Huttig Building Products, Inc.

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Huttig Building Products, Inc.

555 Maryville University Drive, Suite 240
St. Louis, Missouri 63141
U.S.A.
Telephone: (314) 216-2600
Fax: (314) 216-2601
Web site: http://www.huttig.com

Public Company
Founded: 1885
Employees: 2,427
Sales: $938.4 million (2004)
Stock Exchanges: New York
Ticker Symbol: HBP
NAIC: 423310 Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers

St. Louis-based Huttig Building Products, Inc. is the largest distributor of building products in the United States, selling nearly $1 billion in products each year from about 50 distribution centers. Products are used in new home construction as well as remodeling and repair work. General building products include lumber, panels, roofing, siding, insulation, dry wall, gutters, and nails. Millwork products include interior and exterior doors, storm doors, patio doors, windows, stair parts, frames, columns, and mouldings. The company's primary customers are building material dealers, which in turn serve contractors and professional builders. Huttig is a public company listed on the New York Stock Exchange.

Heritage Dating to the Civil War Era

Huttig was founded by brothers Charles F. and William Huttig, natives of Germany. They immigrated to the United States in the mid-1850s when Charles, the eldest, was just 19, settling in Muscatine, Iowa, because they had friends in the city. Charles worked as a mason and eventually became a masonry contractor. William, meanwhile, became a music teacher. With the outbreak of the Civil War in 1861 he formed a regimental band for the 35th Iowa Volunteer Infantry. When regimental bands were dismissed by order of the war department, William was at loose ends. He returned to Muscatine, and in 1862 started a grocery store with his brother. In 1868 they turned their attention to lumber, investing $30,000 to establish a sawmill and lumberyard operating under the company name Huttig Brothers Lumber Company, taking advantage of Muscatine's strategic location on the Mississippi River. They brought in a partner in 1869, acquired the mill business of Cadle and Mulford, and began manufacturing doors, blinds, and window sash under the name of Huttig Brothers & Falter. After Falter left six years later, the company changed its name to Huttig Brothers Manufacturing Company. Before then, however, the company was almost put out of business by a flood caused by the destruction of Muscatine's levees in April 1870, which swept away Huttig's stock of lumber. To make matters worse a fire completely destroyed the factory. The brothers wasted no time in replacing the plant with a new, larger facility, located far removed from the river.

In 1880 Huttig Brothers was incorporated, followed a year later by the opening of a new, larger plant in Muscatine. The extra capacity was put to good use during the 1880s, as the growth of the railroads opened up new markets for the company. But it also became apparent that these new markets could be served better by branch offices, thus setting the stage for Huttig's geographic expansion, shepherded by a second generation of the family. In 1883 Charles's eldest son, William, was dispatched to Kansas City, Missouri, to serve as manager of the first branch, Western Sash and Door Company. After this operation proved successful, Charles's second eldest son, Charles H., was sent to St. Louis to establish a second branch, the forefather of today's Huttig Building Products, then known as Huttig Sash & Door Company. With $40,000 in seed money, Charles H. bought an existing business, Gray and Holekamp, in December 1885 and began distributing the door and sash products produced by the Muscatine plant as well as other manufacturers. Less than two years later, the branch added its own manufacturing capabilities by purchasing a small factory. Business was so strong that the company quickly outgrew its facilities, leading to the 1892 acquisition of a building large enough to accommodate both a warehouse and a factory.

The year 1892 was also a turning point because Charles F. Huttig, whose health was beginning to fail, decided to sell the Muscatine company, Huttig Brothers Manufacturing Company. With that money he then bought stock in the Kansas City and St. Louis branches, which had become separate corporations. Although Huttig Manufacturing Company would continue to do business in Muscatine, it was no longer connected to Huttig Sash and Door Company.

In a relatively short period of time, Charles H. Huttig firmly established himself in the St. Louis business community. Prior to joining the family business he had cut his teeth in banking at Cook, Musser and Company. Now in 1897 he was named president of the Third National Bank of St. Louis. He remained president of Huttig Sash and Door, but increasingly he relied on a chief lieutenant, Alfred J. Siegel, to run the company, serving as secretary and general manager. This arrangement lasted for the next 15 years, during which time the company prospered but also suffered from a June 1911 fire that destroyed the St. Louis complex. A competitor, the William G. Frye Manufacturing Company, was immediately acquired, but it burned to the ground the very next day. Huttig managed to arrange for help from other manufacturers, enough to scrape by. Less than seven months after the fires, the company moved into a new state-of-the-art millwork plant, which opened in January 1912. Around this time, Charles H. Huttig began to experience deteriorating health, leading to an operation in September 1912. He appeared to be on his way to recovery, but he suffered a relapse and returned to the hospital for a second operation in November. He now resigned as Huttig's president, naming Siegel his replacement, and ultimately succumbed in July 1913.

After 26 years in a subordinate role, Siegel took charge of Huttig at a key historical moment, the eve of a world war. Siegel was quick to recognize that despite President Wilson's pledge to keep the country out of the European conflict, the United States would eventually be drawn in, and that Huttig would be called upon to support the war effort. In order to do so effectively, it would need branch offices. The only one established in time was in Memphis, Tennessee, as the Memphis Sash and Door Company. When the United States did declare war in April 1917, Huttig was contracted by the U.S. military to manufacture airplanes, work the company took on in addition to the production of wooden ammunition boxes, ship joinery, and building supplies used to construct 21 army camps, six office training camps, nine air fields, and seven hospitals.

Post-World War I Expansion

When World War I ended in November 1918, pent-up consumer demand led to continued expansion of the Huttig operation. In July 1919 a subsidiary, the Birmingham Sash & Door Company, was opened in Birmingham, Alabama. A year later Huttig entered into a joint venture with Spokane, Washington-based White Pine Sash Company, to establish a sash factory in Missoula, Montana, which took the name Missoula White Pine Sash Company, with Huttig owning a controlling interest. The pace of Huttig's geographic expansion increased in the 1920s. First, the company looked to the fast-growing Southwest, spurred by the energy industry. In 1920 Dallas Sash & Door Company was established and opened for business in September 1921. Florida also attracted the company's attention, leading to the 1923 creation of a Jacksonville operation. Business quickly overwhelmed the leased warehouse and a new facility was built, opening in February 1925. In that same year a Miami warehouse was built to accommodate the growing Florida business. During the first half of the 1920s Memphis Sash & Door Company became a Huttig subsidiary and constructed a new facility. Birmingham Sash & Door also experienced strong growth during this period, resulting in the construction of a new warehouse as well.

Huttig's growth during the early 1920s occurred despite Siegel's poor health. In 1926 he was heavily involved in putting together a major merger, the creation of United States Door Company by combining the interests of Huttig, White Pine Sash Company, Missoula White Pine Sash Company, and the major Pacific Coast fir door and plywood manufacturers. But Siegel's sudden death in November 1926 scuttled the deal and United States Door Company never came to pass. Moreover, Huttig found itself bereft of seasoned leadership. Siegel's son, Roy R. Siegel, was being groomed as a replacement but was not yet ready to take over. Hence, the board's chairman, E.L. McColm, resigned his post, stepped into the breach and assumed the presidency, with the younger Siegel serving as first vice-president. Turnover at the top did not prevent Huttig from continuing to expand, however. Huttig took over a warehouse operation in Columbus, Ohio, in 1926, and a branch office was established in Charlotte, North Carolina, in 1927 to serve the Carolinas. After 16 months, McColm turned over the presidency to another seasoned executive, George W. Simmons, a vice-president of the Chase National Bank. He was immediately faced with some difficult choices. The Florida land boom collapsed suddenly, forcing the closure of the Jacksonville and Miami branches. In addition, Huttig sold its Charlotte operation in 1929. Simmons's tenure as the Huttig head proved brief, however. He was killed in an accident in May 1930, and this time Roy Siegel was deemed ready to succeed his father as Huttig's president.

Company Perspectives:

Our Mission: To lead changes in the building products distribution industry by constantly seeking new avenues for growth and challenging our business technology and processes. We seek to provide our customers with superior products and innovative business solutions to help them grow. We strive to create a safe, rewarding and challenging working environment for our employees.

The younger Siegel took over under difficult circumstances as the country, a few months after the 1929 stock crash, tumbled into a deep depression. Under his leadership, Huttig instituted a number of belt-tightening measures in order to simply stay in business. In 1931 the Houston operation was sold, but by 1934 the worst was over and Huttig began looking to resume its expansion efforts. Once again the company opened a branch in Charlotte to take advantage of growth in the Carolinas. Also in 1934 Huttig acquired an operation from the Roanoke Glass and Door Company, establishing an operation in Roanoke, Virginia, to serve the Shenandoah Valley and Washington, D.C. markets. Its affairs were in such good shape that in 1936 Huttig was able to complete a major acquisition, the purchase of Louisville, Kentucky-based W.J. Hughes and Sons Company, which maintained branches in Paducah, Kentucky, and Knoxville, Tennessee. The Paducah business was shut down but the Louisville and Knoxville operations were brought into the fold and headed by Huttig executives. It was also during the late 1930s that the branch operations began to become less dependent on the St. Louis warehouse, due to the high shipping costs that put the branches at a competitive disadvantage. Huttig now allowed the branches to fill their own orders and limited the St. Louis warehouse to the serving of markets not covered by Huttig branches. Moreover, the company looked to further expand its branch operations to new strategic locations.

With Europe already engulfed in World War II by 1940, the United States began building up its military. For Huttig this meant the increased need for building supplies to construct camps and bases as well as housing for workers in armament plants and other factories supporting the war effort. To meet rising demand Huttig reopened its Miami warehouse in 1940 and a year later opened a large new warehouse in Louisville. After the United States entered the war in December 1941, most of Huttig's business was war-related for the next four years. In addition to building supplies, Huttig produced items for the military such as wood truck body parts and ammunition cases.

After the war ended in 1945 and the country overcame a brief recession, Huttig expanded to keep pace with the postwar building boom, as servicemen returned home, married, and entered the new suburban housing developments where the Baby Boom generation would be raised. The Miami branch moved into a new plant in 1946, followed a year later by a new facility for the Dallas branch, and a new plant in Knoxville in 1948. A new branch was then opened in Nashville, Tennessee, in 1949. Around this time management also began considering what to do with its 40-year-old St. Louis plant, which was outdated, costly to maintain, and no longer conveniently located. In addition, millwork was falling out of favor with the new generation of homeowners, who were in the market for less expensive materials. The company decided to exit this part of the business and the plant was sold in 1951. Huttig began building a new warehouse in the western part of St. Louis, which opened in 1954. Also of note during the 1950s, Huttig opened a branch in Atlanta in 1955 on land purchased a decade earlier when it became apparent that the growing city fell into a crack, unable to be adequately served by Huttig branches in Florida, Alabama, North Carolina, or Tennessee. In addition, in 1955 the Knoxville branch expanded its facility, as did Nashville a year later. The Columbus warehouse was replaced by a new building in 1957, the same year that Huttig moved into the Kansas City, Missouri market by acquiring American Sash & Door Company. To close the decade, in April 1959 Siegel, after serving the company for 34 years, turned over the presidency to T.R. Armstrong. Siegel stayed on as chairman until November 1963 and died less than a year later in September 1964.

Dissolving the St. Louis Branch in the 1960s and Steady Growth into the 21st Century

During the 1960s Huttig consolidated its operations, merging American Sash & Door Company and Birmingham Sash & Door Company. Missoula White Pine Sash Company merged into the parent company, as did Huttig Sash & Door Company of Texas. The company also grew through acquisitions in the 1960s, purchasing the General Sash & Door Company of Tulsa, Oklahoma, in 1966, followed by the addition of Oklahoma City-based Lumbermens Supply Company in 1967. That year also saw the liquidation of the St. Louis branch due to high wages and other factors. Another significant development in 1967 was the purchase of 20 percent of the company's stock by the Crane Co. A year later Crane acquired more shares, gaining a 51 percent controlling interest, and by March 1971 it owned 87 percent of the business. Crane was founded in 1855 in Chicago to produce copper and brass castings used by the railroad industry. Over the years, Crane expanded beyond metal valves and fittings to manufacture fire hydrants, water pumps, elevators, bathroom fixtures, and basic materials businesses. The addition of Huttig added to Crane's portfolio of building products.

Under the direction of its new parent company, Huttig opened an Orlando, Florida branch in 1968 and added operations in Mobile, Alabama, and New Orleans by acquiring the jobbing division of McPhillips Manufacturing Company. A year later, Huttig acquired nine branches covering four states of the Rock Island Corporation's wholesale division. As it moved into the 1970s, Huttig closed operations in Kansas City and Nashville that were no longer performing up to expectations. At the same time, the company aggressively moved into new growth areas. A Fort Myers, Florida operation was opened in 1973, followed a year later by the acquisition of Lexington, Kentucky-based Combs Company. By now Huttig was operating 27 distribution facilities in 26 states along with its lone millwork manufacturing plant in Oregon, all of which in 1976 combined to generate sales in excess of $100 million for the first time in company history. Huttig continued to expand in the second half of the 1970s, adding facilities in Des Moines, Iowa, and Rockford, Illinois, as well as glazing operations in Charlotte and Louisville. Three more branches were added in 1978: Chicago; Kernersville, North Carolina; and Tri-Cities, Tennessee.

Key Dates:

1868:: Huttig Brothers Lumber Company is launched.
1885:: Huttig launches the St. Louis operation.
1919:: Birmingham Sash & Door Company is established.
1936:: W.J. Hughes and Sons Company is acquired.
1957:: American Sash & Door Company is acquired.
1968:: Crane Co. acquires a controlling interest.
1999:: Crane Co. spins off Huttig.
2003:: Michael Lupo turns around the company.

Despite poor economic conditions that resulted in declining housing starts, Huttig managed to grow during the early 1980s. It added Houston and Dallas operations through the acquisition of Lone Star Wholesale Company, and opened yet another Florida distribution center, this one in Clearwater. In 1982 Huttig acquired Palmetto Sash & Door Company and Southern Manufacturing Company of Orangeburg, South Carolina, to expand its presence in the Carolinas. A year later a new distribution center was opened in Dothan, Alabama. The 1985 acquisition of Madison Millwork, Inc. added a branch in Jackson, Tennessee, strategically located to serve Spring Hill, Tennessee, home to the new General Motors Saturn plant. Also in 1985, Huttig acquired warehouses in Albuquerque, New Mexico, and Green Bay, Wisconsin, to close out its first 100 years in operation.

Over the next 15 years Huttig enjoyed steady growth under Crane ownership, increasing sales in excess of $700 million and expanding the number of distribution centers to 41, but by 1999 it became apparent that both Huttig and Crane would be better off if Huttig were spun off as a separate company to pursue its own business strategy. In this way, Crane could focus on its role as a specialty manufacturer and untie the hands of Huttig's management, which wanted to keep pace with the competition in an industry undergoing consolidation. In conjunction with the spinoff, Huttig achieved much needed scale by acquiring the U.S. building products business of The Rugby Group PLC, which in 1998 posted sales of nearly $600 million from 33 distribution centers located in 35 states. Under the terms of the Huttig spinoff, Crane shareholders received 68 percent of Huttig's common stock and Rugby received the balance.

In addition to the economies of scale it hoped to realize from the addition of the Rugby assets, Huttig also expanded its presence in the Midwest and on the East Coast, thus positioning the company to better adapt to regional downturns. But after posting a profitable year in 2001, Huttig began to struggle despite the start of a major housing construction boom, leading to the resignation of its chief executive officer, Barry Kulpa, in March 2003. He was replaced by 70-year-old Michael Lupo on an interim basis, but after two months he asked to take the job on a permanent basis and the board agreed. A veteran turnaround artist, he quickly sized up the situation at Huttig, which he believed should have held a significant competitive advantage in the marketplace. "Instead," according to a St. Louis Post Dispatch profile, "he found chaos, born in part by a multilayered, top-down management structure with almost no accountability for what was happening in the warehouses. When he asked about performance at specific warehouses, he more often than not received shoulder shrugs…. Huttig's sales team was in disarray, as well…. And despite its national presence, Huttig was not serving several large metropolitan areas."

Lupo cut headcount in management and reallocated the money to beef up sales and field operations. To gain accountability, general managers were hired for each distribution center, responsible for inventory, sales, and marketing. The changes quickly began to pay off, and within the year Huttig was again profitable and looking to expand on its national platform. Lupo was committed to remaining as CEO through 2005; whether he stayed on or not, he already had succeeded in positioning Huttig for long-term growth.