Speaker 1: Welcome to Business on the Brink, a production from I
Speaker 1: Heart Radio and how stuff works. Sometimes a company just
Speaker 1: can't catch a break, particularly if everything they make is breakable.
Speaker 1: What might seem crystal clear one day could be cloudy
Speaker 1: the next. But rather than fall into a great depression,
Speaker 1: maybe it's possible to bubble up your troubles and make
Speaker 1: the best out of them. This is anchor Hawking on
Speaker 1: Business on the Brink. Everybody. I'm Jonathan Strickland and I'm
Speaker 1: Arial Casting, and today's episode is about anchor hawking, which
Speaker 1: I did not even know was a thing, but it
Speaker 1: was a request, right, It was from Kimberly Bostick. Yeah.
Speaker 1: An anchor hawking is not like, hey, folks, come see
Speaker 1: this great anchor over here on stage two. It's gonna
Speaker 1: do a performance for you. Extra x stra extra. It's
Speaker 1: actually a glass company. And I'll say, going into this,
Speaker 1: I was like, oh, okay, it's it's a glass company.
Speaker 1: It will be a little niche thing. Maybe we'll find
Speaker 1: one or two little points we can talk about. They've
Speaker 1: had a whole bunch of brink moments. Yeah. As it
Speaker 1: turns out, the entire history of this company, you could
Speaker 1: argue was a series of brink moments, and there were
Speaker 1: more than a few occasions where with just a little
Speaker 1: extra the company could have fizzled out of business. Yeah yeah,
Speaker 1: and yet they keep going. So we're gonna go ahead
Speaker 1: and get started. Yes, So the story of Anchor Hawking
Speaker 1: actually begins with an older company, a company that existed
Speaker 1: before that, and that was the Lancaster Carbon Company. I
Speaker 1: got all excited because I was thinking, like Lancaster, Pennsylvania,
Speaker 1: and I was thinking, it's gonna be about Amish. It's Lancaster, Ohio.
Speaker 1: Not that that's not exciting Ohio people, Yes it is.
Speaker 1: I just didn't know that that was a thing, and
Speaker 1: all I read about this, well, did you know, Um,
Speaker 1: I'm going to put a little fun fact in here. Okay,
Speaker 1: did you know what the nickname of the Lancaster Carbon
Speaker 1: Company was? What's that the black Cat because of all
Speaker 1: the carbon that would line the walls, right. Yes, they
Speaker 1: called their facility the black Cat because it was it
Speaker 1: was just coded in this because because of course, when
Speaker 1: you're making carbon or glass or anything like that, you're
Speaker 1: involving furnaces giving up a lot of smoke. So, uh,
Speaker 1: I don't know, a whole lot about the Lancaster Carbon Company.
Speaker 1: It's an older company that dated from the nineteenth century,
Speaker 1: but I don't know exactly when it was founded. It's
Speaker 1: one of those where I could not find any records
Speaker 1: about it. It's just it was just too small and
Speaker 1: too old for me to find. All I know is
Speaker 1: when it ended, which was that the company was in
Speaker 1: financial difficulty and it essentially went into receivership, meaning it
Speaker 1: was essentially under the control of somebody else after going
Speaker 1: through the bankruptcy process US. And so then you get
Speaker 1: a guy named Isaac J. Collins who got together with
Speaker 1: precisely six of his friends six. Wow. Every single source
Speaker 1: I saw it was always like Isaac J. Collins and
Speaker 1: six friends got together and they pulled their cash and
Speaker 1: they bought the Lancaster Carbon Company for the princely sum
Speaker 1: of eight thousand dollars. Yeah. In in case you guys
Speaker 1: are curious, that's about two hundred and thirty thousand dollars
Speaker 1: in today's money. Yes, yes, adjusting for inflation, it's nearly
Speaker 1: a quarter of a million dollars of a million. But
Speaker 1: here's the thing is that that still wasn't quite enough
Speaker 1: to get things up and running. That was enough to
Speaker 1: take it out of receivership, but they needed more for
Speaker 1: actual startup costs. So they turned to an investor named
Speaker 1: eb Good, who I think could play a guitar just
Speaker 1: like it was ringing a bell. I think it sounds
Speaker 1: like a Charles Dickens character. That's very similar. Yeah, And
Speaker 1: he ended up contributing another seventeen thousand dollars, so more
Speaker 1: than twice what that initial investment was, almost half a
Speaker 1: million in today's money. Yes, so now we're looking at
Speaker 1: maybe like three quarters of a million dollars almost for
Speaker 1: the full startup cost here. And that's when they formed
Speaker 1: the Hawking Glass Company, and it was named the Hawking
Speaker 1: Glass Company because it was near the Hawking River. Yeah,
Speaker 1: which again I before I read this, I just thought, wow,
Speaker 1: it's it's like that. I guess we can't call ourselves
Speaker 1: anchor Sellings. We're calling ourselves anchor Hawking. Well, they'll go
Speaker 1: through a bunch of name changes. But before that, in
Speaker 1: their first year of operation, the company produced and sold
Speaker 1: about twenty thousand dollars in glassware, which I did not
Speaker 1: adjust for inflation. But that's a whole lot of money. Yes, Uh,
Speaker 1: But they needed more money to scale it production. So
Speaker 1: Collins got another five thousand dollars of investment from a
Speaker 1: guy named Thomas Fulton, Yes, who became the secretary treasurer
Speaker 1: for the company. Yes. Now, unfortunately, and and this is
Speaker 1: a problem with a lot of factory jobs. In this time,
Speaker 1: Hawking was known to have rough working conditions and poor
Speaker 1: wages for its employees. They were underpaid, even high level
Speaker 1: employees at that time comparatively. And additionally, this was kind
Speaker 1: of a fun fact, I guess kind of the founders
Speaker 1: were not fans of unions employees being able to band
Speaker 1: together and demand better working conditions. And yeah, so much
Speaker 1: so that when there was a glass workers strike in
Speaker 1: nineteen eleven, Fulton hired scabbers from the Glass Bottle Blowing
Speaker 1: Association or the g b b A to take up
Speaker 1: the work. So he was just like, I'm going to
Speaker 1: hire scabbers because these unions are dumb. Now, I will
Speaker 1: say they did improve conditions in the nine thirties when
Speaker 1: we got the National Industrial Recovery Act and later the
Speaker 1: Wagner Act under f DR, and Hawking said, yeah, well
Speaker 1: follow all of these regulations. So things got better at
Speaker 1: that time. Once it became the law then suddenly they
Speaker 1: were totally on board. Uh, there was a there was
Speaker 1: a little bit of a setback in nineteen twenty four. Um. Yeah,
Speaker 1: fire burned down the factory. Not surprising when you're dealing
Speaker 1: with molten glass. Yeah, as it turns out, First of all,
Speaker 1: things were a lot more flammable back then. Yeah, and
Speaker 1: we don't talk about it a lot. A lot of
Speaker 1: factories had fires at various points yea of history of
Speaker 1: this company. Yeah, So at that point that meant that
Speaker 1: the fifty people who would normally work in that factory
Speaker 1: had no factory to work in holiday. Yeah. But but
Speaker 1: they actually were able to rebound from that. The company
Speaker 1: had made enough money so that they were able to
Speaker 1: reinvest that money and build out new factories, and they
Speaker 1: also had enough to go and acquire a couple of
Speaker 1: other glassmaking companies. But then we get the Great Depression, which,
Speaker 1: as we know, was hard for so many companies. It
Speaker 1: wasn't so great it as it turns out, it's a
Speaker 1: really terrible depression, but it wasn't that bad for Hawking Glass.
Speaker 1: That's that's true because they were able to mostly just
Speaker 1: by coincidence they had happened to not by coincidence, but
Speaker 1: but good timing. They had just developed a an approach
Speaker 1: that would end up dramatically speeding up the process of glassblowing.
Speaker 1: And by speeding it up, they also meant that it
Speaker 1: was more efficient, thus therefore less costly. So ultimately, what
Speaker 1: that translates into is that they could sell glassware for
Speaker 1: less money than they had and still make a profit,
Speaker 1: which is great because everybody had less money. Yes, so
Speaker 1: they could end up selling like two tumblers for a nickel,
Speaker 1: for example, and still make a profit off of that. Charlie,
Speaker 1: if I could have two tumblers for nickel, I would
Speaker 1: build a fort out of tumblers. I'll tumble for you
Speaker 1: different tumbler. Oh right, got it. So that managed to
Speaker 1: allow them to afloat during the Great Depression. They were
Speaker 1: actually still able to sell to the average consumers out
Speaker 1: there because they were able to price their products at
Speaker 1: a very competitive level. Yeah. Yeah, And in Hawking Glass
Speaker 1: merged with a company called Anchor Cap and Closure Corporation
Speaker 1: and they became the Anchor Hawking Glass Corporation. Yeah, so
Speaker 1: Anchor Cap Enclosure, that name probably gives you a hint.
Speaker 1: It was sort of a bottle cap. Yeah, yeah, so
Speaker 1: if you're ever a fallout fan, this is where they
Speaker 1: made the money, apparently, because it's all in bottle caps. Okay,
Speaker 1: that's enough of a tangent there. So then we get
Speaker 1: up to, uh, the fifties and sixties, and we're rushing
Speaker 1: through this because as dramatic as these stories are, where
Speaker 1: things like the Great Depression or a fire could have
Speaker 1: wiped them out, it's not the biggest brink moment. Yeah,
Speaker 1: we're not even close yet. So in the fifties and sixties,
Speaker 1: Anchor Hawking Glass Corporation would expand. Uh, they also not
Speaker 1: just grew as a company. They started to diversify in
Speaker 1: the sort of stuff that they made, and they also
Speaker 1: made more acquisitions. They opened up more factories, They actually
Speaker 1: created R and D facilities. They acquired a mold too
Speaker 1: form glass. Yeah, not white mold on a bread. No not.
Speaker 1: They weren't into penicillin, no, no, I mean, I mean
Speaker 1: maybe if they got to cut or something. Um. And
Speaker 1: then by the end of the sixties they had expanded
Speaker 1: so much that they became the Anchor Hawking Company. They
Speaker 1: removed glass from the name of their company because they
Speaker 1: felt that that was too limiting. Then made people think, oh,
Speaker 1: like the glass company, So they just took that out
Speaker 1: of their name because they were also doing other things yeah,
Speaker 1: like bottling, yeah, peanut butter jars, yeah, beer bottles, and
Speaker 1: enclosures and glass table where they were making millions of
Speaker 1: dollars in sales and profits. Now, the thing is up
Speaker 1: until this point, Anchor Hawking was kind of getting a
Speaker 1: reputation for being conservative. They had never acquired any yet
Speaker 1: by this point, which is kind of impressive considering they've
Speaker 1: had some fires and stuff. They were they were able
Speaker 1: to be profitable enough early enough that they were able
Speaker 1: to pay off those initial investments without having it just
Speaker 1: continue to loom over the head of the company. Yes,
Speaker 1: but it was decided that Anchor Hockey needed some new
Speaker 1: life breathed into it, so they got an outsider to
Speaker 1: be their CEO, John Gushman, and he was the one
Speaker 1: who took the glass out of the name. Around this time,
Speaker 1: they were at their peak. They had about five thousand
Speaker 1: employees in their headquarters alone, and they were Lancaster, Ohio's
Speaker 1: largest employer at the time. And under Gushman, there was
Speaker 1: a bunch of turnover and managers and they acquired nine
Speaker 1: companies so things seem to be going okay, yeah, I mean,
Speaker 1: what could possibly go wrong? Well, we'll tell you the
Speaker 1: first We're gonna take a quick break now, Ariel, you
Speaker 1: did the classic cliffhanger before ache back there, and I'm
Speaker 1: going to be honest with you. I haven't read this
Speaker 1: next note, so I honestly don't know where things are going.
Speaker 1: I want to hear. Okay. So, by the end of
Speaker 1: the seventies, Achor Hawking had expanded into plastics, lighting, cabinet tree,
Speaker 1: and stoneware. While so well outside of just glass yes, uh,
Speaker 1: they had also acquired thirty five million dollars in long
Speaker 1: term debt from the purchase of the Cabinet Tree Company,
Speaker 1: which also did window hardware. Gotcha, So by acquiring this company,
Speaker 1: they had to take out loans in order to make
Speaker 1: that acquisition. For now they have this debt, which I
Speaker 1: don't understand why they're saying, oh, well, the company has
Speaker 1: never been in debt. We should take some debt on
Speaker 1: to get some companies like that'll help us grow. It
Speaker 1: seems counterintuitive, but they tried it. Around the same time,
Speaker 1: though they were facing downward turn in sales rises in costs,
Speaker 1: there were some price control issues, and then they had
Speaker 1: a ten week union strike. Wow. Okay, so it's like
Speaker 1: everything that could go wrong pretty much went wrong all
Speaker 1: at once. Yes, so they knew that they had to
Speaker 1: start making some changes to bring those profits back up
Speaker 1: before they fell too far to salvage. Now, I'm guessing
Speaker 1: that part of that just meant they needed to kind
Speaker 1: of shed some of these these businesses they had been acquiring. Yes,
Speaker 1: they did. In nineteen seventy eight, they started investing themselves
Speaker 1: of some of their previous acquisitions, although they were still
Speaker 1: making some like they bought the Shenango China Company in
Speaker 1: nineteen seventy nine. But they're acquired lighting company. Since we
Speaker 1: said they were into lighting that burnt down. I mean again,
Speaker 1: you know, stuff is flammable, although in the in the
Speaker 1: in the late seventies less so than it wasn't the third. Yes, Yes,
Speaker 1: they sold their Stoneware acquisition, they sold some other stuff,
Speaker 1: and then they replaced Gushman, so the outside CEO was
Speaker 1: now truly back on the outside. Yeah. Well, he decided
Speaker 1: to take on some debt right at the decline of things,
Speaker 1: so I'm sure that didn't help his position in the company.
Speaker 1: They replaced him with a man named Jay Ray topper
Speaker 1: Jay Ray. You can call me Ja or you can
Speaker 1: call me Ray. Well, by the early nineteen eighties, they
Speaker 1: were doing all right as far as their sales were concerned,
Speaker 1: but they were still losing money overall, and they were
Speaker 1: not profitable. So at that point they looked to see
Speaker 1: what else they can shed and how they can, you know,
Speaker 1: manage this business to return to profitability. And part of
Speaker 1: that was selling a glass container division for three million
Speaker 1: dollars to Wesray Corporation. At least it was worth three
Speaker 1: million dollars, but wes Ray didn't pay three They only
Speaker 1: paid sixty eight million, and Acri Hockey didn't even get
Speaker 1: all that. Yeah yeah, so yikes uh. And part of
Speaker 1: this was because you were starting to see how plastic
Speaker 1: was becoming so cheap and so easy to produce and
Speaker 1: it could be turned out so fast that it was
Speaker 1: becoming a major old native to glass containers. So for
Speaker 1: a lot of stuff out there, there were companies who
Speaker 1: were switching from glass to plastic. Not for everything obviously,
Speaker 1: you know, if you want to go out and get pickles,
Speaker 1: they tend to be in glass jars, not plastic ones.
Speaker 1: But for stuff like peanut butter, which had been you know,
Speaker 1: an old mainstay of the Anchor Hawking Company. Well that
Speaker 1: was going into plastic now. Yeah, So this company, this
Speaker 1: this offshoot glass container company got purchased by Vitro s
Speaker 1: A went bankrupt in and was bought by with Zada
Speaker 1: Investment Partners. It still had Anchor Hawking in its name,
Speaker 1: and I think it's still around, but the notes kind
Speaker 1: of trailed off after that, right, and it and it
Speaker 1: didn't have any actual connection to the older Anchor Hawking
Speaker 1: Company at that point apart from that name. Yes, And
Speaker 1: now we get to our old we get to the
Speaker 1: beginning of the real break. Yeah, and we get to
Speaker 1: the entrance of our old old friend who we love
Speaker 1: talking about, Carl icon High. Yes, the activist investor who
Speaker 1: has you used his enormous wealth to influence companies across
Speaker 1: multiple industries frequently to the point of essentially controlling what
Speaker 1: they did from that point, and he tried to do
Speaker 1: that here. He had gotten six percent of the Anchor
Speaker 1: Hawking Company, yeah, which was cash rich at that time
Speaker 1: from the sale of their their divisions. Yeah, and they
Speaker 1: were undervalued because of the lack of sales. And he
Speaker 1: saw the chance to take advantage of them, he did
Speaker 1: what is called green mailing them. Oh, I interesting, I
Speaker 1: don't think I've ever heard the term green mailing. Well,
Speaker 1: I've read it at least once. Jonathan, Well, he uh,
Speaker 1: in return for these big investments, he was saying, you
Speaker 1: know what, I deserve a seat on your board of
Speaker 1: directors because I'm I'm a major investor in the company,
Speaker 1: and the company wanted to not do that. Yeah, and
Speaker 1: he said, cool, you gotta buy my shares back at
Speaker 1: like a premium price. Yeah. So this is one of
Speaker 1: those cases where, uh, it's almost like a hostile takeover, right,
Speaker 1: where where investors come in and they take enough shares
Speaker 1: of a company to have you know, like if it's
Speaker 1: common stock, they can have voting control of the company.
Speaker 1: And if they do that with enough shares, then they
Speaker 1: can determine what the company does, no matter what the
Speaker 1: board of directors wants it to do. Um. So in
Speaker 1: this case, you know, Icon didn't have that much uh shares,
Speaker 1: and he couldn't really influence enough other investors to do it,
Speaker 1: but he had enough for him to be a pain
Speaker 1: in the butt. Yes, So that didn't help because they
Speaker 1: did buy those shares back because they wanted to keep
Speaker 1: their independency from him. They had to lay off six
Speaker 1: hundred and fifty people after closing one of their major
Speaker 1: glassware plants in Lancaster. Yeah, so not a good sign. Yep.
Speaker 1: Then in February of seven, uh, they had to Well,
Speaker 1: there was a long battle for control of of Anchor Hawking, right, Yes,
Speaker 1: what the New York Times calls a five month long
Speaker 1: takeover battle. That's it's crazy to think that this is
Speaker 1: over a company that is primarily known for making glasswear. Yeah,
Speaker 1: so it is. It's just ridiculous. But the person who
Speaker 1: was trying to take over Anchor Hawking was the Newell Company, right,
Speaker 1: who also had similar type products housewares and such, and
Speaker 1: sold it similar locations as Anchor Hawking. And they bought
Speaker 1: the Anchor Hawking Company for three hundred and thirty eight
Speaker 1: point two million dollars in a leverage, hostile takeover. So
Speaker 1: exactly what we were talking about a second ago. They've
Speaker 1: got enough control of shares to say, all right, we
Speaker 1: agreed to this acquisition. Yes, they had started buying shares
Speaker 1: in Acre Hawking in preparation to take the company over
Speaker 1: in the summer of eighty six. So it took, like
Speaker 1: you said, about half a year of just acquiring shares
Speaker 1: to get to the point where they could do this,
Speaker 1: And once they had enough stake in the company, they
Speaker 1: offered to buy the company at thirty four dollars to share,
Speaker 1: and the board of Anchor Hawking said, no, yeah, there's
Speaker 1: too many conditions attached to this, We're not comfortable with it.
Speaker 1: So they revised their offer in January seven, and Anchor
Speaker 1: Hawking agreed. Gotcha. So at this point you had a
Speaker 1: couple of different options that were presented to the shareholders
Speaker 1: in an effort to make this attractive for them to say, yes,
Speaker 1: we were totally on board, which, by the way, the
Speaker 1: first of was the revised offer. They went over the
Speaker 1: CEO of Anchor Hawking's head board members to say, hey,
Speaker 1: we want to buy you, and the board agreed. Right.
Speaker 1: So one of the options they had was that shareholders
Speaker 1: would receive sixteen dollars a share and a sixteen dollar
Speaker 1: principal amount of subordinated debentures, which are not the same thing.
Speaker 1: Is subordinated debentures? Yeah, which I kept wanting to type
Speaker 1: when I was writing these notes. Yeah, but so what
Speaker 1: is subordinated debt. Well, when you have a company and
Speaker 1: you have subordinated debt, that's essentially debt that you pay
Speaker 1: off last. Right, like you have you have various loans
Speaker 1: and debt that you have to pay, you're obligated to
Speaker 1: pay that back. Subordinated debt is the lowest priority stuff,
Speaker 1: and so before you pay off your subordinated debt, you
Speaker 1: have to pay off everything else. So the sixteen dollars
Speaker 1: per share plus sixteen dollars for the subordinated debentures, that's
Speaker 1: essentially saying, once the company has paid off all its
Speaker 1: other debt, then the money that's left over will be
Speaker 1: at least some of it will be paid out in
Speaker 1: the sixteen dollar debentures. So that was option one. So
Speaker 1: if you if you want to cash out, you gotta wait. Yes, yeah,
Speaker 1: you have to wait, and you have to hope that
Speaker 1: there's enough money in this deal to pay off all
Speaker 1: the outstanding debt. Then option two was shareholders would receive
Speaker 1: one share of the holding company's convertible stock with an
Speaker 1: annual dividend of around two dollars a share and a
Speaker 1: liquidation price of thirty two dollars per share, and then
Speaker 1: that could be converted to common stock at a premium.
Speaker 1: So what does that mean. Well, dividends a payout. So
Speaker 1: if you have a stock that pays with dividends, then
Speaker 1: on a regular basis, you get a payout whatever that
Speaker 1: payout is rated for that particular stock. This is determined
Speaker 1: by the company's board of directors, and in the United
Speaker 1: States at least, there's no one rule about how frequently
Speaker 1: these are paid out. Some companies pay out them out quarterly,
Speaker 1: so you'll get one fourth of the amount four times
Speaker 1: a year. Some do it semi annually, some do it annually.
Speaker 1: You know, it all depends on the company. Anyway, it
Speaker 1: means that every year you would get this two dollars
Speaker 1: and a little bit more paid out as a dividend.
Speaker 1: Not very much per share, but if you have a
Speaker 1: lot of shares, it adds up and it's meant to
Speaker 1: be a way to uh encourage people to reinvest in
Speaker 1: the company, right to buy. They take their dividend and
Speaker 1: then they use that to buy more shares in the company.
Speaker 1: Me there are certain companies that became famous for their
Speaker 1: dividends and that was like the reason to own stock
Speaker 1: ge for a very long time. That was the type
Speaker 1: of company they were UM and then common stock is
Speaker 1: the type of stock where if you own common stock,
Speaker 1: you have a vote on company matters. Right, A share
Speaker 1: represents like a vote, So if there are lots and
Speaker 1: lots and lots of shares out there, it doesn't amount
Speaker 1: too much. But if you own thousands of shares, then
Speaker 1: you have a lot of voting power. Um. That's in
Speaker 1: contrast to preferred stock, where it's a share in the company,
Speaker 1: but you don't have any voting rights. But they also
Speaker 1: had a third option they did so what was option three? Well,
Speaker 1: if Anchor Hockey Company shareholders didn't like those options, they
Speaker 1: could choose to defer paying taxes as long as they
Speaker 1: held onto their shares in the new company. Yeah. So
Speaker 1: really what this was was telling shareholders, Hey, we want
Speaker 1: you guys to believe in this and too, you know,
Speaker 1: hold on of these shares. Uh. You know, obviously like
Speaker 1: and attracting shareholders is great because it means new investments
Speaker 1: coming into the company. You don't have to raise as
Speaker 1: much money then because you have influx of of cash
Speaker 1: coming in. So this was all part of the plan
Speaker 1: to try and keep the company stable during this transition. Yes,
Speaker 1: and they renamed the company Anchor Hawking specialty glass classes
Speaker 1: back in the name glasses, back in the name Well,
Speaker 1: it's apropos uh. And the head of Newell, Daniel Ferguson,
Speaker 1: became the head of Anchor Hawking, right. And then the
Speaker 1: first thing he starts to do is look at the
Speaker 1: profitability sheets, right for all the different facilities, Like he
Speaker 1: wasted no time. Yeah. Essentially it's like, hey, if you're
Speaker 1: not if you're not in the black, you're gone. Yeah,
Speaker 1: we're gonna We're gonna kick you to the curb. And
Speaker 1: then for the plants that we're doing well, he would
Speaker 1: look at reinvesting in the plants right to improve their operations,
Speaker 1: which is good. And so he started looking at the
Speaker 1: different stuff that Anchor Hawking was making and decided to
Speaker 1: sort of organize the company around the types of products
Speaker 1: the different places were specializing in. Right, so you would
Speaker 1: have a specific division for one type of product versus another. Yeah,
Speaker 1: and then he fired a whole bunch of executives and
Speaker 1: employees at the hq UH within weeks of this merger's approval,
Speaker 1: and he moved the headquarters to Illinois and all of
Speaker 1: the manufacturing to Lancaster. And this drop sales some for
Speaker 1: Anchor Hawking, So they were they were selling fewer products, yes,
Speaker 1: but the savings that they had made made up for that. Yeah.
Speaker 1: So this is one of those reasons that we see
Speaker 1: companies doing downsizing, right. It's one of those things about
Speaker 1: cutting costs. Sometimes it's absolutely necessary. There are times where
Speaker 1: a company really does have too many employees. Right. More
Speaker 1: frequently we see companies that probably don't have too many employees,
Speaker 1: but they want to make that that quarterly goal. And
Speaker 1: an easy way of doing quote unquote easy way of
Speaker 1: doing it is to cut down on overhead. They have
Speaker 1: more expendable employees than they have expendable cash. Yeah, not
Speaker 1: to say that those employees that laid off are expendable. No,
Speaker 1: there were air quotes around those words. You couldn't see it. Yeah,
Speaker 1: I tried to make them audible. But so what what
Speaker 1: happens now? Well, by Anchor hawkings various divisions, we're contributing
Speaker 1: over four hundred million dollars into Newell's two billion dollars
Speaker 1: of sales, with glass Worth specifically making up a hundred
Speaker 1: and fifty million of that. Okay, so Newell's doing like
Speaker 1: two billion dollars in business and four million of that
Speaker 1: is from Anchor Hawking. Yeah. So again things seem to
Speaker 1: be going pretty well. But you know what, we're not
Speaker 1: done brinking yet. We aren't. We'll we'll tell you what
Speaker 1: happens next right after this break. Okay, So ninety four
Speaker 1: we were talking about how Anchor Hawking was making up
Speaker 1: about four billion dollars of the overall two billion dollars
Speaker 1: in sales that Newell was doing. Just a few years later, though,
Speaker 1: Newell was looking at the possibility of kind of shedding
Speaker 1: Anchor Hawking and getting rid of it entirely. Yes. In
Speaker 1: two thousand one, they were trying to sell Anchor Hawking
Speaker 1: to a company called Libby Glass. I heard some reports
Speaker 1: that Anchor Hawking might have been underperforming, but mainly this
Speaker 1: was because Newell had made a really poorly thought out acquisition.
Speaker 1: Who did who did they buy? They bought rubber Maid,
Speaker 1: And they bought rubber Maid at a time when the
Speaker 1: brand was really struggling. Uh, it was kind of suffering
Speaker 1: from the Walmart effect. And not only did they buy
Speaker 1: it at a time when it was struggling, Uh, they
Speaker 1: very likely overpaid for it. Yes, and then so now
Speaker 1: you've got this this bad investment. You've made paid too
Speaker 1: much for a bad investment. You've got a couple of options, right.
Speaker 1: One is that you you spin it off, you sell
Speaker 1: it off at a loss, and you eat the cost
Speaker 1: of that, which no one really wants to do. Another
Speaker 1: possibility is, well, if we really focus on this business,
Speaker 1: maybe we can turn it around. But if we want
Speaker 1: to really focus on it, we may have to get
Speaker 1: rid of some other stuff in our company in order
Speaker 1: to devote the attention we need to. Yeah, I mean,
Speaker 1: part of the problem is that even the rubber Maid
Speaker 1: and Nah, we're both focusing on homewears to a degree,
Speaker 1: just the sizes of the different corporations didn't match up
Speaker 1: in the marketing strategy and all that. Uh, this this
Speaker 1: week called this merger. The merger from how it was
Speaker 1: kind of a little bit insane. I had to I
Speaker 1: tried to really condense what happened there. But yeah, it's
Speaker 1: it merits a story all by itself. Yes, yes, but
Speaker 1: Newell tried to, as we said, sell off some divisions
Speaker 1: to keep rubber made. Uh. Newell stock values drop in
Speaker 1: two years following the acquisition, and rubber Maid stock drop
Speaker 1: annual had to write off five million dollars in losses
Speaker 1: as goodwill, So selling off Anchor Hawking wouldn't just be
Speaker 1: because they need to focus on rubber Mate, but literally
Speaker 1: because they needed to cover some of this. Yes, uh,
Speaker 1: they sold him off as a or they were trying
Speaker 1: to sell him off as a debt finance buyout. The
Speaker 1: federal government, though, said no, Libby can't buy Anchor Hawking.
Speaker 1: It was too too close to the Libby's business, I assume,
Speaker 1: so it's sort of like an anti competitive thing possibly.
Speaker 1: So instead they were bought by a division of Cerberus
Speaker 1: Capital Management called Global Home Products, along with several other
Speaker 1: divisions of Newell. I just want to say that Cerberus
Speaker 1: Capital Management sounds awfully ominous to me. It really does
Speaker 1: just the game with three headed dogs and stuff, you know.
Speaker 1: All right. So, so the thing though, was that Cerberus
Speaker 1: actually had a reputation for turning companies around. They did,
Speaker 1: they did. Sadly, though, this time they didn't do so
Speaker 1: well on that front because a few short years later,
Speaker 1: in two thousand six, Anchor Hawking and Global Home Products
Speaker 1: filed for Chapter eleven protection. So the company known for
Speaker 1: swooping in and rescuing other companies suddenly needed at least
Speaker 1: this part of it needed rescuing itself. Yes, so Anchor
Speaker 1: Hawking isn't gone. They're not out of the game yet.
Speaker 1: They were sold to Monomoy Capital Partners, which is a
Speaker 1: much smaller investment company, for seventy five million dollars in
Speaker 1: cash and twenty million in liabilities. And at this time,
Speaker 1: Anchor Hawking was making revenues around two million dollars and
Speaker 1: they were still a leading name in glassware right, but
Speaker 1: despite that, they were starting to have some pretty stiff competition,
Speaker 1: largely from glassware that was being imported from other countries
Speaker 1: that was much cheaper. Yeah. For a long time that
Speaker 1: wasn't an issue because glassware is fragile and so you
Speaker 1: don't really want to ship it overseas. But times change. Uh.
Speaker 1: The goal that Monumoy had was to make Anchor Hawking
Speaker 1: a standalone and they did for a while until they
Speaker 1: acquired the Oneita Group in two thousand eleven. If you
Speaker 1: don't know one Needa, they're mostly known for doing like silverware. Yeah,
Speaker 1: And in two thousand twelve they merged Anchor Hawking with
Speaker 1: the one need A Group to create Everywhere Global and
Speaker 1: then that same year they had four million dollars in losses,
Speaker 1: and then the following year or in everything got better, right,
Speaker 1: everything was much better. No, in two thousand thirteen they
Speaker 1: suffered seventeen million dollars in losses. Yes. I looked at
Speaker 1: the end of the year report for Everywhere Global. It
Speaker 1: was not a happy report. No. They became a publicly
Speaker 1: traded company in two thousand thirteen after a bunch of
Speaker 1: financial and regulatory issues. Uh. But most of the company
Speaker 1: was still owned by Monomoy, so when everything went poorly,
Speaker 1: their debt quickly exceeded their credit limits. So then you
Speaker 1: get when the manufacturing plant would actually go through a
Speaker 1: temporary shutdown, right, Yes, after what was called a quote
Speaker 1: unquote dismal first quarter. I mean after a year where
Speaker 1: you've lost almost twenty million dollars. I wonder what their
Speaker 1: definition of dismal is eight million dollars for one quarter. Yes,
Speaker 1: their goal in the shutdown was to to reduce inventory
Speaker 1: and improve liquidity and open up in a month or so.
Speaker 1: It's funny because you would think that just to improve
Speaker 1: liquidity in glassware, you just turned the temperature up, Jonathan,
Speaker 1: I'm sorry. Uh. They said the losses were due to
Speaker 1: a drop in sales. I'm just moving on now. You
Speaker 1: can tell I'm not the one who did these notes
Speaker 1: because I'm the one making terrible jokes. No, please, please,
Speaker 1: it's it's an equal share on the terrible jokes Jonathan again.
Speaker 1: Everywhere said that the losses were due to a dropping
Speaker 1: sales to food service companies and also how utility costs.
Speaker 1: I also want to mention that everywhere in this case
Speaker 1: is every W A R E where, like every table where,
Speaker 1: because when we say everywhere, we mean the company everywhere,
Speaker 1: not that it's not every hair, not that it was
Speaker 1: happening every Yes. Uh, their loss was so large that quarter,
Speaker 1: and I guess overall that they ended up going into
Speaker 1: breach of contract on a two and fifty million dollar
Speaker 1: credit agreement. Yeah, the stock for Everywhere dropped all the
Speaker 1: way down to since a share, which is not great.
Speaker 1: When you dropped down below a dollar, you get delisted. Yes,
Speaker 1: they sought to fix the breach and make their creditors
Speaker 1: happy and negotiate an extension, but by April of two fifteen,
Speaker 1: the Everywhere group entered bankruptcy, the second bankruptcy for Anchor
Speaker 1: Hawking with they At the time, they said they had
Speaker 1: assets of somewhere between a hundred and fifty million dollars.
Speaker 1: That's a pretty wide range, yes, and like abilities of
Speaker 1: somewhere between five million and one million dollars. Okay, well
Speaker 1: that's a bigger range. And their plan was for a
Speaker 1: prepackaged bankruptcy which would give their lenders control of the
Speaker 1: company once they exited in two to three months. Now,
Speaker 1: at this point, the CEO of Everywhere was a guy
Speaker 1: named Sam Solomon, and he said the company wasn't about
Speaker 1: making product, it was about making money. One. I'm pretty
Speaker 1: sure that the workers that the companies weren't super happy
Speaker 1: about that too. They weren't making enough money to cover
Speaker 1: the costs, so they weren't doing such great business either way. Yeah. Well,
Speaker 1: regardless of the lenders decided to be nice and help
Speaker 1: with this bankruptcy. They restructured their debt and the Everywhere
Speaker 1: group left bankruptcy in June of that same year. So
Speaker 1: are we through with all the brink moments? Now? Um?
Speaker 1: There any other brink moments I need to worry about.
Speaker 1: You brought me on a glass roller coaster. I did
Speaker 1: bring you on a last roller coaster. There are no
Speaker 1: more brick moments, but there there's still some movement in
Speaker 1: the company. Let's let's talk about what's happened post bankruptcy emergence. Well,
Speaker 1: first of all, they the company really started focusing on
Speaker 1: reducing their debts something and has actually very vigorously sought
Speaker 1: this goal. In two thousand and sixteen, they brought in
Speaker 1: former Procter and Gamble executive Patrick Lockwood Taylor, and he
Speaker 1: thought that a lot of the losses that Anchor Hawking
Speaker 1: was experiencing, not just because of all these hostile takeovers
Speaker 1: and poor management decisions, was due to the brand losing
Speaker 1: its meaning through all of these changes, and so he
Speaker 1: really wanted to put new emphasis on quality products and
Speaker 1: making them affordable and really bringing back what Anchor Hawking
Speaker 1: was known for. And I guess the one Needed group
Speaker 1: as well. He really wanted to play up community importance
Speaker 1: and all that. But you know, the factory workers, I mean,
Speaker 1: they're obviously not happy through all of this turmoil. Their
Speaker 1: wages are being cut, their benefits are being cut, people
Speaker 1: are getting laid off. In two thou fourteen when the
Speaker 1: shutdown happened, Therefore, one K Contributions got next and I
Speaker 1: don't know if they're back now, but they at least
Speaker 1: weren't back for a good while. So this whole time,
Speaker 1: while people are trying to move paper around to keep
Speaker 1: the company going, the people who are actually responsible for
Speaker 1: making the products are suffering the most. Yes. Yes. And
Speaker 1: the factories of course are going into some amount of
Speaker 1: disrepair because there's all of this focus elsewhere. Again, like
Speaker 1: I said, I don't know if conditions have improved. I
Speaker 1: certainly hope so. Factory work is not. It's so needed,
Speaker 1: but it is not easy. No, it is not the
Speaker 1: glamorous work. No. In two thousand seventeen, the company changed
Speaker 1: their name from Everywhere Global to the One Need a
Speaker 1: Group in an effort to emphasize our long standing leadership
Speaker 1: in the dining and food preparation industry. But they also
Speaker 1: started outsourcing their customer service to Emphasis in India, which
Speaker 1: of course cut more jobs and more costs. Got you,
Speaker 1: so bring us up to date. What's going on over
Speaker 1: the last couple of years. Well, in two thousand eighteen,
Speaker 1: after they got a fifty million dollar capital investment in
Speaker 1: Fusion from one of their largest stockholders, Center Lane Partners,
Speaker 1: they brought back in Mark Ichorn, who we didn't really
Speaker 1: talk about, but he was Anchor Hawking CEO from ninety
Speaker 1: nine in that era of Newell's ownership before they tried
Speaker 1: to sell off again. And he was also everywhere as
Speaker 1: president from two thousand four to two thousand twelve. So
Speaker 1: here's a guy who's been part of this company in
Speaker 1: two separate stints, coming back again, coming back again. So
Speaker 1: I wonder if he just kind of kept getting ousted
Speaker 1: whenever the acquisitions happened. And then it's entirely possible. We've
Speaker 1: seen that sort of stuff happened in other companies before,
Speaker 1: but yeah, I don't think I've ever seen it happened
Speaker 1: twice in the same company. But yeah. In two thousand,
Speaker 1: Groups sold a large portion of their food service division
Speaker 1: to Crown Brands in an effort to focus more on
Speaker 1: selling their glassware and focus on Anchor Hawking, and they
Speaker 1: also opened a showroom at forty one Madisine in New York.
Speaker 1: Two helps strengthen I guess their growth that they're experiencing
Speaker 1: now and kind of to establish themselves in the minds
Speaker 1: of consumers again. I'll have to drop by there next
Speaker 1: time I'm in New York. I go there fairly frequently now,
Speaker 1: so you know, there's it's kind of hard. Like we
Speaker 1: often like to sum up our episodes with lessons, this
Speaker 1: one's a little tricky just because, uh, there were so
Speaker 1: many things that happened within the entire history of this company,
Speaker 1: and so many times, like, there were so many different threats,
Speaker 1: some external, some internal, that this company experienced throughout its
Speaker 1: entire history. I guess, you know, the first thing we
Speaker 1: can say is, if you're working in a highly flammable media,
Speaker 1: make your factories fireproof as best you can. But I mean, also,
Speaker 1: a lot of this was just hostile takeover, so you
Speaker 1: can try to fight it. But yeah, it's uh, I mean,
Speaker 1: a lot of this is from that culture of the
Speaker 1: eighties where the hostile takeover was like a a prime
Speaker 1: methodology for getting control of a company, and since those days,
Speaker 1: the practice has largely fallen out of favor. It's not
Speaker 1: that it can never happen again, but there were a
Speaker 1: lot of high profile hostile takeovers that ended very poorly
Speaker 1: for lots of people. So it's not something you see
Speaker 1: nearly as frequently as you did in the eighties now.
Speaker 1: But you know, it's not surprising to have a bunch
Speaker 1: of bankruptcies when you have three corporate owners in fifteen years. Yeah. Yeah,
Speaker 1: and and again it's we should also mention this in
Speaker 1: no way was a reflection on the quality of the products. Yeah.
Speaker 1: The the issue with the company was not their products
Speaker 1: or even failing to Yeah, they were, they were adapting
Speaker 1: to the market. They were, but it was often because
Speaker 1: whatever parent company had control of them at the time
Speaker 1: was dealing with issues not directly to Anchor Hawking and
Speaker 1: then having to leverage Anchor Hawking in order to deal
Speaker 1: with those issues. Yeah. Now, I wonder if things would
Speaker 1: have turned out differently had they not fought Carl Icon
Speaker 1: on his original move to take over the company. It's
Speaker 1: hard to say. I mean, you know, there's it's impossible
Speaker 1: unless we were able to travel to some sort of
Speaker 1: parallel universe. And uh, I got other plans for this
Speaker 1: weekend too, But I want to end this episode with
Speaker 1: one fun fact. In the nineteen fifties, Anchor Hawking helped
Speaker 1: sponsor the late night show Broadway Open House on NBC.
Speaker 1: So in a lot of the articles I read, they're
Speaker 1: actually credited with helping with the invention of late night television. Interesting. Yeah, yeah,
Speaker 1: one of these days we'll have to do like an
Speaker 1: episode about some of the earliest sponsors of things like
Speaker 1: radio and TV because those were companies that if it
Speaker 1: weren't for those companies, we never would have had radio
Speaker 1: and television programming. It was only because of their money
Speaker 1: that we were able to even get that stuff. But
Speaker 1: that's a topic for a differ for an episode. We've
Speaker 1: got a lot of plans for some interesting ideas for
Speaker 1: upcoming episodes, but we also continue to get amazing suggestions
Speaker 1: from you guys and keep it up because if it
Speaker 1: weren't for that suggestion, I probably never would have learned
Speaker 1: anything about anchor hawking, and it was a fascinating story. Yeah,
Speaker 1: I agree. If you have suggestions, you can email us
Speaker 1: at feedback at the Brink podcast dot show yep, and
Speaker 1: you can visit our website that's the Brink podcast dot Show.
Speaker 1: You're going to find an archive of all of our
Speaker 1: past episodes there. You also find information about us. Yeah. Also,
Speaker 1: if you like the show, tell your friends about it,
Speaker 1: give us a good review on iTunes or whatever catching
Speaker 1: app you use. We really appreciate it. Yeah. Now, word
Speaker 1: of mouth is one of the most powerful ways to
Speaker 1: spread the love and get more more listeners, and the
Speaker 1: more listeners we get, the more suggestions we get, and frankly,
Speaker 1: the easier my job, so you know, from a selfish
Speaker 1: point of view, do it anyhow, Until next time, I'm
Speaker 1: Ariel Austin and I'm Jonathan Strickland. Business on the Brink
Speaker 1: is a production of I Heart Radio and How Stuff Works.
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