Houdaille Industries
| Company type | Public (until 1979), then private |
|---|---|
| Industry | Automotive components, industrial equipment, machine tools, construction materials, contracting services |
| Predecessor | Houde Engineering Corporation |
| Founded | 1919 in Buffalo, New York, United States |
| Founder | Albert B. Shultz and B. David Schultz |
| Defunct | 1987 |
| Fate | Assets sold off and company dissolved after leveraged buyouts |
| Headquarters | Buffalo, New York (originally); later Northbrook, Illinois , United States |
Area served | United States and Canada |
Key people | Maurice Houdaille (inventor), Albert B. Shultz (founder), Ralph Peo (executive), Claire L. Barnes (owner), Gerald C. Saltarelli (president), Jerome Kohlberg Jr. (chairman post-LBO), Phillip A. O'Reilly (CEO post-LBO) |
| Products | Shock absorbers, automotive parts, machine tools, construction materials, industrial equipment |
Number of employees | Over 9,000 (by 1977) |
Houdaille Industries was a multifaceted manufacturer involved in the production of automotive components, industrial equipment, machine tools, construction materials, and contracting services. Established in 1919 in Buffalo, New York, the company originated from the Houde Engineering Corporation, which produced shock absorbers based on an invention patented in France by Maurice Houdaille (1880–1953). The firm grew in tandem with the automotive sector and broadened its product range until 1987, when it sold off most of its assets following a 1979 leveraged buy out to meet investor demands.
Houde Engineering
On March 1, 1909, French engineer Maurice Houdaille submitted a patent application for a shock absorption device (US Patent 933076 granted September 7, 1909). In 1915, Paul Victor Clodio (1882–1928), a French-born import expert, secured the U.S. manufacturing and sales rights for the Houdaille shock absorber and established Houdaille Shock Absorber Co., Inc. in New York City.
On January 27, 1919, Albert B. Shultz (1877–1932), an automotive engineer from Buffalo, along with his brother B. David Schultz, a Rolls-Royce dealer, founded the Houde Engineering Corporation in New York State. The company’s name was an anglicized version of Houdaille. Houde obtained manufacturing and distribution rights from Clodio, who retained sales rights within New York City. By 1925, Houde acquired the New York Houdaille Company and moved production to a new facility located at 533-537 East Delavan Avenue in Buffalo to accommodate expansion.
In 1927, Houde secured exclusive patents from the original French holders, becoming the sole manufacturer and distributor of Houdaille shock absorbers in the United States. That October, Henry Ford wrote to Shultz proposing to purchase Houdaille shocks for all new Ford automobiles if mechanical engineer Ralph Peo was employed to oversee manufacturing. Peo’s hiring resulted in doubling shock absorber output.
In late September 1928, Shultz sold Houde to Frederick B. Cooley and associates for $4.3 million; shortly after, Cooley transferred ownership to Claire L. Barnes for $6 million.
Houdaille-Hershey
Detroit industrialist Claire L. Barnes (1880–1947) established the Houdaille Corporation of Michigan in 1928 to acquire Houde Engineering from Cooley. On January 30, 1929, Barnes combined it with Oakes Products and Hershey Manufacturing, both producers of automotive parts, creating Houdaille-Hershey Corporation headquartered in Detroit. Oakes Products (Indianapolis) manufactured spare wheel and tire locks, door locks, cooling fans, air filters, and carburetors. Hershey Manufacturing (Colorado) produced ignition locks and steering wheel locks with facilities in Chicago and Detroit.
Under Barnes's leadership, Houdaille-Hershey emerged as a top supplier of automobile components to Detroit automakers. In August 1929, Ralph Peo was appointed vice president and general manager of the Houde Engineering Division.
The company grew through acquisitions including Skinner Company (auto bumpers based in Ontario), Muskegon Motors Specialties (crankshafts and camshafts), Biflex Products Corporation (bumpers), Lion Cover Company (metal tire covers), and General Bumper Corporation (spring bumpers). Manufacturing sites operated across Buffalo, Chicago, Indianapolis, Muskegon, Decatur, Gananoque, and Oshawa. Both Ford and General Motors considered purchasing the enterprise.
In November 1932, Houdaille-Hershey's class A common stock was listed on the New York Stock Exchange.
By June 1937, Charles Getler had taken over as president while Barnes served as chairman of the board and Ralph Peo held the position of vice president. Barnes retired in 1940.
During World War II, Houdaille adapted its plants for wartime production. Its Garfield bumper factory in Decatur secured a contract supporting the Top Secret Manhattan Project by nickel plating pipes used at the K-25 atomic bomb facility in Oak Ridge, Tennessee.
Following the war, Houdaille acquired a plant in Huntington, West Virginia which it converted for automobile bumper manufacturing, becoming the largest bumper producer worldwide.
In March 1946, Peo resigned as executive vice president to establish Frontier Industries which acquired Manzel Brothers Oil Pump Company, Fairmount Tool & Forging (Cleveland), Buffalo Arms plant, and Buffalo Crushed Stone Corporation.
Merger of Frontier Industries and Houdaille-Hershey
In 1955, Houdaille-Hershey, a company predominantly engaged in the automotive sector, pursued diversification by merging with Frontier Industries. Ralph Peo was appointed as president following the merger. Peo shifted the corporate headquarters from Detroit to Buffalo and rebranded the enterprise as Houdaille Industries, Inc.
During Peo's tenure, Houdaille expanded its portfolio by acquiring several companies including North Jersey Quarry Co., Commonwealth Concrete, Wales-Strippit, Gravel Products, Provincial Engineering, Buffalo Eclipse Corporation, S.M. Jones, Eclipse Lawn Mower, Penberthy Manufacturing, R.H. Wright & Sons, Broward Asphalt, and Duval Engineering. By 1961, Houdaille had established itself as a nationwide leader in construction materials, automotive components, and industrial machinery. The company operated approximately 60 locations across the United States and Canada and boasted nearly 10,000 shareholders with annual revenues exceeding $80 million.
Peo stepped down as CEO in 1962 and assumed the role of Chairman Emeritus two years later. Gerald C. Saltarelli, who initially joined as corporate counsel in 1941 and advanced through various executive positions, took over as president.
Saltarelli sustained the company's growth trajectory by acquiring firms such as Morris Crane & Hoist, Deerfield Rock, Di-Arco, Burgmaster Corporation, Powermatic Machine Company, Trabon Engineering, U.S. Burke Machine Tool Co., Viking Pump, June Prestressors, Warren Pump, Band-It Company, and Fort Worth Steel and Machine.
By 1977, Houdaille employed more than 9,000 individuals organized into five product divisions and operating through 18 subsidiaries. Due to dissatisfaction with New York's corporate tax policies, Saltarelli relocated the headquarters to Florida. The company's robust cash reserves and absence of debt positioned it as a desirable candidate for acquisition.
Leveraged Buyout by Kohlberg Kravis Roberts
During the winter of 1978, Houdaille's stock price stood at $14.50 per share—below its book value—while Saltarelli was preparing to retire. The private equity firm Kohlberg, Kravis, Roberts & Co. (KKR) offered a leveraged buyout proposal that was accepted, resulting in the company going private at $40 per share. This transaction was notable for being the first instance of a public company privatized through an LBO and represented the largest LBO at that time with a valuation of $355 million. Saltarelli retired with a compensation package of $5 million and successfully averted a hostile takeover.
Following the May 1979 buyout, Jerome Kohlberg Jr. assumed the role of chairman while Phillip A. O'Reilly became president and CEO. The company pursued further growth through acquisitions including the John Crane Group for $204 million, a 49% ownership in UK-based Crane Packaging, and Warren Rupp for $25 million.
Nevertheless, substantial debt from the LBO combined with the early 1980s economic downturn and intensified competition from Japanese manufacturers led to declining profitability. Houdaille sought but did not receive relief from President Reagan regarding Japanese imports. Subsequently, the company undertook restructuring efforts aimed at debt reduction by divesting seven divisions and auctioning off its Burgmaster division in January 1986. In 1987, a second leveraged buyout enabled repayment to initial investors; KKR replaced O'Reilly with Donald N. Boyce as CEO and moved headquarters to Northbrook, Illinois.
Later in 1987, KKR sold Houdaille’s remaining assets to London-based TI Group. TI Group retained John Crane while divesting six other divisions to IDEX Corporation—a new entity formed by KKR—resulting in the disappearance of the Houdaille brand from the U.S. market.