General Binding Corporation
Address:
One GBC Plaza
Northbrook, Illinois 60062-4195
U.S.A.
Telephone: (708) 272-3700
Fax: (708) 272-1389
Statistics:
Public Company
Incorporated: 1947
Employees: 3,363
Sales: $376 million
Stock Exchanges: NASDAQ
SICs: 3579 Office Machines, Nec
Company History:
General Binding Corp. (GBC) manufacturers office equipment and supplies to design, bind, laminate, shred, and protect a variety of paper products, such as books, magazines, annual reports, passports, and menus. GBC is a multinational company with 21 manufacturing plants in North and Central America, Europe, Australia, and Asia. Products are sold through an international network of direct sales and telemarketing personnel, dealers, distributors, wholesalers, and retail office supply outlets. GBC is considered a market leader in the United States for laminating and binding machines and supplies. Approximately 25 percent of GBC's sales come from the sale of business machines; the remaining revenue comes from sales of supplies and service related to GBC systems. GBC has one domestic subsidiary, U.S. RingBinder Corp., which produces metal rings for looseleaf binders.
GBC was founded in 1947 by William N. Lane and two business partners when they purchased a small trade bindery in Chicago, Illinois. First year sales totaled $250,000. GBC expanded operations in 1952, opening another domestic manufacturing plant and founding General Binding Corporation Canada, Ltd. In the 1950s GBC laid the groundwork for its international divisions, creating sales and distribution networks in Europe, Mexico, Canada, Venezuela, and Brazil. Sales were slow at first in the European market, where GBC's binding machines were readily available but supplies were not. In response to this situation, GBC established a manufacturing subsidiary in Switzerland in 1954 to produce a full range of plastic binding supplies as well as a limited number of binding machines. Wholly owned subsidiaries were then set up to market GBC machines and supplies throughout England, Germany, Holland, Italy, and France.
In 1958, the European Economic Community established a 30 percent tariff on goods produced in Switzerland and sold throughout Europe. To avoid hefty tariffs, GBC built a second European manufacturing facility in Germany, just across the border from its Swiss concern. One year later, when labor shortages in Switzerland sharply curtailed production at GBC's plant there, the company built a third European manufacturing facility in England.
In 1960, GBC introduced the Combo, its first combination punch/binding system. GBC also continued its international expansion, becoming one of the first foreign companies to set up operations in Japan. Three years later, the company established a fourth European manufacturing plant in Italy. Again, GBC's profits were threatened by high taxes, so the company built an automated plant in a newly created Italian economic development zone that had a lower tax rate. When the Australian government levied high import tariffs on GBC products in 1966, the company established an Australian manufacturing facility and purchased a Sydney-based firm to manufacture binding supplies from raw materials exported from the United States. This persistence in expanding its international sales garnered GBC an "E" Award for excellence in exporting from the U.S. government in 1964.
GBC also established a wholly owned subsidiary in Brazil in 1962. However, due to the unstable political situation in the country at that time, the company refrained from doing business there until 1971, when it entered into a joint venture with a Brazilian firm to distribute its products.
Sales from 1961 to 1971 rose an average of $2.1 million a year, 30 percent of which came from foreign markets. GBC's domestic sales also expanded greatly, fueled by growth in the office market as well as a surge in the printing and graphics industry. In 1962, GBC ventured into the lamination business with the purchase of Virginia Laminating, a designer and manufacturer of lamination machines. In 1969, GBC purchased Webtron Corp., a maker of specialty presses used for printing tags and labels, and set it up as a wholly owned subsidiary. GBC went public in 1966, listing its securities on the OTC (over the counter) market. Stocks split two-for-one in 1968 and again in 1971. The company declared its first cash dividend in 1975.
Sales in 1973 surpassed $50 million for the first time, and Therm-A-Bind, a revolutionary, heat-activated binding system was introduced. In 1977 GBC purchased U.S. RingBinder Corp. GBC founder, chairman, and CEO William N. Lane passed away in 1978. The Lane family retained control of 57 percent of the company and William N. Lane III was named chairman.
Sales in 1978 hit the $100 million mark but began to slip around 1981, due to the economic recession in the United States. In an attempt to boost earnings, GBC entered into an agreement with NorthStar Computers to sell its personal computers through GBC's well-established distribution and sales channels. The move proved to be nearly disastrous for GBC. Its sales force devoted the majority of its efforts towards selling new computers under the GBC name. However, IBM also ventured into the personal computer arena in the early 1980s and within two years cornered the market. In 1983, GBC sold less that 500 computers. Earnings fell to $236,000 on sales of $145.7 million, compared to 1981 earnings of $7.5 million on sales of $149.6 million.
GBC's subsidiary U.S. RingBinder was facing competition from lower priced imports in the metal ringbinder industry. By 1983 U.S. RingBinder had resorted to selling its products at no gross margin in order to stave-off its eroding market share. GBC's second subsidiary Webtron was also feeling the squeeze of competition.
In 1984, Rudolph Grua was hired to replace John Preschlack as president and CEO. Under Grua, the company began a back-to-basics marketing effort, dropping its computer line and focusing on its core binding and lamination businesses. Faced with growing threats from European and Japanese imports, Grua earmarked $1.4 million for research and development of new binding and laminating systems and shredders. GBC introduced a number of new products and instituted a combined direct-mail, catalog, and telemarketing marketing drive for its binding and office supplies. U.S. RingBinder became competitive again by establishing a manufacturing plant in Singapore. 1984 sales rose 13 percent to $165 million; net earnings soared to $6.4 million.
In 1985, GBC entered into an agreement with VeloBind, Inc., to develop a new binding system that uses rigid plastic strips. The company broadened its marketing efforts, introducing an expanded product catalog named Sourcebook and establishing a telemarketing center at corporate headquarters in Northbrook, Illinois. The following year, telemarketing centers were established in England, Australia, and Canada. In 1987, with sales of over $200 million, GBC stocks split 3 for 2 and dividends increased by 20 percent. In 1988 stocks split 3 for 2 again; earnings jumped 55 percent to $14 million; sales hit a record $250 million.
GBC continued its expansion into the 1990s, establishing a new Film Products Division in 1989 and also purchasing Loose Leaf Metals Co., Inc., that year. The company also began tapping into the growing desktop publishing and home-office market. In 1991, the Film Products Division introduced a high-speed commercial laminating system, which established GBC as a complete marketer of paper finishing products. Also that year, GBC purchased VeloBind, Inc., for approximately $50 million. Research and development spending continued, resulting in the introduction of 14 new products in 1992, including binding machines, improved Therm-A-Bind systems, and shredding machines. The next year, GBC entered the office supply business with the acquisition of Bates Manufacturing Company.
As it moves toward the beginning of the twenty-first century, GBC plans to focus on improving its international markets, which have been hurt by recessions in the overseas operations. In 1993 international sales accounted for 45 percent of unit sales but only 36 percent of dollar sales. With a focus on developing its Mexican and Australian markets, GBC's continued growth and profitability seems likely.
Principal Subsidiaries: U.S. RingBinder Corp.
Further Reading:
"Back to Basics," Barron's, August 17, 1987, p. 45.
Byrne, Harlan S., "General Binding Corp.," Barron's, January 15, 1990, p. 40.
"GBC Cites Overseas Market 'Flexibility,"' Industrial Marketing, May 1974, p. 6.
Lashinsky, Adam, "Globetrotter Settles in at General Binding," Crain's Chicago Business, Sept. 6, 1993.
McCormick, Jay, "A Farewell to Puberty," Forbes, March 11, 1985, pg. 108.
Source: International Directory of Company Histories, Vol. 10. St. James Press, 1995.
