Aren’t consultants simply management’s self righteous hedge to responsibility?
As we ponder these points, let us not forget that Torrington no longer exists as a separate entity. Something went wrong. Do you agree?
Sunday, July 29, 2007
Sunday, July 22, 2007
DISCUSSION TOPIC - 4. IR takes over Torrington
IR bought out Torrington as of December 31, 1968 but did not name its own choice for President, Tom Bennett, until 1981. That’s 13 years of Torrington running its own show.
Does anyone know if there had been an agreement in the sell out that Torrington would maintain its own management….. for example “as long as Torrington met IR’s performance criteria“? (See Bob Breckinridge’s recollections in Comments under Discussion Topic 1)
Torrington enjoyed a relatively independent status during those years. It expanded with the money and blessing of Ingersoll-Rand to perhaps the resentment of other IR holdings. Other than monthly financial reporting, we had only to satisfy a quarterly management review. It seemed as long as Torrington remained on or ahead of the profit schedule, there was no interference from WCL.
Was Ray O’Connell retired early? I.e. forced out? I was an employee at the time and what I witnessed was Ray being President one day and after a visit to Woodcliff Lake, was out the next. He was a graduate of MIT Class of 1941 so I would guess he was about 61 years old in 1981. That seems a little young for voluntary retirement.
Was there a conflict of personalities? Did Ray fail to provide IR what they were looking for from Torrington? If so, what was that?
Was it a desire to improve Torrington’s performance with a different man? Or was it just a time for change?
Norm Massicotte
Does anyone know if there had been an agreement in the sell out that Torrington would maintain its own management….. for example “as long as Torrington met IR’s performance criteria“? (See Bob Breckinridge’s recollections in Comments under Discussion Topic 1)
Torrington enjoyed a relatively independent status during those years. It expanded with the money and blessing of Ingersoll-Rand to perhaps the resentment of other IR holdings. Other than monthly financial reporting, we had only to satisfy a quarterly management review. It seemed as long as Torrington remained on or ahead of the profit schedule, there was no interference from WCL.
Was Ray O’Connell retired early? I.e. forced out? I was an employee at the time and what I witnessed was Ray being President one day and after a visit to Woodcliff Lake, was out the next. He was a graduate of MIT Class of 1941 so I would guess he was about 61 years old in 1981. That seems a little young for voluntary retirement.
Was there a conflict of personalities? Did Ray fail to provide IR what they were looking for from Torrington? If so, what was that?
Was it a desire to improve Torrington’s performance with a different man? Or was it just a time for change?
Norm Massicotte
Sunday, July 15, 2007
DISCUSSION TOPIC - 3. Why did Torrington unload the Needle Division back in 1980?
I am sure it was at the urging of Ingersoll-Rand that Torrington would get out of the needle making business. Why? Because it was losing money. That’s the simple answer.
What is interesting is to delve into how Torrington got into that condition. Lieberthal in “Progress Through Precision…” points to some of the reasons:
p. 108 “Prior to 1960, a very high percentage of the industrial knitting machines used around the world were U.S. made. From the beginning, Torrington had made it a point to have most new machines shipped with Torrington needles tailored to the machine. But with the bulk of the world’s business was in their hands, the U.S. knitting machine manufacturers became complacent and neglected to listen to their customers. They failed to invest sufficiently to improve and speed up their machines and the world turned elsewhere. In Germany, Italy and Spain, many new knitting machine builders seized upon the opportunity to break in and gradually take over as suppliers.
It could be said that Torrington also failed to recognize the significance of this change….Neither the move of the knitting machine business from the U.S. to Europe, nor the need to work with these foreign builders received the proper attention.
By 1967, then, it became apparent that Torrington had missed the boat…..”
p.116 “By 1971 doubleknit - and flatstock needles - was the name of the game in the knitting industry,…...profits (for Torrington) were merely marginal due to high scrap losses, and regrettably, the company never became as proficient at flatstock needles as it was at fine-gauge hosiery needles.”……………..
We see a picture of falling behind. Is that the result of having a weak management on the needle side of the business? It seems from the 1920s with E.K. Brown onward, Torrington’s focus was on development of the bearings business. Did that mean there had to be a neglect of needles?
Were there questions of territorial responsibilities? Fortunately needle profits were there to fund the bearings venture. Unfortunately, the lag of engineering attention to the manufacture of needles would ultimately ease its demise.
One of the stories, I have heard, was that the Excelsior workforce was made up of many first generation immigrants from the Eastern European countries such as Poland, Hungary, Ukraine, Czechoslovakia, etc. These workers were innately intelligent and although they did not have the benefit of formal education, they were very capable needle makers. They had developed the procedures to manufacture very intricate needles. But, either as a means of job preservation or from lack of instruction, they kept the procedures to themselves without documentation. As these people retired, their knowledge and experience went with them.
Needle management started too late with too little to overcome the prowess of European competition.
Today, if you look up the website for Groz-Beckert you see an apparently successful needle manufacturer, surviving even with Chinese and Japanese competition..
At the time Torrington was selling its needle division, 1980, it was prevented from selling the knitting needle portion of the business to G-B by the Federal Trade Commission because that would have given G-B a monopoly, 90% of the world market for knitting needles.
G-B did purchase the Sewing Machine, Felting and Hook needle lines from Torrington and these businesses seem to have survived. If they survived, why couldn’t Torrington needles? It certainly wasn’t due to wage rates where the German worker enjoyed a high rate of pay and maybe even better fringe benefits than the U.S. worker.
Can anyone outline some other reasons why Groz-Beckert survived and Torrington did not ?
As far as what was left, Exeltor in Bedford, P.Q. Canada with Guy Champagne at the helm, picked up the knitting business through a private buyout.. Don’t know much about Exeltor but they also, seem to have survived handsomely, at least from the looks of their website.
We conclude, there are companies today making needles profitably and they seem to be doing it successfully. Why could not Torrington have done the same?
In a big corporate atmosphere, does one lose the will to compete and to survive? It does appear needle making was starved to feed bearing making.
Would needles have survived had we been satisfied with less on the bottom line? Or maybe if its future instead of being driven by the performance demand of the stock market had been driven by private interest?
Any thoughts?
Norm Massicotte
What is interesting is to delve into how Torrington got into that condition. Lieberthal in “Progress Through Precision…” points to some of the reasons:
p. 108 “Prior to 1960, a very high percentage of the industrial knitting machines used around the world were U.S. made. From the beginning, Torrington had made it a point to have most new machines shipped with Torrington needles tailored to the machine. But with the bulk of the world’s business was in their hands, the U.S. knitting machine manufacturers became complacent and neglected to listen to their customers. They failed to invest sufficiently to improve and speed up their machines and the world turned elsewhere. In Germany, Italy and Spain, many new knitting machine builders seized upon the opportunity to break in and gradually take over as suppliers.
It could be said that Torrington also failed to recognize the significance of this change….Neither the move of the knitting machine business from the U.S. to Europe, nor the need to work with these foreign builders received the proper attention.
By 1967, then, it became apparent that Torrington had missed the boat…..”
p.116 “By 1971 doubleknit - and flatstock needles - was the name of the game in the knitting industry,…...profits (for Torrington) were merely marginal due to high scrap losses, and regrettably, the company never became as proficient at flatstock needles as it was at fine-gauge hosiery needles.”……………..
We see a picture of falling behind. Is that the result of having a weak management on the needle side of the business? It seems from the 1920s with E.K. Brown onward, Torrington’s focus was on development of the bearings business. Did that mean there had to be a neglect of needles?
Were there questions of territorial responsibilities? Fortunately needle profits were there to fund the bearings venture. Unfortunately, the lag of engineering attention to the manufacture of needles would ultimately ease its demise.
One of the stories, I have heard, was that the Excelsior workforce was made up of many first generation immigrants from the Eastern European countries such as Poland, Hungary, Ukraine, Czechoslovakia, etc. These workers were innately intelligent and although they did not have the benefit of formal education, they were very capable needle makers. They had developed the procedures to manufacture very intricate needles. But, either as a means of job preservation or from lack of instruction, they kept the procedures to themselves without documentation. As these people retired, their knowledge and experience went with them.
Needle management started too late with too little to overcome the prowess of European competition.
Today, if you look up the website for Groz-Beckert you see an apparently successful needle manufacturer, surviving even with Chinese and Japanese competition..
At the time Torrington was selling its needle division, 1980, it was prevented from selling the knitting needle portion of the business to G-B by the Federal Trade Commission because that would have given G-B a monopoly, 90% of the world market for knitting needles.
G-B did purchase the Sewing Machine, Felting and Hook needle lines from Torrington and these businesses seem to have survived. If they survived, why couldn’t Torrington needles? It certainly wasn’t due to wage rates where the German worker enjoyed a high rate of pay and maybe even better fringe benefits than the U.S. worker.
Can anyone outline some other reasons why Groz-Beckert survived and Torrington did not ?
As far as what was left, Exeltor in Bedford, P.Q. Canada with Guy Champagne at the helm, picked up the knitting business through a private buyout.. Don’t know much about Exeltor but they also, seem to have survived handsomely, at least from the looks of their website.
We conclude, there are companies today making needles profitably and they seem to be doing it successfully. Why could not Torrington have done the same?
In a big corporate atmosphere, does one lose the will to compete and to survive? It does appear needle making was starved to feed bearing making.
Would needles have survived had we been satisfied with less on the bottom line? Or maybe if its future instead of being driven by the performance demand of the stock market had been driven by private interest?
Any thoughts?
Norm Massicotte
Sunday, July 8, 2007
DISCUSSION TOPIC - 2. Was there nepotism / cronyism going on at the time of take over by IR?
We know that E.B. Thompson and Bob Reid were the sons or relatives of prior Torrington Presidents, respectively Walter C. Thompson (1953-1959) and William R. Reid (1926-1946). Was E.B. a son or nephew?
When I joined the Company in the early sixties, E.B. sat in the front office, I believe as an Executive Vice President. I don’t know what his responsibilities or abilities were other than occupying the front office.
On the other hand, Bob Reid came up through the ranks, mainly in the Needle Division. Again, was he a good and astute business manager?
Could others comment who worked under him?
Bob Reid was part and parcel of the group that sold out to IR and ended up on the Board of Directors of Ingersoll-Rand, pretty good personal survival.
Seeing the demise of the Needle Division, it makes one wonder if he was a capable business man. Of course the faltering of needles did not begin with his tenure but could he have done something to reverse the direction?
We know he brought Ora Bailey along, a former cost accountant, shrewd with all the qualities of his Irish ancestry, who unfortunately passed away prematurely in office. Needles were up against world wide competition and as history shows, the Needle Division did not survive. Were we up to it, management wise?
Another player, although on a substantially more limited scale, was Walter St. Onge. His dad had been instrumental in rescuing the Company from its ventures with vacuum cleaners.
Were there any other, relatives, favorite sons, or cronies in the management? Is it your belief that the managers listed above were the best suited to their responsibilities?
Norm Massicotte
When I joined the Company in the early sixties, E.B. sat in the front office, I believe as an Executive Vice President. I don’t know what his responsibilities or abilities were other than occupying the front office.
On the other hand, Bob Reid came up through the ranks, mainly in the Needle Division. Again, was he a good and astute business manager?
Could others comment who worked under him?
Bob Reid was part and parcel of the group that sold out to IR and ended up on the Board of Directors of Ingersoll-Rand, pretty good personal survival.
Seeing the demise of the Needle Division, it makes one wonder if he was a capable business man. Of course the faltering of needles did not begin with his tenure but could he have done something to reverse the direction?
We know he brought Ora Bailey along, a former cost accountant, shrewd with all the qualities of his Irish ancestry, who unfortunately passed away prematurely in office. Needles were up against world wide competition and as history shows, the Needle Division did not survive. Were we up to it, management wise?
Another player, although on a substantially more limited scale, was Walter St. Onge. His dad had been instrumental in rescuing the Company from its ventures with vacuum cleaners.
Were there any other, relatives, favorite sons, or cronies in the management? Is it your belief that the managers listed above were the best suited to their responsibilities?
Norm Massicotte
Sunday, July 1, 2007
DISCUSSION TOPIC - 1. Did Torrington have to sell to IR?
The late 60s were a time of conglomeration. Companies were buying out other companies not solely with the intention of growing the businesses they were in. Rather, it was take over any company you could find that was undervalued by the stock market, whether or not you had any expertise running that business. These Companies were more like predators skilled in the machinations of Wall St., out to find a good deal, buying and selling companies.
Torrington had to have been a very attractive package and the proof of that is the premium IR paid to bring Torrington on-board, i.e. providing a share of preferred stock paying a dividend of $2.35 and 0.4 of a share of IR stock for each Torrington share. The new stock provided a dividend of $3.15 per share vs. the $1.60 that Torrington had been paying.
Torrington management did indeed negotiate a good deal for its stockholders, and took the safe and easy route to expansion by tapping IR’s definitely deep pockets. Unfortunately and sadly, Torrington gave up its autonomy, the self determination of its future.
Does any one know if Timken was ever faced with that dilemma?
Torrington had just gone big-time a few years earlier in 1960 when it got itself listed on the New York Stock Exchange. Milt Berglund moved up to Chairman, Bob Reid became President and Don Lewis and Ray O’Connell new Executive Vice Presidents.
Without a doubt, they constituted a plethora of brain power. Berglund, the hard driving no nonsense engineer, Bob Reid, the paramount polished Ivy Leaguer, O’Connell, the brainy MITer and Don Lewis, the just as capable UCONN engineer.
If one of these officers had a greater influence on the sell out, I would say it was Ray O’Connell because he had spent the prior few years as Torrington’s marketing expert and director of planning where the responsibility is not only to study the strengths and weaknesses of the existing operations but also to assess the possibilities of the future.
I believe he would have seen that Torrington was entering a period of tremendous growth which could be satisfied only by expanding and building more plants. This of course required outside financing. That would mean leveraging the Company , taking on more debt than it had ever done before. In the past, the Company had resorted to debt but only in so far as it could be repaid promptly.
All in the management were “nice guys” and the top mechanical engineers you could find anywhere. What did they lack as managers? I propose, none had any financial background. None had the level of experience and capability in business finance that compared to their expertise in Engineering. Why? Because apparently they did not give Finance as much importance as Engineering otherwise they would have brought on board some type of Harvard/ Stanford/ Wharton MBA with experience in investment banking, wheeling and dealing on Wall St. and perhaps as capable and intelligent as they were but instead in Business Finance.
Another theory of why they did not bring on some high level persons in the financial area is that, in the past, the Company had been run by non-engineer accounting types who had kept such a tight fist on the purse strings that manufacturing and engineering’s progress had suffered from lack of appreciation of their needs. When these Engineers became the ruling management, they were not about to let themselves revert back to that type of domination.
Instead they were satisfied with the likes of Walter Hudson, Bob Cron and Rae White. These too were “nice guys” but I don’t think anyone of the three had the abilities to assess what was going on in the world of conglomeration , provide alternatives to selling out and help navigate through the era. To add insult to the function, a manufacturing person, Larry Smith, was named Vice President - Finance and later a manufacturing planning and production specialist, Bob Breckinridge replaced him but by then the Corporate Financial function had been taken over by IR and the last two appointments were not as critical.
To its credit, management did hire White Weld for advice, a NYC investment banking outfit. I feel, though, our management was overwhelmed by these big city people especially when they were told that their personal assets would be in jeopardy from potential stockholder suit if they did not submit to the best offers of the predators.
To answer the question first posed, No , I do not think Torrington had to sell to IR.
If management had beefed up the in-house financial/stock market/Walk St. dealing expertise, developed a professional campaign to bring around a majority of stockholders and published a plan to get the Company through the onslaught. Seeing the success the Company had had since its founding, I am fairly confident that the shareholders would have been willing to give it a try and not sell out.
It’s second guessing. The benefit of retrospective second guessing. What do you think?
Norm Massicotte
Torrington had to have been a very attractive package and the proof of that is the premium IR paid to bring Torrington on-board, i.e. providing a share of preferred stock paying a dividend of $2.35 and 0.4 of a share of IR stock for each Torrington share. The new stock provided a dividend of $3.15 per share vs. the $1.60 that Torrington had been paying.
Torrington management did indeed negotiate a good deal for its stockholders, and took the safe and easy route to expansion by tapping IR’s definitely deep pockets. Unfortunately and sadly, Torrington gave up its autonomy, the self determination of its future.
Does any one know if Timken was ever faced with that dilemma?
Torrington had just gone big-time a few years earlier in 1960 when it got itself listed on the New York Stock Exchange. Milt Berglund moved up to Chairman, Bob Reid became President and Don Lewis and Ray O’Connell new Executive Vice Presidents.
Without a doubt, they constituted a plethora of brain power. Berglund, the hard driving no nonsense engineer, Bob Reid, the paramount polished Ivy Leaguer, O’Connell, the brainy MITer and Don Lewis, the just as capable UCONN engineer.
If one of these officers had a greater influence on the sell out, I would say it was Ray O’Connell because he had spent the prior few years as Torrington’s marketing expert and director of planning where the responsibility is not only to study the strengths and weaknesses of the existing operations but also to assess the possibilities of the future.
I believe he would have seen that Torrington was entering a period of tremendous growth which could be satisfied only by expanding and building more plants. This of course required outside financing. That would mean leveraging the Company , taking on more debt than it had ever done before. In the past, the Company had resorted to debt but only in so far as it could be repaid promptly.
All in the management were “nice guys” and the top mechanical engineers you could find anywhere. What did they lack as managers? I propose, none had any financial background. None had the level of experience and capability in business finance that compared to their expertise in Engineering. Why? Because apparently they did not give Finance as much importance as Engineering otherwise they would have brought on board some type of Harvard/ Stanford/ Wharton MBA with experience in investment banking, wheeling and dealing on Wall St. and perhaps as capable and intelligent as they were but instead in Business Finance.
Another theory of why they did not bring on some high level persons in the financial area is that, in the past, the Company had been run by non-engineer accounting types who had kept such a tight fist on the purse strings that manufacturing and engineering’s progress had suffered from lack of appreciation of their needs. When these Engineers became the ruling management, they were not about to let themselves revert back to that type of domination.
Instead they were satisfied with the likes of Walter Hudson, Bob Cron and Rae White. These too were “nice guys” but I don’t think anyone of the three had the abilities to assess what was going on in the world of conglomeration , provide alternatives to selling out and help navigate through the era. To add insult to the function, a manufacturing person, Larry Smith, was named Vice President - Finance and later a manufacturing planning and production specialist, Bob Breckinridge replaced him but by then the Corporate Financial function had been taken over by IR and the last two appointments were not as critical.
To its credit, management did hire White Weld for advice, a NYC investment banking outfit. I feel, though, our management was overwhelmed by these big city people especially when they were told that their personal assets would be in jeopardy from potential stockholder suit if they did not submit to the best offers of the predators.
To answer the question first posed, No , I do not think Torrington had to sell to IR.
If management had beefed up the in-house financial/stock market/Walk St. dealing expertise, developed a professional campaign to bring around a majority of stockholders and published a plan to get the Company through the onslaught. Seeing the success the Company had had since its founding, I am fairly confident that the shareholders would have been willing to give it a try and not sell out.
It’s second guessing. The benefit of retrospective second guessing. What do you think?
Norm Massicotte
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