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characterized by a preponderance of privately held corporations. However, publicly held corporations are gaining an increasingly competitive presence in the industry with the entry of such U.S. firms as Harnischfeger Corporation, by its purchase of Beloit Corporation, and by the entry of Thermo-Electron Corporation. Many of the industry's leading firms date from the 19th century and still operate in their original location. P

Until some 10 years ago, the industry structure remained as it had for generations. Since then, however, the industry has undergone rapid change, with several major mergers and the development of a very substantial foreign-owned presence among U.S. domestic producers.

The large number of closely held firms in the industry generally precludes a complete ranking of producers by sales or assets. At the time of its purchase in 1986 by Harnischfeger Corporation, the Beloit Corporation announced that its 1985 sales were $483 million. Beloit is generally recognized as the largest U.S.-based producer of paper machinery with the Black Clawson Company generally regarded as second in paper machinery product shipments among U.S.-based competitors.

The following section offers a brief profile of six representative U.S.-based producers. Information was drawn from a variety of sources, including annual and quarterly reports, news releases, and discussions with officials of these firms. The selection of particular firms is not intended to indicate any endorsement by the U. S. Government of products or firms, nor should the presence or absence of any firm from these descriptions be taken to represent any such endorsement. Subsequent sections of this study will also contain discussion of these and other U.S.-based and foreign suppliers.

Beloit Corporation

Based in its namesake town of Beloit, Wisconsin, the Beloit Corporation is the largest U.S.-based producer of paper machinery. Founded in 1858 as the Merrill Machine Company, the firm manufactured its first spaper machine 4 years later. The firm became Beloit Iron Works in 1885 and adopted its present name in 1961.

The Beloit Corporation, long family held, became a subsidiary of the Milwaukee-based Harnischfeger Corporation during 1986. At the time of the merger, Beloit announced 1985 sales of $483 million, a figure equal in size to its new parent firm, Harnischfeger Corporation.

* Numerous industry leaders, including Beloit, Sandy Hill, Bird Machine, and Rice Barton, still operate in the towns where they began in the 19th century.

In the first 7 months of its operation under Harnischfeger, Beloit reported sales of $345,917, 000 and operating income of $40,937, 000, substantially greater than any other Harnischfeger segment. This represents a return on sales of nearly 12 percent, substantially greater than the most recent industry performance. For 1985, the most recently available year, return on sales averaged 7.1 percent for the upper quartile of 45 paper machinery firms surveyed by Dun & Bradstreet.

With approximately 6, 200 employees (October 1987) in 18 facilities worldwide, Beloit is the largest employer in the U.S. paper machinery industry. Adjustments since the Harnischfeger merger have reduced total Beloit employment by approximately 500 primarily through consolidation of production at 3 major plants. Currently, Beloit maintains foreign plants at Bolton, United Kingdom; Sorel, Quebec, Canada; and in Turin, Italy and Campinas, Brazil. The firm maintains licensing agreements in such markets as Australia, India, Japan, Poland, Portugal, and Spain. Major U.S. operations are located in greater Beloit, Wisconsin and Dalton and Lenox, Massachusetts. Other U.S. facilities are located at Portland, Oregon (Rader Companies), Kalamazoo, Michigan (Beloit Wheeler), and Clarks Summit, Pennsylvania (Beloit Manhattan). Beloit produces most major components of pulping and papermaking systems, including papermaking and paperboard-making machines, pulp manufacturing equipment and systems, pulpstock preparation equipment and systems, including refiners, and paper finishing equipment and systems including winders, sheeters, and calenders.

Black Clawson Company

Founded in 1893, the Black Clawson Company has evolved into a major supplier of pulp and paper mill systems. The firm is closely held. Sales for fiscal 1987 were estimated at $170 million. With executive offices in New York City, Black Clawson operates five facilities in the United States, three in Canada, and one each in France and the United tâingdom. Its Brazilian plant was sold earlier in the decade. Black Clawson has licensing agreements with West German and Japanese suppliers.

Black Clawson operates manufacturing plants in Watertown and Fulton, New York. Pulp mill equipment is produced by the Shartle Division at Middletown, Ohio. Major research and development facilities are located in Fulton & Watertown, New York and also in the United Kingdom. Black Olawson recently built a $4 million converting laboratory at Fulton.

Black Clawson is a leading worldwide supplier of equipment for brownstock washing, part of the process of bleaching or whitening pulp. Currently, 18 Black Clawson Chemi-Washers'TM (ll in North America) are in operation. The major competitor in this area, Sunds Defibrator of Sweden, has five of its ultra-washers in operation with several on order. Black Clawson recently announced the sale of three Chemi-Washers'TM to China, all to be manufactured at its U. K. plant. In an unusual cross licensing agreement, Black and Sunds will offer a technology exchange for potential buyers. Black Clawson Ultra-washers will be modified to accept Sunds' perforated steel band instead of a woven textile fabric customarily offered.

Black Clawson has gradually transferred some manufacturing activities from its U.S. facilities to its Black Clawson-Kennedy Ltd. Office in Montreal, Quebec, and to its manufacturing plant at Owen Sound, Ontario. A non-paper machinery division, BC Hydrotile Machinery Company, which produces equipment for manufacture of concrete pipe, is based at Nashua, Iowa. BC Hydrotile also has a Canadian facility at Woodstock, Ontario. This division accounts for less than 10 percent of Black Clawson's shipments.

Sandy Hill Corporation

Sandy Hill Corporation, founded in upper New York State in 1858, is one of the oldest firms in the paper machinery industry. Originally founded as Bakers Falls Iron Machine Works, the name was changed in 1882 to Sandy Hill Iron & Brass Works, the name deriving from the village in which the firm was located. The municipality is now called Hudson Falls, New York but the firm remains at its 27 Allen Street address. The Company has had the same owner since 1936. The firm is closely held with sales of approximately $25 million-$35 million per year and employs 300 people. The principal manufacturing facility and corporate offices are at Hudson Falls, New York with a major service facility at Pell City, Alabama. Sandy Hill Canada serves the Canadian market from Montàeal, Quebec. Three other subsidiaries, Sandy Hill International Corporation, Insta-Tech Services, Inc., and Rondac Machine Corporation, have been established to serve specific market segments.

Sandy Hill paper machinery products include headboxes, presses, dryer sections, calenders, and reels, with particular emphasis on machine rebuilding. With an on-site foundry, Sandy Hill is one of the principal suppliers of cast iron dryers to the North American market. In the paper machinery line, Sandy Hill is a primary supplier of machinery for producing non-wovens, including fiberglass roofing mat, utilizing the wet-laid process. The firm also maintains its own on-site research and development laboratory. Sandy Hill has maintained licensing and manufacturing arrangements with Kamyr, the Swedish-based supplier of pulp equipment, for over 50 years, and also has an investment interest in the U.S. entity Kamyr, Inc.

Thermo-Electron Corporation

Thermo-Electron Corporation is a large, publicly traded firm, which through its Web-Process Systems Division has carved for itself a significant place in the paper machinery industry. Thermo-Electron

is based in Waltham, Massachusetts. Its Web-Process Systems Division is based in Auburn, Massachusetts with an additional plant located at Neenah, Wisconsin. The present corporate structure combines Aer, Overly, and Lodding, three formerly independent firms which were bought separately by Thermo-Electron in the early 1980s. Thermo-Electron Manufactures paper machine dryers, stock preparation equipment, and auxiliary paper machinery equipment. Thermo-Electron reported $32.4 million in net sales and contract revenues during 1985 for its process equipment. This includes revenues for three segments in addition to Web Systems. The firm recently introduced a new moisture control profile system for which it has reported sales in Canada, Europe, and Asia.

Combustion Engineering, Inc.

Combustion Engineering, Inc. (C-E), based in Stamford, Connecticut, traditionally has provided engineered products, systems, and services to the worldwide power generation, process control and public Works markets. It now has aggressively expanded its offerings to the global pulp and paper industry. C-E's scope of supply now includes process control systems; machinery and equipment for mechanical pulping systems; chemical recovery and steam generating systems; cogeneration facilities; valves and actuators; construction, engineering, and project management; coating and filler clays, and environmental services.

Long established in the power boiler and pulping segments through C-E Power Systems and C-E Bauer, C-E has greatly increased its involvement with the paper industries through three major acquisitions since the end of 1985.

The first acquisition completed in August 1986 was the
Sprout-Waldron Division of Koppers Company, Inc., based in Muncy,
Pennsylvania. The business was consolidated with C-E's Bauer unit
and renamed Sprout-Bauer, Inc. The new Company is headquartered at
Muncy, with International locations in Australia, Canada, and Europe.

Sprout-Waldron had been C-E Bauer's major domestic competitor in the production of pulping systems. The newly combined C-E Sprout-Bauer unit has becomes the leading domestic producer of pulping systems and will be more competitive with Canadian, Swedish, and West German suppliers of pulping systems. Following the consolidation, Sprout-Bauer invested $5 million in an upgrading of its Muncy, Pennsylvania foundry. Completed in June 1987, the expansion doubled refiner plate production capacity to 100 molds per hour.

In a separate transaction announced in February 1987, C-E acquired Columbus, Ohio-based AccuRay Corporation, a leading producer of specialized machine controls for the paper industries. This acquisition enhanced C-E's position in this rising market segment which C-E had begun serving through a joint venture with the Finnish-based firm Nokia. This joint venture was known as

Nokia/Combustion-Engineering and was based in Atlanta, Georgia.

In another transaction in August 1987, C-E acquired AFORA Ltd., a subidiary of Nokia Corporation. This business was subsequently consolidated with ACCURAY and Taylor Instrument, of Rochester, New York, to form C-E Automation Business, based in Columbus, Ohio. C-E Automation Business provides ACCURAY measurement and control devices, Taylor instrumentation and distributed process controls, and AFORA optimization software and on-line sensing devices.

In mid-1988, C-E Sprout-Bauer announced it had reached a marketing agreement with the Canadian firm, S. W. Hooper to distribute Hooper products in Europe. Subject to Canadian Government approval, C-E Canada would also acquire a minority stake in Hooper.

In 1987, C-E reported overall revenues of $3 billion, of which about $600 million was attributed to pulp and paper industry sales. Process systems revenues, including sales to the paper industries, totaled $788 million in 1986, a 4 percent increase over 1985. Notably, C–E attributed the increase to sales of Sprout-Bauer pulping equipment and sales of specialty clays to the paper industry. Process industries sales contributed approximately $71 million, or 44 percent of the $162 million in overall profits reported by C-E during 1986. Among C-E's most recent contract awards was the selection of its C-E Lummus Canada construction unit to oversee the installation of a $65 million corrugated paper machine at a mill in New Brunswick, Canada.

The Johnson Corporation

The Johnson Corporation is a closely held firm based in Three Rivers, Michigan. The firm was originally a machine shop. Reorganized and incorporated in 1933 as the Johnson Corporation, the firm began manufacture of its major product, the rotary joint. Accounting for about 70 percent of Johnson Corporation sales, the rotary joint is a device connecting rotating cylinders to stationary pipes and finds its primary application in industrial doors: In addition, the firm makes rotary syphons, Turbulator Bars", and condensate mixers which are also used in industrial dryers. About 65 percent of the firm's business represents sales to the paper industries. The firm employs approximately 200 people at its Three Rivers headquarters and its wholly owned subsidiaries, Specialty Castings, Inc., a gray and ductile iron foundry, located at Springport, Michigan, and Johnson Energy Technologies, Inc., a manufacturer of removable and reusable insulation devices located in Gonzales, Louisiana.

Johnson Corporation has exported for over 50 years and is highly geared to global marketing. It has affiliate firms at Ilkley, England and Weesp, The Netherlands. The firm maintains license arrangements in Canada, Japan, Argentina, France, Mexico, Spain, and Brazil. Worldwide employment is approximately 500. The Company has completed construction of a $2 million, 14,500 foot research and

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