Oak Industries

Oak Industries, Inc.

Company type	Public
Industry	Electronics, electronic components and materials
Predecessor	Oak Manufacturing
Founded	1932 (1932)
Founder	Edward S. Bessey
Defunct	2000 (2000)
Fate	Acquired by Corning Inc. (Lasertron segment)
Headquarters	Crystal Lake, Illinois (original); Rancho Bernardo, California (late 1970s); Waltham, Massachusetts (by 1990) , United States
Area served	United States
Key people	Edward S. Bessey (founder), Everitt A. Carter (chairman 1963–1984), E. L. McNeely (chairman 1984–1989), Roderick M. Hills (board member from 1985)
Products	Electronic components, television tuning dials, cable converter boxes, subscription television descramblers, quartz crystal components
Number of employees	Approximately 11,000 (1979) (1979)

Oak Industries, Inc. was a U.S.-based electronics firm active from 1932 until 2000, specializing in electronic components and materials. Established by Edward S. Bessey in Crystal Lake, Illinois, the company later shifted its main office first to Rancho Bernardo, California, in the late 1970s and subsequently to Waltham, Massachusetts, by 1990. In 2000, Oak was purchased by Corning Inc., primarily acquiring its Lasertron laser manufacturing segment.

Early history

Oak Manufacturing was founded amid the Great Depression within a facility spanning 400,000 square feet. Initially, it produced electrical switches, Bakelite components, dial light bulbs, and sockets. Throughout the 1930s and 1940s, the company broadened its product line to include radio parts such as tube sockets. The early 1950s saw growth driven by success in television tuning dials, which propelled Oak into TV component manufacturing. Between 1956 and 1970, the company expanded further through acquisitions and new divisions focused on printed circuit board materials. In 1960, Oak reincorporated in Delaware.

Everitt A. Carter joined Oak in 1958 and assumed the chairmanship in 1963. Reflecting its diversification, the firm changed its name to Oak Electro-netics Corporation in 1964 and later simplified it to Oak Industries in 1972. During this era, Oak was Crystal Lake’s largest employer and experienced rapid expansion necessitating additional office space. Publicly traded since its initial public offering in 1944, Oak secured a listing on the New York Stock Exchange by 1967. At that time, its subsidiaries included an electrical equipment manufacturer based in South America, a Mexican firm specializing in gas valves and electrical controls, and Adec, which provided energy management solutions.

In 1976, Oak established the joint venture Oak-Mitsui alongside Anaconda Copper and Mitsui Mining & Smelting to manufacture copper sheets and foil tailored for precision instruments. Following Anaconda’s withdrawal—which increased Oak’s ownership to over 78%—Oak-Mitsui experienced rapid growth. By 1980 it ranked as the third-largest copper foil supplier in the United States and by 1984 had become a key provider for circuit board laminators.

Media expansion and ON TV

Oak Industries ventured into the cable converter box market in 1971, introducing the addressable converter technology that enabled cable operators to communicate directly with individual subscriber decoders. This breakthrough spurred Oak’s advancement within telecommunications. Through its division Oak Communications, the company produced equipment for community antenna television (CATV) systems and launched a financial consulting arm serving broadcasters. By 1980, Oak had become the leading U.S. manufacturer of television tuning dials.

In collaboration with Chartwell Communications in 1973, Oak co-founded World Pay Television, which later became National Subscription Television. This enterprise developed ON TV, a subscription television (STV) service that transmitted scrambled programming over UHF stations from 1977 through 1985. ON TV debuted in Los Angeles in April 1977 and subsequently expanded into seven major metropolitan areas: Detroit, Phoenix, Miami–Fort Lauderdale, Cincinnati, Chicago, Dallas–Fort Worth, and Portland–Salem.

Subscribers paid monthly fees for descrambler units predominantly produced by Oak—except for those in Detroit. Los Angeles stood as ON TV’s most robust market with subscription numbers exceeding 400,000 at its peak in 1982—accounting for more than half of all subscribers nationwide. To better integrate with entertainment content production activities, Oak relocated its headquarters to Rancho Bernardo near San Diego in 1979. By that year, the company employed approximately 11,000 people overall, including around 2,500 at its Crystal Lake base.

In 1981 ON TV generated revenues of $260 million—exceeding combined sales from Oak’s components and materials divisions—and marked a significant milestone in expanding its media presence. Additionally, Oak co-produced the film Psycho II in 1983 under a four-picture agreement with Universal Pictures. However, growth of over-the-air subscription television stagnated due to cable television’s rise and economic downturns affecting other segments of Oak’s business during the early 1980s. Technical difficulties with the TC-56 cable box led to a voluntary recall that caused market share to fall sharply from over half to approximately fifteen percent.

Beginning in 1983, ON TV locations began shutting down amid programming disputes, competition from cable providers, and controversies surrounding adult content broadcasts. Concurrently, investigations by the Securities and Exchange Commission into earnings misstatements along with shareholder lawsuits placed additional financial pressure on Oak. Having become sole proprietor of Los Angeles’ ON TV service by this time, Oak divested its final ON TV operation there to competitor SelecTV in 1985. The company also sold television stations WKID and KBSC-TV—used for ON TV broadcasts within Miami and Los Angeles markets—but retained ownership of Chicago’s WSNS-TV until a licensing dispute delayed its sale until 1995. The scrambling technology developed for ON TV was later adapted for South Africa’s M-Net service.

Oak sought to enter direct broadcast satellite systems but reduced these ambitions due to escalating costs. Its Oak Orion scrambling technology was employed for Cancom satellite transmissions via Anik satellites serving Canada. Nevertheless, when leading cable programmers such as HBO required encryption for satellite signals, competitor M/A-COM Linkabit won contracts to develop VideoCipher II—the industry standard—over Oak’s offerings.

McNeely's leadership, shareholder dispute, and organizational restructuring

After serving as chairman of Oak for 21 years, Everitt A. Carter unexpectedly stepped down in late 1984 amid investor unease regarding the company's strategic direction and choice of meeting venues. E. L. McNeely (1919–1991), previously associated with Wickes Companies, was named interim chairman in November 1984 and subsequently confirmed in the role. He intensified the downsizing efforts initiated by Carter, cutting the Rancho Bernardo headquarters workforce from 250 employees to just 50 within a three-year span.

In 1985, McNeely divested Oak’s underperforming subsidiaries located in Mexico, South America, and Adec. The next year, he sold the materials division to AlliedSignal, utilizing the proceeds to reduce $195.5 million of the $230 million debt burden, transforming Oak’s net worth from a deficit of $69.9 million into a positive $65 million. Industry analysts credited McNeely with rescuing Oak from potential bankruptcy. The SEC cleared Oak in 1987, which culminated in a $33 million settlement with shareholders related to previous class action lawsuits.

Between late 1986 and early 1987, Oak capitalized on tax-loss carry-forwards to acquire the Quartz Crystal Components Group from Electronic Technologies Corporation along with railway maintenance equipment companies Railway Maintenance Equipment Company and Nordco. These acquisitions were aimed at industries known for their stability such as telecommunications and defense sectors. By mid-1987, Oak had sold Croven Crystals but retained other subsidiaries focused on precision quartz components and enclosures. Ongoing patent infringement lawsuits against competitors also promised future income opportunities.

Nevertheless, these strategic decisions triggered internal disputes. Roderick M. Hills, former SEC chairman who joined Oak’s board in 1985, led a proxy battle in April 1989 citing McNeely’s unauthorized appointment of CFO Alan Steel, undisclosed acquisitions, and cumulative net losses totaling $227.7 million between 1983 and 1989. Hills was backed by British investment firm MIM Ltd., which controlled a 25% stake acquired through AlliedSignal’s divestitures, and challenged McNeely’s management.

At the annual shareholders meeting, MIM chairman David A. Stevens criticized Oak’s shareholder communication amidst a $14 drop in stock price since 1982. Despite McNeely defending his record by highlighting debt reduction and improving earnings, he was removed as chairman while Hills secured control of 77% of the board seats. McNeely remained on the board at Hills’s invitation.

Hills and three other directors divided CEO responsibilities while addressing Oak’s ranking among The Wall Street Journal’s ten worst-managed companies. They promptly appointed Rex W. Warden from Aerojet General as acting president and shuttered the TeleFinder online classifieds division which employed 45 staff members. By late 1989, William S. Antle III from consulting firm Hadleigh Group replaced Warden amid concerns over rapidly diminishing cash reserves.

Antle conducted comprehensive reviews of all nine operating units and developed contingency liquidation plans for seven divisions if necessary. He directed the sale of Diamond-H Controls (European electric stove components) and Oak Communications while relocating headquarters to Boston to rejuvenate management effectiveness and employee morale. In early 1990, Oak put its California headquarters up for sale and began divesting communications assets; Lorain Group acquired Oak Communications in May 1990, renaming it OCI Communications. Subsequently, Lorain filed a lawsuit against Oak alleging financial misrepresentation during the transaction.

In January 1991, Oak purchased Illinois-based switch manufacturer Standard Grigsby for $7.6 million and consolidated component production under the OakGrigsby name while closing former Crystal Lake facilities by July. The component division was split between Sugar Grove, Illinois, and Standard Grigsby’s plant located in Ciudad Juárez, Mexico.

Entering the early 1990s, Oak achieved profitability again with net income of $5.6 million in 1991 and $10 million over revenues exceeding $107 million through the first three quarters of 1992. The workforce was reduced from 2,203 employees in 1989 to 1,620 by 1992; operating divisions included Harper-Wyman (gas appliance controls), OakGrigsby (components), Nordco (railroad equipment), and the Oak Frequency Control Group (quartz oscillators).

Final acquisitions and Corning's purchase

In line with Antle's approach to acquiring businesses exhibiting strong growth prospects, Oak purchased Gilbert Engineering in December 1992, a producer of aluminum connectors used in cable television systems. Oak experienced an 85% increase in net income, reaching $26.7 million in 1993, alongside a 53% rise in revenue. After becoming a subsidiary of Oak, Gilbert expanded by acquiring Cable-Con A/S, a Danish manufacturer of cable connectors. In August 1995, Oak further broadened its portfolio by acquiring Lasertron Inc., a company focused on optical fiber support products, for $112 million.

In 1996, Oak sold Nordco to Bank One Corporation to concentrate more intently on its primary telecommunications sector.

On November 15, 1999, Oak consented to a $1.8 billion acquisition by Corning Inc., a leader in photonics, amid widespread industry consolidation; the transaction was finalized on January 28, 2000. At that time, Oak had a workforce of 3,900 employees, with no layoffs anticipated following the acquisition. This transaction enhanced Corning’s fiber optics offerings and strengthened its position within the global telecommunications market.

Legacy

Willow Creek Community Church in Crystal Lake, Illinois, revealed plans in 2016 to purchase Oak Industries' former manufacturing facility located at 100 South Main Street for transformation into a megachurch campus. The city granted approval for the project in November 2016, with construction beginning in February 2017 and an opening planned for later that year. Crystal Lake Mayor Aaron Shepley emphasized the historical importance of the factory and praised Willow Creek's redevelopment as a significant initiative for the city.

External links

• Oak Industries Inc. at Encyclopedia.com