Author Archives: Colby

Red was still the color of choice in the paver market. The red burning shale in the Waynesburg/Magnolia area had severe limitations. Recalling that during a 1953 visit to Summitville Tile, arranged by Harry Keagler (a large face brick and ladle brick distributor for WG), both Harry and Fred Johnson extolled the virtues of “the best shale in Ohio,” which was used to produce the famous “Summitville Reds.” Alliance was close to Summittville, so we arranged to get the shale, Buffalo shale, from an adjoining farm and found it to be excellent for dry pressed paver manufacture.

At this time we solved, for the time being, two long-standing problems. First, the health and pension benefits, which we had agreed to provide 30 years ago in our labor agreement with the union, had become unaffordable. Second, work of handling heavy clay products was so draining that after 20 years, many employees could not continue to do that work, so we had to provide lighter work such as lift driver, bricklayer and bricklayer helpers. Many were barely capable of the jobs available and there were not enough lighter duty jobs to take care of the aging pieceworkers. It was like professional football. the careers were limited, but in our case after the career ended, we had an obligation to provide employment for many more years.

One of the earliest remaining dry pressed paving projects is shown below. Morris Civic Plaza, South Bend, IN.

In the 1950s, we paved many plant roadways with extruded and dry pressed off-grade brick. We observed the dry press brick were virtually undamaged by repeated freeze-thaw cycles, whereas the extruded pavers often failed by spalling. In addition to improved freeze-thaw failure, the dry press paver was more dimensionally accurate than extruded brick. In fact, the size control was so good, dry pressed brick could readily be substituted for segmental concrete paving brick in installations designed for concrete pavers. Extruded clay pavers could not make this claim. This was an important distinction as the segmental concrete paving business, where WG needed to create a niche, had grown from $20 million in 1960 to $250 million in 1990. The potential market for WG dry pressed pavers was the larger of any product we had produced this century. However, the dry pressed clay paver had two major limitations versus extruded clay pavers. First, the pore structure of the brick readily transmitted water by wicking action through the brick. The ground water, thus passing through the brick, often picked up soluble salts from the ground and left unsightly discoloration on the surface of the brick after the water evaporated into the air. Ten years of work have continuously reduced the impact of this limitation, but more improvement is needed if we are to truly exploit the potential of the product. Secondly, the strength of the pavers was less than an extruded brick. the strength has been increased by adjustments in the raw material mix.

Earlier this period, we sold the Magnolia plant property, 400 acres for $400,000. In probably our most successful land sale, we sold 120 acres of strip mine property north of Waynesburg for $400,000. In combination with Earl Merrick and Scott Evans, we formed WMT. WMT designed a landfill, obtained the required permits and then auctioned the property to the highest bidder.

We turned complete attend to turning Alliance around, as that was all that was left. We moved the corporate office into the laboratory at Alliance, with the lab moving into the hallway between the office and plant. Lynn and I invited any worker to come in a half-hour before starting time to discuss improvements. Lynn and I were there every day at 6:30 a.m. for the next year. We recorded all suggestions and implemented many. The plant operations started to improve. It was obvious that substantial new production was vital to replace the ladle brick business and bring the plant operations above a break-even point. Since my time with the company, WG had made most of its money supplying the steel business, so we first considered growing volume products such as high alumina ladle brick and bottom pouring refractories. We felt WG had little chance of success producing either product, so we began developing the dry pressed paver to replace the ladle brick business.

This recession, which I believe, led to the defeat of President Bush in 1992, was extended when the banks pulled $70 billion in loans from corporations. Capital to loans ratios at many banks had dropped to dangerous levels and their management feared takeover by federal regulators and forced sale of the banks. The banks’ recourse of choice was to reduce loads to improve the capital ration. They tried to target recalling loans to companies they thought had the assets to pay, because closing down a company that couldn’t pay resulted in writing off a bad loan. This is what reduced the capital in the first place. WG was an obvious target. An out-of-town workout hatchet man came to see us. He disregarded our written proposal on how we could reduce the loan in an orderly way and insisted on calling the loan immediately. I said, “Our attorney is on vacation for a week and we won’t do anything before consulting him.” The banker replied, “I am not interested in what you and your attorney want to do about bankruptcy.” Lynn Morrison said, “We need to talk with him about a lenders liability suit, not bankruptcy.” After 30 seconds, the banker said, “Let me see that proposal of yours again.” We proceeded per our proposal.

Eighteen months later, natural gas price futures increased and Belden & Blake doubled their offer for the Morges Gas System to $1 million. The increased Columbia transportation rates had decreased the value of the system to WG, so we accepted the offer and paid off the balance of the bank debt. We now had no cash for working capital. WG borrowed $400,000 from the Bank of Magnolia on John Jr.’s and Lynn’s signatures. Also, I made a loan of $100,000 and Lynn $50,000 to WG.

The labor contract at Midvale was to expire in the spring of 1988. In the fall of 1987, we informed the union that the plant would not restart in 1988 unless we had a new contract in effect with enough cost savings to leave room for a profit. The expiration date of the contract was unfortunate, as the local union had just fired its second business agent in two years. The new man, Jim Hadley, a vice president of the international union, had bargained with us before. he believed us and said he would work to get an agreement. He also warned that he hadn’t been on the Midvale job long enough to get the confidence of the employees and didn’t expect to be able to lead them to an agreement. The night of the contract vote, Lynn and I were invited to address the members and answer questions, which we did. The contract offer was rejected by a reasonably close vote.

Fortunately, business was still good and we booked orders for, sold, shipped, and collected about $2 million in inventory. The plant closure was expensive beyond belief. WG had gone self-insured on workers compensation 10 years earlier. The early announcement of the plant closing, ordinary regarded as a benefit in allowing workers to get new jobs, backfired in this case, as many used the time to set up fraudulent back injuries. We paid out millions in fraudulent compensation and fighting the fraud over the next five years, and are still paying in 2015. The Midvale

plant was part of a multi employer pension plan. Of the 19 companies originally in the plan, 16 had gone bankrupt, leaving the payment of their retired employees up to the three survivors. It cast $500,000 to buy our way out.

We were fortunate the workers turned us down, as another home building recession arrived soon. There is no way we could have survived the negative cash flow at both Alliance and Midvale.

The first years after acquiring Midvale, the earnings from Alliance more than covered the loss at Midvale. However, now the “money machine” at Alliance was broken down. The steel plants had stopped using clay ladle brick, severely decreasing the Alliance production. The Columbia Gas System had gone bankrupt and subsequently greatly increased the charge to transport gas for others, such as WG’s gas from Waynesburg to Alliance. The Alliance plant was now barely breaking even.

WG did benefit from these circumstances when Ivan Parker, melt shop superintendent at Republic, retired after 30 years, accepted a lump sum payment for his pension benefits and came to work for WG. Ivan sold steel plant refractories, later added sales management of firebrick, and finally developed a line of vacuum cast refractories, customers and supplies for the same, which developed into an annual $1 million business. The supplier was sold, the buyer fired WG as a distributor, WG sued and collected $75,000 in damages. Ivan continued to be a highly productive employee until his retirement.

The Midvale plant turnaround soon turned difficult. The plant had never made money through three owners before WG purchased the plant from the First National Bank of Allentown, PA., after the last owner went belly up. The product line consisted of unremarkable face brick produced in tunnel kilns and flue liners produced at a loss in periodic kilns. The labor force was very high cost and militant. The kilns and grinding area were a bargain. WG’s plan was to produce the higher priced unique line of face brick and pavers developed in the periodic kilns at Magnolia in the lower cost tunnel kilns and have good profit margins despite the labor cost. Trial runs of these products over the next 10 years resulted in only 50 percent yield of salable material. Our attempt to produce “flashed” colors in the continuous kilns failed. This failure paralleled the Structural Stoneware effort to move its unique product to a fast-fire low-cost process, as well as the failure of numerous steel plants that tried to reproduce unique specialty steel products by continuous casting, rather than the more expensive ingots.

Two building recessions in the early 1980s forced two yearlong shutdowns at Middle with a resulting large loss both years. Housing construction is highly sensitive to interest rates – if rates are down, housing is up and if rates are up, housing is down. Being a second- or third-rate line producer in the eyes of distributors meant that when business was down, they favored their most valuable suppliers for the available business. When business was good, the first line suppliers had long delivery times and factories like Midvale did better. Business picked up and by 1987, the Midvale plant broke even on record sales for the plant.

James Frost had come with WG as head financial officer earlier in the period. Jim come from the Diebold Company and had knowledge and skills we felt were needed, as we were growing rapidly at this time. Jim worked hard and helped me get my personal affairs in better order. Jim retired when we retrenched after the Midvale plant failure and closing. Unfortunately, we adopted the ill-fated self-insured worker compensation policy during the period.

JB strongly opposed the purchase of Alliance. However, he lived to see the venture succeed and died of lung cancer in 1975 at the age of 83. His estate went entirely to his wife, Mary, and WG purchased her preferred stock and the Whitacre mansion from her. Mary Whitacre died in 1999 at the age of 95.

Kate Estep died in 1973. Art Estep died in 1982 at the age of 90. In the vote on the Alliance plant purchase, Art voted nay with JB. He said to me before the vote, “I will be voting with your father as I have for these many years. You have plenty of votes in favor to carry the proposition.” John Jr. inherited the Estep stock from Art’s estate.

John Jr. continued as president and board chairman. My wife, Pauline, won her second and third Ohio State amateur golf championships in 1966 and 1982. Her golfing skill was an asset to WG in its relationships with customers, suppliers and employees who were golf fans.

During this period, Mary Lou Murray, a daughter of RE Whitacre, sold her stock to John Jr. and Lynn Morrison. Bette Newcomb, daughter of DD, sold her stock to Lynn Morrison. (I had plenty if it was worth anything.) WG bought the rest of the stock in DD’s estate as treasury stock.

WG sold the Magnolia plant and 400 acres of property for $400,000. We also purchased a small continuous kiln plant at Lindentree from Norton Company for $45,000 and sold the plant later to Canada Brick for $450,000.

By the end of the period in 1981, our earnings at Alliance often exceeded the best sales amount of the former company. Chuck Hatfield, plant manager at Alliance, was obviously doing a fine job.

We purchased the Middle plant in 1978, expecting to make the face brick and paver business profitable by moving it from periodic batch kilns to continuous kilns as we had done with the refractory business at Alliance. We were riding high, but storm clouds were in the future, as we will soon see.

Meanwhile The Timken Company had built a large research facility near the Akron/Canton airport. Timken lab people championed the idea of reducing the iron oxide in the mill scale to metallic iron and by this means, reducing the amount of scrap needed to make the heat of steel. The research folks approached WG to determine how to form the mill scale and coke breeze into a shape suitable to charge into the electric furnace. We tried dry pressing and extrusion without much success and finally settled on briquettes, as made like charcoal for a grill. Ralph Shipley, vice president of steel production from Timken, came up to me one day at Brookside and said, “Our management wants to go ahead with the sercom (their name for the briquettes) project.” I was a bit reticent in my answer as we were talking about very big tonnage. Ralph looked me in the eye and said, “Well, we are going to do it, aren’t we?” I said, “Absolutely.”

Within months, we had restored the Magnolia plant for this process, were hauling truckloads per day of mill scale from Timken to Magnolia, grinding and screening the mill scale, adding lime and molasses as a binder, briquetting and curing the mix, and loading it back into the truck for the return to Timken. Ralph Foster was plant manager of this operation and my daughter Lynn was the second shift supervisor. We obtained profitable revenues of $1 million per year from the project for five years, when the price of scrap dropped below the cost of the sercom and we discontinued the product.