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Sunday, 01 July 2007

The cutting edge: Fitchburg manufacturer celebrating its 175th year

FITCHBURG— The floor of the 400,000-square-foot plant where Simonds International Corp. manufactures sharp and biting band saws looks like brick, blocks of clay that have been coated with black paint and worn smooth by nearly 70 years of workers’ movements.

But looks deceive. The floor beneath machines that have been carefully placed according to the latest thinking in efficient manufacturing management is made of blocks of wood specifically placed there to soften the blow if any of Simonds’ saws should hit the floor.

Worcester Telegram, June 2007

It’s a sign of Simonds’ mix of old and new. The company is preparing for its 175th anniversary in a plant where floors dating to 1939 support modern manufacturing of saws for users such as airplane makers. “It’s all based on continuous improvement,” said Kenneth R. Myer, Simonds vice president of procurement and a 35-year employee of the company. “We’re competing on a worldwide basis, where even 10 years ago we were competing only with competitors in the United States.” Privately held Simonds makes cutting tools, mostly for industrial customers. The company’s blades, saws, files, knives and other products go to manufacturers that cut steel and wood. The company will celebrate its 175th year on Friday and Saturday at the Fitchburg plant, which is also the company headquarters, and at facilities around the world. With a worldwide work force of about 600 people, Simonds is about 30 percent smaller than it was in 2000. But President and Chief Executive Raymond J. Martino said that after a recent merger and the sale of certain business lines, the company is profitable and focused on specialized cutting products.

“We are profitable and have a strong balance sheet, and the company is doing well at this point,” Mr. Martino said. The cutting tool industry is a $12.97 billion market worldwide that is expected to grow to $16 billion by 2010, according to Dedalus Consulting, a New York-based market research firm. Dedalus projects that worldwide sales of saw blades this year will surpass $1 billion.

Although some cutting-tool manufacturing has moved offshore to cheaper locations, many North American customers purchase cutting products made in North America to have closer access to companies, said John D. Hamilton, president of Abrasives & Tools of N.H. Inc., a cutting tool distributor in Concord, N.H. Simonds offers those customers service and product development, he said.

“They’re just kind of a leader when it come to carbide-tip products,” said Mr. Hamilton, whose company distributes Simonds tools. “They spend money on research and development. It seems like every year they’re coming out with something new.”

Simonds produces more than 10,000 products. About half its sales are products for saw mills and wood pulping. The other half is blades for cutting metal and files. The company operates eight plants and six distribution centers around the world, and it is part of two joint ventures in Honduras and Brazil.

In the Fitchburg plant, a facility that drew 18,000 visitors when it opened in 1939, about 6 million pounds of steel flattened into long, thin bands arrive each year for saw production. The plant turns out carbon-based, bi-metal and carbide-tipped saw blades.

Automated machines in one room weld tiny carbide balls onto the tips of saw teeth. Workers elsewhere take 32-foot lengths of band saws, weld them into a loop and then twirl the steel into compact circles for shipment to customers. Employees may go through a month of training before they can weld and twirl the band saws into shape, according to Mr. Myer.

Simonds has encountered bumps in its 175 years. But staying in business for that long requires hard work, dedication and foresight, said Douglas A. Starrett, chief executive of Athol-based L.S. Starrett Co., a competitor that has been in business since 1880.

“They are a competitor in certain lines, in metal-cutting band saws, but I’ve gotten nothing but the utmost respect from the people at Simonds over the years,” Mr. Starrett said. “They’ve done an outstanding job and been able to provide an outstanding work environment for the people in Fitchburg.”

Founded by Abel Simonds and his brother-in-law, John T. Farwell in 1832 as the J.T. Farwell & Co., the business now known as Simonds started by making scythes and knives.

Simonds family members sold the business to Wallace-Murray Corp. in 1965. The company changed hands again in 1981 when Household International Inc. bought Wallace-Murray.

By 1982, the company was telling salaried workers they would have to take pay cuts or work 10 days without pay. Workers represented by U.S. Steelworkers Local 7896 went on strike for a month in 1986.

Household International put the company up for sale, and in 1988, managers allied with Wellesley investor Charles W. Doulton and venture capital firm Greylock Management Corp. bought it.

What followed was dramatic. The new owners shut down the sprawling Fitchburg plant and told workers they would have to reapply for their jobs. U.S. Steelworkers Local 7896, which represented many of the workers, argued that the new owners were obligated to honor an existing contract. Workers went back to work at lower wages, but about a month later many showed their displeasure with a walkout. Seventeen nonunion workers were also laid off.

“We were way out of line in our industry, primarily in labor rates rising,” said former Simonds president Ross B. George, one of the managers involved in the buyout. After the shutdown, he said, “we rehired anyone who wanted to return. I think just about everyone returned.”

Mr. Ross remained president until 1999, building revenues to about $120 million a year, he said. Under his direction, the company continued making acquisitions.

“I was always looking for something to buy,” said Mr. Ross, who now lives in College Station, Texas. “We were trying to get it to a level it would be a viable public offering. That never did happen.”

In recent years, Simonds has confronted problems. Simonds defaulted on interest payments for bonds in 2001 and reported a nine-month loss of $5.1 million on sales of $85.1 million, according to the last publicly filed financial reports for the company. In 2003, Simonds merged with International Knife & Saw Inc. of Erlanger, Ky., a company that had gone through bankruptcy reorganization.

Since then, Simonds has divested certain businesses in five separate transactions, including a plastic industrial knife business in Florence, S.C., that had been part of International Knife & Saw. It is back in the hunt for acquisitions, said Mr. Martino, who has been president and chief executive since 1999.

“We’re constantly on the lookout for adjustments to our portfolio,” he said.

More Information & How to Order

For more information about this report including a brochure and table of contents contact Dedalus Consulting:

About Dedalus Consulting

Dedalus Consulting Inc. is a privately owned and independently operated market research publisher and consultancy. Our research focuses on both emerging and mature markets in high-technology sectors, including machining & materials, electronic components, life sciences, nanotechnology, mobile communications and photonics.

Research is continually updated through a methodology based on primary interviews with key executives. Companies interviewed include manufacturers, end-users, distributors, and research institutions.

Our clients include Fortune 500 companies, start-ups, financial analysts, and research organizations engaged in the development and manufacturing of advanced technology products and services.