PI, Topic-5, Recent Emails

PI, Topic - 3 Funny moments

What was the funniest thing that happened to you while you were at Torrington?

PI, Topic - 2 Best thing working for Torrington

What was the best thing about working for Torrington?

Personal Input(PI) Topic 1, Memories

What is your best memory of your time at Torrington?

DISCUSSION TOPIC(DC Topic) - 7. Year end stock values

. …………..…….IR…….Timken
As of
12/31/1998.…..$46.51.…$17.97
12/31/1999.……54.83.….20.19
12/29/2000.…..41.88.….15.12
12/31/2001.……41.81.….16.18
12/31/2002.……43.06.….19.10
Sell off Torrington to Timken
12/31/3003.……67.88.….20.06
12/31/2004.……80.30.….26.02
12/30/2005.……80.74.….32.02 IR stock split 2:1 9/2/05
12/29/2006.……78.26.….29.18
Avg. of 1st 7 end of the month values
...in 2007..……….94.48.….32.16

IR stock is up 119% after shedding Torrington whereas Timken stock is up just over 68% since then, 12/31/2002. IR stock value keeps rising.

I would like to be able to say the swing in stock prices was the effect of the Torrington transaction but of course I can’t. There are too many other factors that have come into play in these two organizations to draw such a conclusion.

But, can we conclude with a little more veracity that the acquisition of Torrington was beneficial to Timken and the price of its stock? Has anyone made a more in depth analysis of the financials over the years. Do you have any comments? Yes it seems to have been a benefit to Timken as well as a benefit to IR where the expectation for performance appears to be greater than at Timken.

Below is a summary of Sales and Operating Income for Timken which are made to include Torrington in the years prior to 2003.

- The Timken Company……………Including Torrington
………………………………........................pre 2003.......
.................Net Sales.......Oper. Inc…Net Sales.....Oper. Inc

…...1999.....$2,495.0.......$132.8..….$3,734.500...$278,500
..... 2000.....$2,643.0.......$105.6.....$3,804.000...$278,200
..... 2001.....$2,447.2........($17.7)..…$3,525.000..…$84.400
..... 2002.....$2,384,077....$85,657...$3,587.527...$170,807
..... 2003....$3,626,490...$101,875...$3,626,490...$101,875
..... 2004.....$4,287,197...$234,928....$4,287,197...$234,928
..... 2005.....$4,823,167...$326,960....$4,823,167...$326,960
..... 2006.....$4,973,365...$219,350....$4,973,365...$219,350

Torrington seems to be a plus for Timken. It seems to be a question of expectation where it would be more for IR than Timken,

DISCUSSION TOPIC - 6.FAFNIR, a benefit or a noose

In the early sixties, Torrington considered an acquisition of Fafnir. It fell apart because there was no benefit to Torrington. Bennett came along in 1985 and thought differently. Was it megalomania? It is hard to conceive how given a few more years after initial inquiry, the Fafnir operation would suddenly become attractive.

The question for those who have dealt with Fafnir is “Was there a benefit to Torrington of acquiring Fafnir?” We know their plant in Arkadelphia, Arkansas was subsequently shut down. There were labor problems at the HQ plant in New Britain, Connecticut, more at the Newington plant. These also were shut down. The plant in Wolverhampton, England was sold off to Timken. What did Fafnir bring to Torrington other than a noose?

It is hard to rationalize the Fafnir acquisition as a strategically sound move. If it was such a good acquisition why were its production assets soon decimated? Did we think we could resolve a labor union dominated company?

Going back again to Lieberthal, “ Progress Through Precision…” p. 140 “No single event would have greater impact on the changing complexion of The Torrington Company than the merger with the Fafnir Bearings Division of Textron in the fall of 1985.” Ask yourself, why would Textron want to sell? Does one sell off a good thing?

For that matter, in 1987, Torrington additionally acquired the commercial bearing assets of New Departure Hyatt, which was a division of General Motors. Again, would GM sell a good and profitable operation? Were we buying sick businesses with blinders so that given the exposure, in time, Torrington itself would acquire the malady?

Another question, was this the beginning of Torrington’s downfall? Tom Bennett felt the “sales and market position of Fafnir were 100% complementary with those of Torrington” and yet the resolution to move forward was to close down its manufacturing facilities.

The Fafnir brand was made to replace “Heavy” or “Bantam Bearings” and a new outside VP, Steve Martin, was put in charge. Was this an improvement over the Torrington people who had brought us thus far or, were we digging ourselves a grave full of heavy bearings that Timken would ultimately covet ?

In 2003, Timken initially approached IR with an interest solely in the Fafnir Division (previously known as “Heavy Bearings“) but then got interested in Needle Bearings. Must be Needle Bearings were a juicier plum.

It appears Timken now expects to run Needle Bearings the way they run Heavy Bearings, without the Engineering lab support so vital to automotive and multi application uses. Good luck, Timken.

Our perspective is retrospective, with one proviso, The Torrington Company no longer exists.
Now, that’s a mouthful. Fafnir, benefit or noose.

Norm M.

DISCUSSION TOPIC - 5. Bennett vs O'Connell

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?

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

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

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