The Monarch Cement Company

views updated

The Monarch Cement Company

449 1200 Street
Humboldt, Kansas 66748
U.S.A.
Telephone: (620) 473-2222
Fax: (620) 473-2447
Web site: http://www.monarchcement.com

Public Company
Incorporated: 1907 as The Monarch Portland Cement Company
Employees: 650
Sales: $145.1 million
Stock Exchanges: Over the Counter
Ticker Symbol: MCEM
NAIC: 327320 Ready-Mix Concrete Manufacturing

Based in Humboldt, Kansas, The Monarch Cement Company manufactures two products: Portland Cement, which is used in the production of ready-mixed concrete for the construction of buildings, highways, and bridges, and masonry cement, which is mixed with sand and water to make a masonry mortar suitable for use in bricks, block, and stone construction. The company's service area includes Arkansas, Iowa, Kansas, Missouri, Nebraska, and Oklahoma. Monarch is a public company, its shares trading on an over-the-counter basis. It is run by the third generation of the Wulf family.

Portland Cement Developed in 1820s

Cement is a material that dates back at least to the ancient Greeks and Romans, who used volcanic ash and clay to make cement for building roads, aqueducts, and buildings. The Roman Coliseum, for instance, relied on a cement made from lime and volcanic ash. As was the case with much of the knowledge the Greek and Roman civilizations possessed, however, the art of cement making was lost during the Middle Ages. It was not rediscovered until 1756, when John Smeaton in England developed a durable mortar used to build a lighthouse. Because this type of natural cement relied on local materials, its properties varied. Then, in 1824, an English bricklayer, Joseph Aspdin, developed a new cement that was not only less expensive and stronger, it was made from a combination of calcium, silicon, iron, and aluminum that could be produced anywhere, thus providing builders with a consistent product. In brief, these materials are combined in a kiln at a temperature approaching 3000 degrees F. Requiring vigilant supervision, the resulting product is called "clinker," and it is then ground to make cement. Aspdin named it Portland Cement, because it resembled a type of stone quarried from the British Isle of Portland. The new cement crossed the Atlantic to the United States in 1868, and in the 1870s David Oliver Saylor developed a Portland Cement from native materials found in Pennsylvania's Lehigh Valley. By 1897, domestic-made Portland Cement exceeded imports, after which the production of American Portland Cement expanded rapidly.

The first cement company, the Iola Portland Cement Company, was formed in Kansas in 1898. The Monarch Portland Cement Company was the third, organized in January 1907. Its founders were O.M. Connet, the president of the company, and William Keith, secretary-treasurer. According to press accounts from the time, the company's headquarters was originally in Wichita, but Connet and Keith settled on Humboldt as the site of their plant because it was served by two railroads and was a well-established town. According to an account in the Allen County Herald, Humboldt was "not a boom town with the precarious values of all boom towns, but a town which has withstood all the difficulties which have beset all Kansas towns and come forth victorious. The banks of Humboldt are solid and prosperous institutions. The stores in Humboldt are well stocked with the latest and best of everything and the merchants are progressive business men who do not let old stock accumulate on their hands, but keep up with the times in everything."

Panic of 1907 Fails to Deter New Company

Monarch began building its plant in 1907, and as work proceeded Connet and Keith relocated to Humboldt from Wichita. The timing for a new venture was not fortuitous, however, because in October of that year, shortly after construction began, the United States suffered from one of its periodic financial crises, the Panic of 1907, which led to the failure of banks and other businesses and resulted in some cement plants shutting down their operations. Nevertheless, according to the Allen County Herald, "the Monarch Portland Cement Company began a forward march towards completion which has not stopped a day." While construction of the plant proceeded, the company continued to drum up funding, bringing potential investors to Humboldt to see for themselves the progress that was being made. Construction would continue for more than a year, and in the meantime the company procured rooms above the old Humboldt National Bank for "up-town offices and sleeping rooms." In March 1908, the local newspaper reported, "The demand for stock is growing. The fact that stock holders in Kansas corporations do not have to pay taxes as individuals is an inducement to many to buy stock in a home company. The plant of the company is assessed and thus pays the taxes as a company." Keith was also scouting for investors outside of Kansas as well. A month later, the Allen County Herald reported that Keith was in Wisconsin, "where there is a large demand for the stock of the company."

The Monarch plant was expected to be operational early in 1909 but it was not until July 21 that the company made its first shipment of cement. While Connet and Keith were due credit for having the wherewithal to launch the business, they proved less adroit at actually running it. Yet Monarch continued to pay a dividend to its investors, a fact that persuaded many others to buy stock. One these latecomers was Henry F.G. Wulf, who came to the Wichita area with his parents from Germany in 1885 when he was 14 years old. A man of little education or financial resources, he was nonetheless able to succeed in business. When he was 20 years old, he found work at a hardware and implement company in Garden Plain, west of Wichita. The owners decided after the Panic of 1891 to get out of the business and turned it over to young Wulf and his brother Otto, telling them they could paid them back when they were able. Wulf was able to turn around the company, and he built a solid reputation in the area.

In 1911, some of Wulf's friends bought Monarch stock and induced him to invest in the company as well, claiming it was a "veritable gold mine." Wulf bought 20 shares at $100 a share. He was soon surprised to discover that he had been elected to Monarch's Board of Directors, and to fulfill his duties he attended the company's next board meeting. He quickly uncovered the truth about the Humboldt "gold mine": it was broke. The dividends were coming from the sale of stock. His friends refused to believe him, pointing to the solid dividends Monarch was paying. Wulf predicted that within two months the company's creditors would call for receivership. He was proved right, and Monarch was taken to court. His friends now persuaded the judge in charge of the matter to appoint Wulf as receiver, which was accomplished in March 1912. On July 21, 1913, the company was reorganized and incorporated as The Monarch Cement Company. Wulf was named president in September and August C. Kreotzer vice-president. According to recollections of Wulf's son, Walter H. Wulf, "They had rough going. The new company had no credit. Suppliers would ship only C.O.D. with the guarantee of Dad's firm of Wulf Brothers of Garden Plain. He often wondered how his friends got him into such a mess."

Developments from the 1910s to the Mid-1940s

In the spring of 1914, Wulf moved his family to Humboldt, and despite difficulties he managed to build up Monarch's business. In those early days, much of the work was done by hand. Raw materials mined from the company quarry were hand-loaded into carts and drawn by mules over narrow gauge rail to a crusher. In this way, Monarch was able to produced 282,000 tons of cement, or 1.5 million barrels, in 1913. A year later, the quarry operation was improved with the introduction of a used Vulcan steam-shovel that moved on railroad tracks and eliminated the need for hand-loading the quarry cars. These cars would soon be replaced by larger side dump cars, and the mules were replaced by a small steam locomotive. Under Wulf, Monarch's power plant was also upgraded. In 1914 and 1915, six of eight boilers were connected to rotary kilns, thus allowing them to make use of waste heat and making them more efficient and economical to run. In the second half of the 1910s, Monarch replaced its original nine mills with newer equipment and open cement bins were replaced by six 70-foot high cement storage silos.

As sales grew in the 1920s, improvements to the physical plant continued. The company had been relying on direct current provided by four steam engines. In 1920, they were superseded by a 1,500 kilowatt General Electric-built turbine-powered generator producing alternating current. The conversion to alternating current would not be completed until 1923, and by the end of the decade, as the demand for power increased, the company installed a 4,000 kilowatt turbine and generator. Also in 1920, a pair of small crushers were replaced with a 42-inch Allis-Chalmers gyrator and a Williams hammermill. Throughout the decade, Monarch added more cement storage silos, six that were 70-feet high and another ten that were 90-feet high. In addition, the company erected six rock and shale storage silos in the milling department.

Company Perspectives:

The Monarch Cement Company has produced the highest quality cement for customers in the Midwest for over nine decades.

With the advent of the Depression of the 1930s, expansion at the Monarch plant was brought to a halt. The company also underwent a change in leadership. In October 1934, Henry Wulf died, and a few months later, in January 1935, Kreitzer died as well. Succeeding Wulf as president was Fred H. Rhodes, who had been corporate secretary since the 1913 reincorporation and was named treasurer as well in 1917. Replacing Kreitzer as vice-president was Wulf's son, Walter H. Wulf, who was also Kreitzer's son-in-law. The younger Wulf had been involved in the Monarch operation since moving to Humboldt when he was 14. During the summers while he attended college, he learned the business from the marketing side, going from town to town by train to sell the company's cement, and he also did his best to collect on past due accounts. After college, he joined Monarch, serving as a foreman and then working his way up through the management ranks. He replaced Rhodes as president of the company in March 1945.

Prosperity and Improvements:
Postwar Era to the 21st Century

World War II stimulated the U.S. economy and led to a postwar boom, especially in housing, that greatly benefited Monarch. Demand for cement soon outstripped the company's capacity, leading to eight years of upgrades, the first improvements in the physical plant in nearly 20 years. In 1948, a massive kiln, measuring 11 feet by 230 feet, was erected, and two new large boilers were installed. Another kiln of the same design was added in 1951, and new waste heat boilers were placed into service. In 1954, Monarch added a new shale crushing and drying plant, and a year later a new 9,375 kilowatt GE turbine and generator, along with the old 5,000 kilowatt generator, was installed in a new power plant building. All told, the company spent more than $4 million on improvements during this period, and the plant capacity increased to 2.25 million barrels per year. Over the course of the next dozen years, Monarch spent another $12 million on capital upgrades, which included the installation of a third kiln and waste heat boiler combination, new mills, and another dozen storage silos. As a result, annual plant capacity increased to three million barrels.

In April 1969, Walter Wulf turned over the presidency of the company to Charles L. Fussman, who oversaw further improvements to the operation during the 1970s. Wulf stayed on as chairman of the board. The company constructed three new 100-foot high cement storage silos in 1970. Over the next two years, two of the kilns were replaced by a 12-foot-by-165 foot kiln with a four-stage preheater. The third kiln was now operated on a standby basis. An F.L. Smidth single pass Ball mill with a 1250 horsepower motor and symetro drive was also installed. A second kiln equipment with a four-stage preheater was installed in 1974. The result was a much more efficient operation, as raw materials were now preheated before entering the kiln using the kiln's waste heat, which was further utilized by the roller mill. In this way, the company was able to make use of all but 200 degrees of the operation's available heat. These improvements in the 1970s came at a price of $16.4 million.

A new president, Jack R. Callahan, was installed in August 1980. Like his predecessors, he oversaw continued growth in Monarch's business and added to the plant's capabilities. During the early 1980s, the company introduced a new economical roller mill, which was able to turn raw materials into powder, grind them together, and then dry them with waste heat from the kilns. The next step in the evolution of the physical plant came in the 1990s as the company sought to automate as much of the work as possible. Computer-controlled process control technology were applied to the preheater kilns, roller mill, and all finish mills. The preheater kilns were also set up to dispose of used tires, thus improving Monarch's reputation as a good corporate citizenship by serving as a state-approved tire disposal site while also taking advantage of the fuel potential of a material that was previously thrown away. As a result of improvements over the course of several decades, Monarch increased its cement capacity from 282,000 tons in 1913 to more than 850,000 at the end of the 20th century.

Monarch enjoyed strong growth during the 1990s, starting the decade around $50 million in annual sales and in 1997 realizing $91.8 million. In 1997, Callahan stepped down as president and was succeeded by a third generation of the Wulf family, Walter H. Wulf, Jr. His father, well into his nineties, remained as chairman of the board for a couple more years. He would die in 2001 at the age of 101. Demand was so strong for cement that the company was forced to supplement its production in 1998 by purchasing clinker from overseas. Sales topped the $100 million mark for the first time in company history, but higher sales costs caused Monarch's net income, which had exceeded $10 million in 1996 and 1997, to slip to $9.7 million in 1998. Sales continue to trend upward through 2002, when the company recorded $134.6 million in revenues, but net income dipped below $6 million. A downturn in the economy caught up to Monarch in 2003, when sales fell to $122 million and net income to $3.8 million. The economy began to recover in the Midwest in 2004, resulting in a rebound on the sales side of the ledger, $145.1 million on the year, but net income was a disappointing $2.6 million. Nevertheless, the future demand held promise for Monarch, prompting the company to install a new coal firing system to save money on fuel. Approaching its 100th anniversary, Monarch was well positioned to continue its history of prosperity.

Principal Subsidiaries

Beaver Lake Concrete, Inc.; Concrete Enterprises, Inc.; Concrete Materials, Inc.; Kansas Sand and Concrete, Inc.; Monarch Cement of Iowa, Inc.

Principal Competitors

Buzzi Unicem USA Inc.; Holcim Ltd.; Lafarge North America Inc.

Key Dates:

1907:: The Monarch Portland Cement Company is formed.
1913:: Monarch Portland is reorganized as The Monarch Cement Company by Henry Wulf.
1934:: Wulf dies.
1935:: Wulf's son, Walter Wulf, becomes the company's president.
1969:: Walter Wulf gives up his position as president and remains as chairman for another 30 years.
1997:: Walter Wulf, Jr., represents the third generation to lead Monarch.
2001:: Walter Wulf dies at age of 101.