GATX / Boothe Corporation
List of Deals
GATX was founded by Max Epstein in 1898, when the Duquesne Brewery of Pittsburgh was in need of refrigerator cars in which to ship beer. Epstein connected the buyer with Armour and Co., which had forty-eight old cars to dispose of. Duquesne purchased twenty of the cars, and Epstein purchased the other twenty-eight. He began leasing cars under the name the Atlantic Seaboard Dispatch. In 1902 the company incorporated as the German-American Car Company. Epstein originated the idea of leasing specialty cars to shippers on a long-term basis. The continuing mainstay of the business is the leasing of tank and other specialty cars to railroads and shippers that cannot bear the cost and upkeep of maintaining such complex cars year round.
By 1907, with 360 tank cars and 73 refrigerator cars, the company had shifted focus to tank cars and established itself as a prominent lessor. GATX was able to attract certain customers by creating custom-designed cars for their products. Among its early specialty cars were chromium steel-lined cars to transport nitric acid; rubber-lined cars for phosphoric and muriatic acid; high-pressure cars, which they developed in 1914; nickel-lined cars for transport of caustic substances; and airtight cars for dry-ice transport. In 1916 the company offered stock under the name General American Tank Car Company (GATC), which served as a holding company for its subsidiaries. The company's railcars carried the initials GATX (the "X" meant that a car belonged to a private line).
In 1925 the company entered the field of bulk liquid storage, sowing the seeds for what would become the GATX Terminals Corporation. Three years later GATC purchased Sharon Tank Car Corporation, whose manufacturing facilities in Sharon, Pennsylvania, became GATC's second building site.
The company survived the years of the Depression well, managing to increase profits every year despite the economic conditions. The three qualities that maintained the business during the Depression are those that have continually kept its earnings on a steady incline since GATX's inception. First, the company transported products such as petroleum and food; during an economic depression, the price of these items may fall, but demand remains constant, thus ensuring the need for their transport. Second, GATX ran its leases over relatively long periods, usually three or four years, enabling it to ride out tough times on the cushion of old leases. Finally, the constant repair and maintenance work needed for the cars was a continual source of work for its manufacturing facilities, even when new car orders were low. The company capitalized on the relative weakness of other companies during these years and used the time to grow through acquisitions. While GATX made three acquisitions before 1926, it made thirteen between 1926 and 1931, five of these after 1929. In 1928 the company acquired its first foreign subsidiary, Allegmeine Transpotmittel Aktiengsellschaft.
The assets and property of most of the subsidiaries were transferred to GATC in 1936, and the subsidiaries dissolved into the large company. GATC took over the management of the Pressed Steel Car Co., the third-largest U.S. car builder. By 1940 GATX was operating 60,000 freight cars, making it the country's largest freight car leasing system. The bulk-liquid-storage system had also grown in its first fourteen years into the country's largest public liquid-storage terminal facility. By the end of World War II, the company was interested in diversification. In 1939 the company acquired a 50 percent interest in Barkley-Grow Aircraft Corporation, a Detroit aircraft builder. By the early 1940s GATC was operating cargo ships on the Great Lakes, foreshadowing its later domination of that trade.
By 1952 GATX ranked as the country's fourth-largest manufacturer of freight cars as well as the largest lessor. In 1954, having earned profits every year since its incorporation, the company acquired Fuller Co., a concern that built turnkey cement plants. In 1959 GATX purchased Traylor Engineering & Manufacturing Company, a producer of cement machinery, to complement Fuller's operations. In addition to other projects, GATX constructed a cement plant in the Philippines in 1960 and an industrial waste treatment plant for Whippany Board Co. in 1962.
Automation developments in the 1960s made hauling less labor intensive, and GATX developed several products that were more mechanized, including a 20,000 gallon wine tank and side-loading device for transferring twenty-foot containers. In 1963 there was a huge boom in orders because the railroads were stepping up their competition with trucking and barges. By 1968, however, as sales of freight cars dropped significantly throughout the industry, GATC stopped producing freight cars, although they continued to build tank cars. In 1967 the company formed an airplane leasing company, GATX Leasing.
In 1975 the company established a wholly owned subsidiary, General American Transportation Corporation.