Badger Meter, Inc.

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Badger Meter, Inc.

4545 West Brown Deer Road
P. O. Box 23099
Milwaukee, Wisconsin 53223-0099
U.S.A.
(414) 355-0400
Fax: (414) 371-5956
Web site: http://www.badgermeter.com

Public Company
incorporated: 1905
Employees: 940
Sales: $116 million (1996)
Stock Exchanges: American
SICs: 3824 Water & Gas Meters; 3823 Industrial Process Control Flow Meters & Instruments; 7389 Remote Meter Readers; 3491 Industrial Valves; 3492 Control Valves

Badger Meter, Inc. was born on the afternoon of March 8, 1905, when four Milwaukee businessmen incorporated the Badger Meter Manufacturing Company to fabricate frost-proof water meters for measuring water consumption in Midwestern homes. Badger’s innovation was a meter with a soft, replaceable cast-iron bottom plate that ruptured when the water in the meter froze, thus relieving pressure on the meter and safeguarding its mechanical parts. Since frozen water pipes were an all too common occurrence in Wisconsin’s bitter winters, Badger found a ready market and by 1910 was selling close to 3,700 eight-dollar meters a year. Under cofounder and now president John Leach, Badger initially operated out of a two-story machine shop in Milwaukee’s downtown under the motto “Accuracy Durability Simplicity Capacity.”

“Measuring the Water of the World”: 1905-38

Within 13 years of its founding, Badger’s annual production had climbed to 10,000 meters and it had expanded into bronze as well as cast iron and had added disc, turbine, and compound water meters to its line. With only 12 employees, Badger was forced to stay flexible to meet surges in demand. When an order for 200 or more meters came in, the entire company pulled weekend shifts, stopping only for a lunchtime “pail” of beer and a free dinner on Leach’s tab at the end of the day. In 1919 Badger moved to a new facility that included the company’s first foundry. Now able to fabricate its own metal components, Badger was soon taking on job shop work for other Milwaukee manufacturers, including bronze castings for A. O. Smith Corporation and auto hubs and fingers for Milwaukee Automotive Supply. A year later it transformed itself into a national company by appointing sales agents for Chicago, Kansas City, Brooklyn, Denver, and Portland.

In 1924 Leach was replaced as president by Charles Wright, who would guide the company for the next three decades. In the Roaring Twenties, Badger’s business boomed as U.S. municipalities made expensive upgrades of their water department equipment. In 1925, for example, the City of Chicago signed a mammoth deal with Badger to produce 400 meters a day. Buoyed by such orders, Badger’s earnings averaged almost $100,000 a year between 1924 and 1929, and before the Great Stock Market Crash of 1929, it declared a 300 percent stock dividend on its ample $365,000 surplus. Like many American companies, the Great Depression devastated Badger’s business, forcing it to lower prices to maintain sales levels. Meters that sold for $7.75 in 1922 were discounted to $5 in 1932, and the average hourly wages of Badger’s workers were almost halved, from 64 cents to 33 cents an hour. Badger extended long-term credit to its customers, slashed its workforce, and by 1937 was forced to ask its stockholders to relinquish the $165,000 in unpaid dividends still owed them.

On the brink of insolvency, the company was saved only by an order for 30,000 water meters from the government of Mexico City in 1933. In 1937, Franklin Roosevelt’s New Deal gave a further boost to Badger’s recovery by granting U.S. municipalities funds to install new water works. With steady sales to customers in Central and South America, by 1937 Badger’s workforce, which had unionized the year before, had climbed to more than 200. Badger’s worst days were behind it.

Bomb Fuses for the War Effort: 1939-51

In 1939 Badger moved to solidify its business by expanding from water meters to grease and oil gun meters, which were used to measure the amount of motor oil and lubrication consumed in U.S. service stations. With America’s entry into World War II, Badger Meter was conscripted by the federal government to apply its skills in manufacturing the clocklike mechanisms inside its water meters to the fabrication of bomb fuses. Fuse production—seven million in all were made—soon accounted for 95 percent of its total output, and in the space of a few months in 1942 Badger’s employment more than doubled to 550. Like many U.S. companies during the war years, women came to comprise an ever larger portion of Badger’s workforce, and the blue, all-cotton dresses they wore to prevent the buildup of static around the electrically sensitive fuses soon earned them the nickname Badger’s “blue belles.”

Despite the incredible growth brought on by the war, Badger’s physical manufacturing plant entered the postwar period uncomfortably ill-equipped. When President Wright’s sons returned from the war to learn their father’s trade they found a company with no research function, no tool shop, and an antiquated machine room that relied on a single motor to power all the plant’s machines. What is more, Badger was spending its money inefficiently. Rather than make the registers for its meters in house, it paid an outside firm to produce them, and by the late 1940s was also paying out $120,000 a year to an outside machine shop to make its tools and dies.

While Badger had been churning out bomb fuses, the American residential market’s need for new water meters had been put on hold. Because of that pent-up demand and the housing boom unleashed by the demobilization of America’s armed forces, Badger’s sales vaulted forward in the late 1940s and 1950s. In 1946 it further diversified its product line by introducing the GMOP meter, a grease and oil-measuring meter that soon became the standard for U.S. makers of lubricating equipment. The outbreak of the Korean War in 1950 returned Badger to the bomb fuse-making business, which it continued to participate in until—21 million fuses later—it abandoned the munitions business for good in 1960.

Diversification Under James Wright: 1952-59

When Charles Wright died in 1952, his son James became Badger’s third president and promptly began stepping up Badger’s product diversification. He created the company’s first new product R&D and testing department in 1953 and added new products through the acquisition of other companies throughout the 1950s. In 1954, for example, Badger acquired Precision Products of Oklahoma, a manufacturer of detonating mechanisms for the oil industry and timing components for parking meters and other instruments. Three years later it bought Counter and Control Corporation (CCC) of Milwaukee, a producer of electromechanical devices for counting shaft revolutions, lever strokes, and electrical impulses. In 1961, Wright merged Precision and CCC to form a Tulsa-based subsidiary named Precon. Finally, in 1958 Badger acquired Measure-Rite Inc. of California, a maker of propeller-driven flow and irrigation meters, which became a new Badger division.

In 1954 Wright had built a new state-of-the-art nonferrous foundry in Fall River, Wisconsin, 70 miles west of Milwaukee, that he hoped would further diversify Badger’s business by enabling it to take on other manufacturers’ machining jobs. Badger’s wartime experience mass producing bomb fuses for the government did not translate to the commercial market, however. Rather than the large-run orders of a few parts that Wright had expected, Fall River was inundated with short-run orders for an enormous variety of products, which it was unable to juggle profitably. Moreover, to grow Fall River had to sell to Badger’s competitors, who were unexcited by the prospect of enriching the subsidiary of an archrival. In 1959, Wright therefore sold Fall River to a group led by his brother William, enabling the facility to pursue new business while continuing to supply Badger with most of the castings it would use for the next four decades.

The South and Central American marketplace that had rescued Badger in the Depression years had virtually vanished in the years that followed as European meter companies gobbled up Badger’s customers. In 1953 Badger countered by establishing a wholly owned subsidiary in Mexico City named Medidores Azteca, which in 1956 began to manufacture multi-jet water meters for the Mexican market. In 1966 Badger expanded into South America with a velocity meter manufacturing plant in Peru and then later established a subsidiary in Ecuador. Currency fluctuations and general South American economic uncertainty, however, convinced the company to sell off its interest in these firms in 1978. But Badger’s 25-year-old Mexican connection remained strong, and in 1980 it opened a manufacturing plant for a new line of water meters in the Mexican border town of Nogales.

In 1961 Badger had formed an international division to manage all foreign sales, which by 1970 were accounting for one third of Badger’s total residential sales. In 1967 it acquired W. Gottlob Volz, a Stuttgart-based meter maker that unfortunately ranked at the bottom of Germany’s water meter industry. It stubbornly remained there, and in 1978 Badger was forced to sell it off. In 1973 Badger used Stuttgart as the base for a new European sales arm, Badger Meter Europe, which in 1983 became a full-fledged business unit that performed order processing, administrative functions, and valve and lube meter assembly and testing. By the mid-1990s fully 20 percent of Badger’s annual sales went to overseas customers, and the opening of a new Singapore office in 1997 announced its intention to lift its international sales even higher.

Company Perspectives:

Badger Meter, Inc., an independent company, will grow as a leading worldwide marketer and manufacturer of flow measurement and control products. Through the use of new technologies and product development, dedication to our customers and employees, commitment to improvement and innovation, we will continuously pursue superior performance in customer service, quality, and financial results.

The Easy-Read Meter and New Markets: 1960-69

Fifty-five years after its founding, residential water meters remained Badger’s bread and butter. By the 1960s, however, the long housing boom of the postwar years was beginning to peter out, and new rivals like Rockwell and Neptune were threatening Badger’s preeminence in its core business. Jim Wright’s multi-pronged diversification efforts had been aimed at relieving Badger of its dependence on the home water meter market, and throughout the 1960s Badger’s product line was extended by new stainless steel meters for measuring highly corrosive liquids such as fertilizers and acids, turbine-type meters for water softening equipment manufacturers, and a variety of other technologically sophisticated industrial meters. Moreover, early in the decade Badger engineers received development contracts from federal agencies to apply the noninvasive measuring technology known as nuclear magnetic resonance to the measurement of fluid flow. By 1968 this had culminated in the unveiling of a magnetic resonance flowmeter (MRF) that could measure the flow of chemicals inside a pipe without coming into contact with the fluid, thus improving the accuracy of the measurement.

The introduction of the Easy-Read water meter in 1960 signaled that Badger was not prepared to surrender the residential niche it had created in 1905. The Easy-Read used a magnetic coupling rather than the traditional mechanical coupling to make possible the creation of a sealed gear train and register unit. This improved measurement accuracy to 98 percent, eliminated water leakage into the meter, and solved the problem of fogging, which made the meter’s register all but impossible to read. Because more than half of all water meters were situated outside in poorly lit areas, the Easy-Read’s more legible register dial and rotating-digit counter also made it easier for meter readers to record water consumption data. Badger improved the Easy-Read still further in 1963 when it introduced the Read-O-Matic, a register that could be used with Easy-Read to read the meter’s data remotely. Since the Read-O-Matic could be installed outside, it now became possible for meter readers to collect consumption data when homeowners were away.

Fueled by Easy-Read’s success, Badger embarked on a new cycle of acquisition in the 1960s, extending its reach into increasingly high-tech applications of fluid-measuring technology. In 1963 it bought Technicon Instruments of California, a maker of chart recorders for water and sewage plants (folded into Badger’s Precon operation); in 1964 it acquired Research Controls of Tulsa, a producer of small control valves for research, pilot plant, and commercial process applications; and in the same year it absorbed Noller Control Systems, a California manufacturer of telemetering and supervisory control systems.

The Noller purchase was Badger’s first acquisition outside the meter industry and reflected Wright’s desire to penetrate the water and sewage plant market by offering not only meters but the electronic equipment that managed them. Badger’s purchase of Everson Manufacturing of Chicago, a maker of the chlorin-ators used in water treatment plants, sewage systems, and swimming pools, further solidified its presence in the water treatment and sewage market (it was eventually sold in 1982). Finally, in 1969 Badger founded a new subsidiary named Grafton Plastics (based in the Milwaukee suburb of Grafton) to supply the meter chambers, gears, number wheels, and other plastic components Badger had traditionally purchased from outside vendors.

Retrenching and Restructuring: 1969-74

Badger’s transformation into a high-tech fluid-measurement firm came to a head in 1966 when it formed the Systems Division out of the supervisory control and communications management systems it had gained in the purchase of Noller Control Systems two years before. Badger was soon supplying computerized pollution control and water control and telemetering systems to water utilities and sanitary districts and then ventured even further afield with contracts to provide data terminals for such customers as stock exchanges and universities. Before the term core competency had become a corporate synonym for staying true to one’s roots, Badger had realized as early as 1969 that it could no longer follow where its recent speculative high-tech ventures were leading it without jeopardizing the company’s very profitability. In 1960 it therefore merged the Systems Division into Noller’s Control System Division and pulled back from projects that would have led it into large computer systems and medical data collection systems.

In 1971, Wright listed Badger (now known simply as Badger Meter) on the American Stock Exchange and reorganized it into four semi-independent business groups: Flow Products, comprising the company’s Milwaukee and Grafton operations; Environmental and Electronic Products, encompassing its Oklahoma Precision Products and California Electronics divisions; International, which consolidated all its foreign operations; and Corporate Administration, containing its corporate administrative functions. Then, after 22 years at Badger’s helm, Wright relinquished the presidency to company veteran Robert Pfeffer in 1974. The pell-mell expansion of the 1960s had left Badger a profitable but financially leaky enterprise, and Pfeffer sought to complete the reorganization Wright had begun by trying to determine, as he later recalled, “where all the money was going.” The U.S. economy refused to cooperate, however, and the recession of the mid-1970s brought skyrocketing copper prices, high interest rates and inflation, and intensified competition in the meter industry. Badger’s sales kept growing but earnings swung wildly, and the company was forced to forego dividend payments to shareholders.

“Recordall” and Success in Industrial Products: 1975-82

James Wright’s diversification efforts two decades before had expanded the potential sources of Badger’s revenues, and in 1975, for the first time in its history, more than half of the company’s profits came from products other than residential water heaters. When housing starts began to pick up in the late 1970s, Badger was ready with a new generation of home meters, christened Recordall. Like the Easy-Read before it, the Recordall promised to revolutionize the home water meter. It offered improved measuring accuracy for water consumption at any flow rate (a selling point to utilities supporting water conservation programs), a broader range of sizes for utilities to choose from, and an all-thermoplastic external design—which enabled Badger to sidestep high copper prices and give utilities a noncorroding meter to market to customers. But consumers never overcame their instinctive feeling that to be durable and reliable water meters had to be heavy and metal, and Badger eventually began to replace its plastic Recordall meters with traditional copper versions.

Badger’s efforts to establish itself in the industrial flow measurement industry in the 1960s began bearing fruit in the 1970s when sales of industrial flowmeters took off, doubling between 1973 and 1978 alone. It established a separate division for its industrial products in 1979 and enjoyed increased sales to chemical and food processors, concrete batching plants, and suppliers of auto lubrication systems. Its waste and water treatment flow and control products were also making inroads, fueled by the development of ultrasonic flowmeter (UF) technology by Badger’s Envirolab unit. UF technology was uniquely capable of giving accurate measurements of fluid flow in sewage, and in 1972 Badger scored a major coup when its UF meter was chosen to measure the surging water flow in California’s earthquake-damaged Van Norman dam. When President Nixon cut funding for the Environmental Protection Agency in 1973, however, Badger had to refocus its precision flowmeter marketing efforts from the wastewater control industry to the petrochemical and chemical industries. With company sales at $58.5 million, in 1979 Pfeffer stepped down as Badger’s president after less than seven years at the helm.

The Forbes Era: 1982-93

The recession of 1981-82 struck Midwestern manufacturing firms especially hard, and Badger Meter was no exception. Faced with flagging demand, in 1982 new CEO James Forbes was forced to implement a wage freeze, a reduction in benefits, forced early retirements, and an employee downsizing program that reduced the company’s workforce from 1,300 to 960. Forbes also developed a new corporate mission that emphasized improved financial strength and market share, a new commitment to customer satisfaction and state-of-the-art technology, and a high-tech flow measurement technology image to replace Badger’s historical reputation as a mere water meter maker. He also implemented an employee ownership program that placed almost a quarter of the firm’s stock in the hands of its employees, with the rest held by its management, public shareholders, and the Wright family.

Because Badger was strapped for cash and had already incorporated the telemetering technology of its California-based Electronics Division into its knowledge base, Forbes also felt he could afford to cut loose that division, selling it in 1983 to General Signal. The same year, he divided Badger’s products into two divisions organized by the markets they sold to rather than the products they manufactured, thus eliminating redundant sales efforts. The new Utility Division would encompass Badger’s waste and wastewater and natural gas utilities customers, and the Industrial Division would comprise Badger’s industrial and commercial customers, including the energy, petroleum, food and beverage, pharmaceutical, chemical, process waters, and concrete meter markets. Moreover, a new Operations Division would contain all Badger’s Milwaukee- and Tulsa-based machined and engineering products, and the company’s International Division would be broken up and integrated in the new Utility and Industrial divisions.

Between 1984 and 1994, Badger had spent more than $60 million on product development, plant and equipment, and systems and quality programs. One byproduct of this was the coming of age of automatic meter reading (AMR) technology, which Badger had first experimented with in the late 1960s. Advances in computer technology were finally making AMR cost-effective, and in 1986 Badger unveiled an inbound phone-based AMR system called ACCESSplus that used phone lines to call in meter readings at preset times and software to download them into utilities’ billing systems. Four years later Badger signed an agreement to license ACCESSplus to American Meter in exchange for the right to incorporate American’s radio-based TRACE meter reading technology into its own meter products. In 1993 Badger won a $15 million contract to supply TRACE-equipped Recordall meters to Mexico City, the world’s largest residential water meter project at that time. In 1996, Badger was also retained by the City of Milwaukee to install AMR technology in all the city’s water meters, and Badger closed a contract to become a leading supplier to the largest AMR project in the United States, under construction in Philadelphia.

Throughout the 1980s and 1990s Badger continued its pursuit of the cutting-edge flow measurement technology it had begun in the 1960s, unveiling a microprocessor-based ultrasonic flowmeter called the Compu-Sonic in 1985, a concrete admixture dispensing system the same year, an advanced flow meter for the natural gas industry (christened Tru-Therm) in 1993, and the Q-Tracker, a portable monitor for measuring infiltration and inflow in sewer systems. Not all its high-tech ventures bore fruit, however. Its purchase of Precision Measurement Inc. of Dallas in 1985 came to little when its leading technology, a calorimeter for measuring the heat-producing capability of natural gas in gas pipelines, proved impractical.

Positioning for a New Century: 1994-97

Forbes also led Badger aggressively into the increasingly popular quality management and manufacturing reengineering movements that swept through American corporations in the 1980s. Badger embraced continuous flow manufacturing, a technique that promised to improve productivity and manufacturing efficiency by seamlessly linking the previously isolated steps of the manufacturing process; purchased computer-aided design, flexible manufacturing, and computer-controlled machining systems; implemented a team-based approach throughout its corporate management structure; and installed a multimillion-dollar enterprise management software system that combined all its business operations into an integrated data network. By the mid-1990s, two hundred Badger workers could produce twice the number of meters that 600 workers produced only 12 years earlier.

By 1995, Badger had broken the $100 million level in sales and set the goal of reaching $200 million in sales by the turn of the century. Competing against mammoth instrument firms like Rockwell, Schlumberger, Asea Brown Boveri, and Emerson Electric, however, Badger had to remain a nimble, cutting-edge technology producer to preserve its market share. Producing superior measurement products was no longer enough; Forbes had therefore positioned Badger as a provider of interfaces between other firms’ meter-reading technologies and its own meter products and opened the door to connectivity partnerships with such firms as Cellnet Data Systems and Instromet International, whose AMR and instrumentation products promised to expand the market for Badger’s line. With the measurement technology needs of the industrial process industries continually expanding and the enormous growth potential of the AMR market, Badger’s future appeared brighter than at any time in its 90-year history.

Principal Subsidiaries

Badger Meter Europe, GmbH (Germany); Badger Meter International Sales, Inc.; Badger Meter de Mexico, S.A. de C.V.; Badger Meter Limited (U.K.); Badger Meter de Las Americas, S.A. de C.V. (Mexico); Badger Meter Export, Inc. (Virgin Islands); Badger/Instromet LLC (50%); Badger Meter, Canada.