Bridgeport Machines, Inc.
Address:
500 Lindley Street
Bridgeport, Connecticut 06606
U.S.A.
Telephone: (203) 367-3651
Fax: (203) 335-0151
Statistics:
Public Company
Incorporated: 1939
Employees: 1,024
Sales: $209.2 million (1996)
Stock Exchanges: NASDAQ
SICs: 3541 Machine Tools, Metal Cutting Types
Company Perspectives:
With over 100,000 different users of our machine tools around the world, perhaps there should be no surprise at some of the end products Bridgeport's machines help to create. Some of the more recognizable items include sporting equipment, airplanes, automobiles, and medical devices.
Company History:
Bridgeport Machines, Inc., is the leading manufacturer of manual milling machines, surface grinders, and computer-controlled metal cutting machine tools in the United States. The company primarily markets standardized, general-purpose machine tools to small and medium-sized machine shops who in turn sell products to the automotive, aerospace, medical equipment, computer, defense, farm implement, construction equipment, and energy industries. In addition to its well-known Bridgeport brand name, the company manufactures and sells surface grinders under the Harig brand name and lathes under the ROMI and EZ-PATH brand names. Bridgeport operates manufacturing facilities in Elgin, Illinois; Leicester, England; and Kempten, Germany; and operates a joint-venture facility in Sicken province, China. It sells its machines through a 150-member sales force and a network of independent distributors throughout the United States and in 60 other countries.
Machines tools are used to cut and shape metal parts for use in a variety of products ranging from automobiles to golf clubs. Although Bridgeport's tools are priced higher than those of its competition, the company enjoys a strong reputation for reliability and attentive service, two factors that have historically mitigated price concerns among buyers. Bridgeport has also benefitted from being a niche player, seeking to retain its top position as a purveyor of metal cutting machines and not to venture into other markets. The company's Series 1 Standard Mill, a manually operated metal cutting machine, debuted in 1939 and remains one of the best-known machines in the business, with over 330,000 units sold. Since the mid-1980s, Bridgeport has been developing its product line to include high-tech machining centers and computer numerically controlled milling machines. While customers in Europe and Asia seem to prefer the new computerized machines, Bridgeport's U.S. customers primarily purchase manual machines.
Early History
The company's origins date to 1929 when Rudolph F. Bannow, president of Bridgeport Pattern and Model Works, enlisted his customer and friend, Magnus Wahlstrom, to jointly develop an electric hedge clipper. The two worked together on the hedge clipper for over a year when the project was put on the back burner because a company called Atlas Tools asked them to develop a special type of milling attachment. Bannow and Wahlstrom developed the tool, a "portable self-contained
Bannow and Wahlstrom continued to perfect their product and, in 1936, offered a customer a Model C Head that ran on
The first drawing of the machine--which was to become a permanent fixture in metal shops throughout the United States--was sketched by Bannow on the back of a paper bag. Actual development took several years, and in August 1939, the company delivered the first machine to Precision Casting Company of Syracuse, New York. Originally marketed as a "Vertical Knee Type milling machine," the $995 tool soon became known simply as the "Bridgeport."
Bannow and Wahlstrom incorporated their organization that year, under the name Bridgeport Machines Inc. During the 1940s, the company grew steadily, building new products and a name for itself with little competition. Bridgeport Machines profited from the post-World War II manufacturing boom as well. By 1960, the Bridgeport, its original milling machine, had become the standard tool used everywhere from school metal shops and mid-sized companies to large manufacturing facilities.
Textron Purchase and Expansion
In 1968 Textron, Inc., purchased Bridgeport Machines. Forbes later declared that the purchase made Bridgeport an "early victim of conglomeration"; however, Bridgeport soon made improvements to its product offerings with the financial support and direction of its new parent company. The machine tool industry is a cyclical one, and in the late 1960s, the industry was experiencing a slowdown. In an attempt to expand sales by diversifying its product mix, Bridgeport introduced a line of surface, abrasive, and toolroom grinders that became extremely successful. By 1970, Bridgeport had also introduced the Series II milling machine, a larger version of Bridgeport's original machine, and the first numerically controlled Series I milling machine. In the 1970s, Bridgeport purchased the Harig brand of surface grinders. Textron was also responsible for Bridgeport's first foray into the European market when it purchased Adcock & Shipley Ltd., a British manufacturing plant that was converted to build Bridgeport's machines. In 1986 the Adcock & Shipley's name was changed to Bridgeport Machines, Ltd.
Industry Boom
In 1971 demand for machine tools began to skyrocket, fueled by the expanding commercial aerospace and defense industries and a shift among automobile manufacturers to front-wheel drives and four-cylinder engines. Bridgeport's slump was over as it began scrambling to meet new demands. The company successfully filled its orders through 1973, but began to slip as demand outpaced supply. By 1974 the backlog at most manufacturers, including Bridgeport, grew as high as two years. That year, Bridgeport instituted a five-year expansion plan, beginning with the addition of 100,000 square feet of production space in 1975. The company was still unable to make a dent in its two-year backlog, and its primary customers, small and mid-sized shops, were unable to wait that long.
Sensing an opportunity, Asian manufacturers entered the U.S. market in the late 1970s, selling standard machines, CNC lathes, and basic, uncustomized machining centers. Although the influx of Asian machines severely damaged many U.S. machine tool manufacturers, their effect on Bridgeport was less severe. The company continued as it always had, building on its reputation as a manufacturer of reliable, high quality machines. Asian manufacturers did, however, secure a foothold in the computer numerically controlled market. In 1978 Bridgeport responded by introducing a new computer numerically controlled milling machine that reduced programming time by up to 90 percent. Expansion continued through 1979 with the construction of a new 200,000-square-foot plant near the company's headquarters in Bridgeport, Connecticut, the purchase of two Midwest distributors, and the construction of a sales and service center in the Chicago area.
From Boom to Recession
If the 1970s were challenging because of excessive demand for Bridgeport's machines, the 1980s were tumultuous. Just as Bridgeport had expanded to meet increasing demand, a recession hit the United States. Between 1981 and 1982, industry sales dropped by more than 60 percent from $5 billion to less than $2 billion. Although Textron did not release sales figures for its individual subsidiaries, analysts estimated Bridgeport's 1982 sales to have been slightly under $200 million. Textron's Machine Tool and Precision Bearing Group (of which Bridgeport is part) reported an $8 million loss for the year. In 1982 Bridgeport diversified its product line again through an agreement with Romi S.A. of Brazil to import Romi's standard engine lathe. In 1983 the Group posted a $16 million loss, but by 1984, the group was back in the black again, with an $11 million profit.
Also in the early 1980s, Bridgeport filed a claim with the United States International Trade Commission charging more than 20 Korean, Taiwanese, and U.S. machine tool builders with trademark and copyright infringements. Bridgeport pursued the case for over two years. In 1983 the International Trade Commission unanimously rejected Bridgeport's plea, although it did note that it found blatant copying of the company's promotional materials.
The company responded to the recession by diversifying its product line. In 1984 Bridgeport purchased McWilliams Machinery Sales Inc., the exclusive U.S. distributor of Japax electrical discharge machines. The following year, Bridgeport entered into an agreement with a Japanese company, Yasuda Industry Co. Ltd., to market Yasuda's line of horizontal machining centers as part of a long-term strategy to move into the growing market for automated machining centers. 1984 sales were approximately $180 million, comfortably above 1983 figures but well below the company's peak in 1980. The increase was fueled by sales of Bridgeport's new, high-tech machine tools and increased demands in the manufacturing segment of the economy.
Management Buyout
In 1985 Bridgeport's parent company, Textron, acquired a company called Avco Corp. To fund the acquisition, Textron placed Bridgeport and other subsidiaries on the auction block. That year, Bridgeport senior management, led by Bridgeport Division president Joseph Clancy, joined with E. F. Hutton LBO Inc. to purchase a 67 percent stake in the company for $77 million. Clancy and his management team took a risk in their acquisition. According to E. F. Hutton the buyout was highly leveraged, and industry analysts felt the company faced "severe operational and competitive problems," and sales for the following year did not look entirely promising.
To compound the difficulty, Bridgeport's hourly workers unionized a few days after the buyout was finalized. A year later, 220 workers went on strike for increased benefits. Bridgeport's management rolled up their sleeves and joined 128 temporary workers on the shop floor to keep production running. In addition, Clancy and his managers roamed the picket lines to talk informally with the workers. Ultimately, the workers agreed to leave the Teamsters and return to the shop as non-union employees.
Bridgeport continued its investment in automated and computerized machines. In 1987 the company introduced EZ Draft computer-aided-design software and also aligned its EZ-CAM with Apple Computers' macEZ-CAD, to create a team of inexpensive, easy-to-use CAD-CAM milling machines.
The economic recession of the late 1980s hit the company hard, as sales dropped from $185 million in 1989 to $98 million in 1992. Most of its losses were due to the closing of customers' plants; the company responded by downsizing and restructuring its operational and financial organizations. In addition, Bridgeport made an initial public offering of 2.5 million shares of common stock on the NASDAQ exchange in November 1994, raising $12.9 million in the process.
The tide turned again in Bridgeport's favor that year, when the U.S. machinery market entered a boom. "U.S. factories are operating at 84 percent of capacity, their highest rate in more than five years," noted Business Week. "After years of underinvestment, there's a pent-up demand for machinery." By the end of 1994, Bridgeport had a backlog of $44 million. By the end of 1995, the backlog had increased to $75 million. Fiscal year 1995 sales rose 39 percent to $148.8 million.
International Expansion
Bridgeport began focusing on international expansion as a means of cushioning itself against the cyclical downturns of the U.S. market. In 1994 the company entered into a joint venture to form P.T. Bridgeport Perkasa Machine Tools to manufacture machine tools in Indonesia for future sale to the burgeoning Association of South-East Asian Nations.
By 1995, 35 percent of Bridgeport's sales were from international markets. That year, the company instituted an international expansion plan with a focus on Asia; business in China alone was expected to grow $10 to $20 million by the year 2000. Bridgeport directly targeted the Chinese market when it entered into a joint-venture/joint manufacturing agreement in 1995 with a long-time strategic partner, Chang Zheng Machine Tool Works. The new company, Chengdu Chang Zheng Bridgeport Machines Ltd., will build two of Bridgeport's "machining centers" for sale to Eastern Europe, North Korea, and China. In June 1995 Bridgeport's British subsidiary purchased a state-of-the-art manufacturing facility in Germany from Deckel Maho AG I.K. for $9.6 million. Production at that facility was used to meet Bridgeport's $44 million backlog in Europe. In the United States, Bridgeport purchased a 19.5 percent share of Engineering Geometry Systems and entered into a strategic alliance agreement with the company to jointly develop and market technology for use in the computer-aided-manufacturing market.
Machine-tool orders continued their record-setting climb in 1996. Fiscal year sales rose 40 percent to $209.2 million, fueled by a 110 percent increase in machining center sales and a 27 percent increase in sales of Bridgeport-Romi lathes.
Bridgeport Machines has proved to be a resilient player in the competitive machine tool market. Having responded well to many industry downturns, the company finds itself in a secure position with a diversified product line and a broadening customer base. Although its joint ventures in China and Malaysia have yet to commence production as of 1996, Bridgeport continues to increase its foreign market presence and is in a strong position for continued, steady growth.
Principal Subsidiaries: Bridgeport Machines, Ltd.; Chengdu Chang Zheng Bridgeport Machines Ltd.; P.T. Bridgeport Perkasa Machine Tools.
Further Reading:
Johnson, Stephen S., "The Smell of Grease," Forbes, June 3, 1996, p. 74.
Maio, Patrick J., "Stepping up Its Commitment to Int'l Markets," Investor's Business Daily, April 3, 1995, p. 4.
Schiller, Zachary, "The Din in Here Is Deafening," Business Week, January 9, 1995, p. 65.
Source: International Directory of Company Histories, Vol. 17. St. James Press, 1997.
