American Cast Iron Pipe Company

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American Cast Iron Pipe Company

1501 31st Avenue North
Birmingham, Alabama 35207
U.S.A.
Telephone: (205) 325-7701
Fax: (205) 325-1942
Web site: http://www.acipco.com

Private Company
Incorporated: 1905
Employees: 2,300 (2001)
Sales: $600 million (2000)
NAIC: 331511 Iron Foundries; 331111 Iron and Steel Mills; 331528 Other Nonferrous Foundries; 332313 Plate Work Manufacturing; 332911 Industrial Valve Manufacturing; 332919 Other Metal Valve and Pipe Fitting Manufacturing

American Cast Iron Pipe Company (ACIPCO), with 242,000 square meters of roofed production space and a daily production of 1,800 metric tons, is the largest individual iron pipe casting plant in the world. One of Birmingham’s biggest companies and largest employers, a major presence in the city’s business community, and the only pipe manufacturing company ever to be named by Fortune magazine as one of the 100 best companies to work for in America, ACIPCO is clearly exceptional in a number of ways. Unlike most industrial companies, ACIPCO is privately held; in 1922, the company placed all of its stock into a beneficial trust for its employees. And, the company’s tradition of putting its employees first has been maintained to the present day: four elected company employees serve on the board of directors; ACIPCO boasts one of the oldest employee suggestion systems in the U.S.; the company provides on-site training for its employees, as well as a tuition reimbursement program; and ACIPCO’s health benefits program, which includes on-site medical and dental care, is one of the most progressive in the country.

ACIPCO is also known for innovation and for diversity in its product lines. The company was instrumental in developing ductile iron and was the first to introduce it commercially in 1955. Although the company name reflects its initial product—cast iron pipe—ACIPCO has progressed well beyond its initial product line and has boasted an international customer base since it began exporting its products in 1915. Today, its products include steel and iron pipe of various kinds for a variety of applications, fire hydrants, valves, pumps, and fabricated castings. In 2002, for the fifth year in a row, the company was named to Fortune magazine’s list of 100 Best Companies to Work For in America.

Steeltown, Alabama

Founded in 1905, American Cast Iron Pipe Company held its principles of good employer-employee relations and team cooperation from the very beginning, making it an unusual example among industrial companies. John J. Eagan, company founder and ACIPCO’s first president, founded his company on the then-novel principle that because employees make up a company, a company should take good care of its employees. In 1917, for instance, ACIPCO instituted a pension fund for its employees, a highly unusual practice at the time. Eagan is quoted in the 1993 book The 100 Best Companies to Work for in America as saying, “Industry has no right to take a man, use the best years of his life, and as old age approaches, to throw him out and employ young men in his place. It is one of the real joys to see men who otherwise would be dependent on their families receiving monthly through this fund their own money which they have earned and which has been set aside in this fund.”

Likewise, ACIPCO was from the beginning a privately held company—and, upon Eagan’s death in 1924 remained so, in the hands of its employees. All of the company stock had been placed in a trust in 1922, and ever after the trust has paid dividends to all employees based on company profitability. Eagan also left behind a corporate hierarchy that was unique to the pipe-casting industry, including a 12-employee elected board of operatives designed to facilitate communication between workers and management. Frequent meetings with managers helped to ensure that worker concerns were addressed promptly.

A Tradition of Innovation

From its inception, ACIPCO was at the forefront of the pipe-casting industry, an industry that dates back to the early 14th century with the introduction of cast iron cannons in Europe. In the 1920s, the company helped pioneer the development of centrifugal pipe casting, where a mold is spun about its horizontal axis while the metal is poured into the mold. The rotation generates centrifugal force, which causes the liquid metal to distribute evenly, forming a pipe of uniform thickness. Centrifugal casting remained a major element in ACIPCO’s pipe manufacturing process 80 years later, incorporating new developments in pipe design and production along the way. Centrifugal casting was invented in 1918 by Dimitri Sensaud deLavaud, a Brazilian after whom the process was named. DeLavaud’s invention eliminated the need for a central core in the pipe mold, and the mold was water-cooled, allowing for a high rate of repeated use. The deLavaud process is still used today by ACIPCO and other casting companies.

The invention of ductile iron in 1948 revolutionized the pipe-casting industry, and once again ACIPCO adopted the new technology early, having played a continuing role in its development and possible applications. The term “ductile” as applied to metal refers to a metal’s capacity for being hammered or drawn to extreme thinness. Ductile iron combined the strength and durability of steel with cast iron’s resistance to corrosion, making for a metal that was suitable for a wide variety of applications, especially the movement of water and sewage. Ductile iron is annealed, a process that softens the metal and makes it less brittle, to increase its strength and flexibility. Over the years, ACIPCO applied these manufacturing principles to steel pipe, fire hydrants, valves, and spiralweld pipe.

The 1960s ushered in an era of prosperity for the foundry industry in general, and ACIPCO was no exception, despite the social turbulence in the U.S. in general and Birmingham in particular. Although the country experienced a net loss of metal-casting facilities, those facilities that remained or that were newly built tended to remain open. This was partly due to increased demand from the U.S. military for cast-metal products, especially ammunition. It was also a period of general advancement in areas of technology and production; ACIPCO’s steel pipe division began operations in 1963. William G. Gude, the editor of Foundry magazine, commented in a 1966 issue, “The most modern foundry built today is likely to be obsolete to a large extent 20 years from now, if not sooner. Conventional materials and production methods can be superseded almost overnight, and if the newer developments offer a major economic advantage, the implications are obvious.” Additional pressure was brought to bear in the 1970s by increasing environmental concerns related to industrial production. Foundry magazine noted in February 1970: “It’s becoming rapidly evident that control of air and water pollution is going to be the big social (and political) issue of the ‘70s, surpassing Vietnam and civil rights.” In 1971, Birmingham was the first U.S. city to shut down its industrial plants in response to the mounting pollution crisis.

ACIPCO was also an early adopter of computer-numerically-controlled (CNC) technology in its manufacturing process, a technology that allows for extremely precise work. Jerry Edwards, the president and owner of the highly-reputed Jordan Machine Company in Alabama from 1979 until his retirement, first encountered CNC technology during his 26-year tenure at ACIPCO, and applied it at his new company. He also brought to Jordan a couple of other innovations from ACIPCO: upon his retirement in the mid-1990s, 85 percent of the company stock was transferred to employee ownership, an arrangement similar to that at Edwards’ former employer.

ACIPCO continued to develop and take advantage of new technologies as the century closed. In 1999, the company announced the formation of a new division, American SpiralWeld Pipe Company. The purpose of the new division was to manufacture spiral-welded steel pipe for water, wastewater, and other applications. ACIPCO began construction of a new facility in South Carolina, with production equipment by Pacific Roller Die, a leading manufacturer of pipe-production technology. Production at the brand-new 289,000-square-foot facility began in September of 2000. Vice President of Operations Don Gray, quoted in a company press release, stated: “As the U.S. population increases, we’re seeing a rise in demand for larger diameter pipe to serve the water, wastewater, hydroelectric, and power generation industries. Our spiral-welded steel pipe, which can be manufactured up to 12 feet in diameter, will meet that demand.” The process, where long strips of steel are coiled in a spiral formation, then welded together, can produce larger-diameter pipes than older methods.

However, ACIPCO did not neglect its older industries. It created a lining for ductile iron sewer pipe that incorporated epoxy and polythylene, two materials that were previously incompatible. The Water Environment Federation awarded ACIPCO an Innovative Technology Award in 2001 for this development. The company also built a Contiarc demonstration furnace at its Birmingham plant in the 1990s. The Contiarc furnace allows more efficient cast-iron production. As it entered the new millennium and neared its centennial anniversary, ACIPCO continued a tradition of close association between its research and development staff and its production, engineering, and sales teams to stay at the forefront of the industry.

Environmental Concerns

At the turn of the millennium, three major concerns faced the metalworking industry, and ACIPCO was no exception: the acquisition and retention of qualified employees, the impact of the industry on the environment, and the increasingly global state of the industry itself.

Company Perspectives:

American Cast Iron Pipe Company (ACIPCO) is a privately held company and operates as a beneficial trust with both employees and customers as beneficiaries. ACIPCO’s founder, John J. Eagan, developed a unique plan of industrial cooperation under which the company operates today. The employees work together as a team under the guiding principle of commitment to quality and service. ACIPCO’s corporate philosophy is to respond to customer demand with premium quality products shipped in a timely manner at a fair and competitive price.

ACIPCO had the distinction of being the only pipe-casting company ever to be named to Fortune magazine’s list of the “Best 100 Companies to Work For,” let alone making the list five years in a row. In the 1993 book of the same title, authors Levering and Moskowitz observed that the company’s on-site medical facility, which treated retirees and relatives as well as current employees, was one of the best in the city of Birmingham. The facility was part of one of the most comprehensive—as well as expensive—health-care plans in the U.S., and was designed by company employees. ACIPCO also preserved the open-relationship principles of its corporate hierarchy; as CEO Van L. Richey put it in a June 9, 2000 article in the Birmingham Business Journal, “In manufacturing, [the slogan] is communication, communication, communication.” He went on to describe the many points of contact between himself and all levels of the company that he had maintained or introduced. In 2000, Richey was named Executive of the Year by the National Management Association; in an interview with Manage magazine, published in August 2000, he cited some of the reasons for his company’s success and discussed the importance of hiring and retaining qualified employees: “With an employee turnover of less than one-half of 1 %, we have to struggle to get the right employee proper training.” He also said, “We know there is a direct relationship between successful companies and those that emphasize training. Therefore, ACIPCO has eight classrooms teaching a number of skills, including English, math, and computer labs.” Fortune’s 2002 report on the 100 best companies to work for in the U.S. found that ACIPCO employees averaged 76 hours of training per year.

The emphasis on communication manifested in sometimes surprising ways. In 1997, ACIPCO created the Threat Response Team, the purpose of which was to prevent violence in the workplace. The team’s method involved the employees themselves, who were taught to recognize the indicators of potentially violent behavior, and to alert the team. ACIPCO human resources director Leann Barr told the Birmingham Business Journal in April 2000 that “Safety is an essential part of the workplace. Just as we would not allow an employee melting iron to work without safety glasses, a hard hat and flame-retardant clothing, today our Threat Response Team also works to ensure that we have a safer place to work.” And in 2001, ACPICO paid a $5 million settlement to 346 male employees who filed a discrimination suit in 1986. The suit claimed that the company’s health insurance policy did not cover employees’ children who did not live with employees. The company changed its policy in 1994 in response to a change in federal regulations.

ACIPCO was also responsive to outside influences on its industry, particularly in the areas of environmentalism and globalization. In 1999, the company began an expansion at its main facility in Birmingham with a price tag of $70 million. The purpose of the expansion was to provide space for an electrically fired furnace that would help the ACIPCO comply with new anti-pollution legislation. The company’s older, coke-fired furnace had been installed in the 1970s and would, within another decade, require modifications to stay compliant with the law. CEO Van Richey told the Birmingham Business Journal in December 1999: “When you have equipment that old, it starts costing a lot more in maintenance. But we also wanted to get ahead of the power curve on pollution control.” Vice president and chief engineer James Woods added: “We see coke being less available in the future. Plus, the new furnace will be more versatile.”

Another challenge the company had to face was increasing competition from foreign manufacturers. In 2001, the American Steel Pipe Division of ACIPCO joined Berg Steel Pipe Corporation and Stupp Corporation in petitioning the U.S. International Trade Commission (ITC) regarding Japanese and Mexican imports of steel pipe. The allegation was that, by selling at less than fair market value, the imports had damaged the domestic industry. The low prices of the imports stemmed in part from the 1997 economic crisis in southeast Asia; over the following three years, 25 American companies filed for bankruptcy protection and more than 27,000 steel workers lost their jobs. Early in 2002, the ITC approved new import tariffs on Japanese large-diameter steel pipe; an article in the January 2002 issue of Underground Construction predicted a subsequent rise in prices.

Despite the general economic downturn in the U.S. at the turn of the millennium, ACIPCO was well positioned to weather whatever storms might lie ahead. In 2001, the company enjoyed revenues of over $600 million and remained one of the Birmingham area’s largest employers. As Vice President and Works Manager Arthur Edge commented at an American Foundrymen’s Society conference in May 2000, “Driving the cost down—that’s the name of the game. Not so much expansion, but remaining competitive.”

Key Dates:

1905:: American Cast Iron Pipe Company (ACIPCO) founded by John J. Eagan in Birmingham, Alabama.
1915:: ACIPCO begins exporting pipe products.
1917:: ACIPCO institutes pension plan.
1922:: Company places all of its stock into a beneficial trust for ACIPCO employees.
1924:: Founder and company president John J. Eagan dies.
1948:: Inception of ductile iron.
1955:: Commercial introduction of ductile iron pipe by ACIPCO.
1963:: American Steel Pipe division founded.
1971:: Birmingham is the first U.S. city in which industrial plants are closed due to air pollution.
1990:: Company wins AFS Environmental Affairs Service award.
1999:: Company begins installation of new furnace to meet pollution standards. American SpiralWeld division founded.
2000:: President and CEO Van L. Richey named National Management Association Executive of the Year.
2001:: Company wins Innovative Technology Award from Water Environment Foundation.
2002:: For the fifth year in a row, the company is named to Fortune magazine’s list of 100 Best Companies to Work For in America.