Lehman Brothers Collection - Contemporary Business Archives

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Lehman Brothers Collection

Twentieth-Century Business Archives

Interlake, Inc. - Lehman Brothers Collection

Interlake, Inc.

List of Deals

The earliest predecessor of Interlake was a small furniture shop in Shelbyville, Missouri. There, in 1880, a furniture maker named M.E. McMasters developed a barbed steel staple that he used to join wooden bed rails. The staple was a rigid metal form with teeth cut into it. When hammered into place, it held two pieces of wood securely at a specific angle. In 1882 the business was reincorporated as the Quincy Plate and Staple Manufacturing Company.

The company was acquired by the Acme Flexible Clasp Company in 1889. Demand for building materials in Chicago, where Acme was based, was high during the following two decades. In 1917 Acme changed its name to Acme Steel Goods Company. That year, the company purchased a site on the Little Calument River in Riverdale, Illinois; the next year Acme built a hoop mill on the site. In 1926 the company built a second rolling mill, and three years later added a third hot mill, both of which were used to produce formed and sheet steel, as opposed to block ingots.

Although the Depression was hard on the company, it survived and quickly recovered. Acme became heavily involved in war production during World War II and produced a variety of steel products for artillery and mechanized armament manufacturers. Acme did not profit greatly from its war production, but gained valuable relationships with new customers. In 1947 the company acquired the Hoffert Machine Company, which brought Acme into a new line of finished products, manufacturing stitching machines for the boxboard and graphic arts industries. Acme made its first international expansion in 1952 when it established a steel-strap slitting and painting facility in Scarborough, Ontario.

In 1954 the company added a new building in Riverdale for the production of stitching and strapping tools and machines and other accessories. The company continued its expansion in 1956 by acquiring the Newport Steel Company; with this acquisition Acme became a producer of steel ingots made from scrap steel and pig iron, freeing it from increasingly unstable supply prices. Newport also manufactured hot and cold rolled steel products, silicon and alloy sheets and bars, and electric weld line and conductor pipe, in addition to other steel products. In 1959 Acme opened a new steel line in Riverdale using the more efficient, higher-quality oxygen converter system. The expansion caused Acme's debt to grow from $5.2 million in 1955 to $35 million in 1961. By 1964, however, the worst was over.

Despite its growth and expansion into new product lines, Acme was not a fully integrated steel manufacturer, although it began making its own raw steel in 1956 for downstream use and thus could be considered semi-integrated. It was mainly involved in the final stage of steel production, manufacturing finished products, and had no control over the price or availability of scrap, coal, or iron ore.

Another small company limited to one primary production process was Interlake Iron Corporation. Interlake produced pig iron, coke, and ferroalloys. The company sold its pig iron primarily to foundries and steel companies. It was slowly being squeezed out of its limited market by new materials, changing technologies, and growing pig iron imports. The company had considered diversification as early as 1949, but had dismissed all proposals as too risky or not yet urgent. By 1964, however, the pig iron market had collapsed and the situation had become urgent. At that time, however, the company was not financially stable enough to pull off a diversification.

Interlake began discussions with Acme with regard to a merger. Interlake's ore mining companies, Erie Mining and Wabush Mines, would provide an adequate source of iron ore for Acme's finishing plants. Additionally, Interlake operated a blast furnace only fifteen miles from Acme's Riverdale facility. This would enable molten iron ore to be transported by special rail cars directly from Interlake's furnaces to Acme's steel plant, eliminating the need for secondary melting facilities. The two companies merged in 1964, forming Interlake Steel Corporation.

In 1967 Interlake Steel's management dropped a proposed $200 million expansion program and decided instead to begin a diversification strategy aimed at reducing the company's dependence on its core steel business. The first move in this direction came in 1968 when the company purchased a two-thirds interest in the American subsidiary of the Swedish company Hoganas A.B. The subsidiary, Hoeganaes Corporation, was a ferrous metal powder manufacturer. Interlake Steel also acquired Redirack Industries, Ltd., a Canadian firm that specialized in the manufacture of warehouse storage products. The company later introduced a new line of manual and automated stacker-retrievers that could neatly stack boxes or pallets of stock in warehouses. The next year, Interlake opened a technical research facility in Riverdale and later that year acquired the Gary Steel Supply Company, a warehousing and pickling operation. Also in 1969 the company took over Lodi Fab Industries, which manufactured storage rack systems. In 1970, after dropping "Steel" from its name to emphasize its growing diversification, Interlake purchased the Burmac Corporation, a steel-strapping equipment and storage system manufacturer. By 1972 Interlake had reduced the volume of its steel sales to 68 percent of total sales.

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