Hughes Tool Company

Hughes Tool Company

Company type	Private
Industry	Oilfield services, manufacturing
Predecessor	Sharp-Hughes Tool Company
Founded	December 1908 (1908-12)
Founder	Howard R. Hughes Sr.
Defunct	1987 (1987)
Fate	Merged with Baker International to form Baker Hughes Incorporated
Headquarters	Houston , United States
Products	Drill bits, oilfield equipment, hydraulic jackhammers, earth augering machines

Hughes Tool Company was a U.S.-based manufacturer specializing in drill bits, established in 1908 and eventually integrated into Baker Hughes in 1987.

History

The company originated as Sharp-Hughes Tool Company in December 1908, founded by Howard R. Hughes Sr. following his invention of a roller cutter bit that transformed rotary drilling for oil extraction. Initially, the business was a partnership with Walter Benona Sharp to produce and promote this innovation. After Sharp passed away, his widow sold her shares to Hughes Sr. in 1914, leading to the rebranding of the firm as Hughes Tool Company in 1915.

When Hughes Sr. died in 1924, control passed to his son, Howard Jr., who consolidated family ownership by purchasing remaining shares. He utilized company earnings to finance various enterprises while receiving an annual salary of $50,000 with major expenses covered by the company. By 1937, Hughes Jr. leveraged the firm’s resources to gain majority control over TWA.

In 1932, Hughes created Hughes Aircraft Company as a division within Hughes Tool. Benefiting from defense contracts during World War II, this division expanded rapidly and by the 1950s had revenues exceeding those of the original drill bit business. In 1953, Hughes Aircraft was spun off as an independent entity and gifted to the Howard Hughes Medical Institute. The helicopter manufacturing operations remained part of Hughes Tool until 1972.

Following the end of Prohibition, the company constructed a brewery on its premises that produced Grand Prize beer under Gulf Brewing Co. From the 1940s through the late 1950s, Hughes Tool owned RKO companies including RKO Pictures and RKO Studios.

In 1946, executive Noah Dietrich assumed operational leadership and invested more than $5 million to modernize manufacturing through automation and standardization. This modernization supported international expansion with facilities established in Ireland and West Germany, targeting markets such as Saudi Arabia and Russia. These initiatives yielded profits totaling $285 million over eight years.

During the early 1960s, Hughes Dynamics, a subsidiary offering information technology and data processing services, was launched but was shuttered after a $9.5 million investment failed to produce positive returns.

Hughes Tool briefly held minority interests in Northeast Airlines and divested its controlling stake in TWA by 1966. In 1968, it acquired North Las Vegas Air Terminal and diversified into Las Vegas hospitality by purchasing several hotels and casinos including Sands and Desert Inn, alongside KLAS-TV. The company also took ownership of regional carrier Air West (renamed Hughes Airwest) and briefly operated Los Angeles Airways.

That same year saw Hughes Tool acquire Sports Network Incorporated, which was subsequently renamed Hughes Television Network.

The Houston manufacturing plant became a central facility for oil tool production during the Texas oil boom. It featured advanced foundry, forging, heat-treating, and machining capabilities. Key products developed there included drill bits for oil and gas extraction, ram blast bits for mining operations, geothermal drilling equipment, hydraulic jackhammers known as Hughes Impactors, and earth augering machines used for construction foundations. Additionally, the site housed a drilling simulator designed to test prototype bits under realistic conditions.

In 1972, Howard Hughes sold the core profitable segment of Hughes Tool while transferring other divisions into Summa Corporation.

During Deng Xiaoping’s visit to the United States in 1979, he toured the Houston facility.

The merger of Hughes Tool with Baker International in 1987 resulted in the formation of Baker Hughes Incorporated, establishing a leading firm in oilfield services and equipment manufacturing.