Graybar Electric Company

Infobox Company
name = Graybar Electric Company, Inc.

type = Private/Employee-Owned
company_slogan = Works to Your Advantage
foundation = 1869
founder = Elisha Gray and Enos Barton
location_city = St. Louis, Missouri
location_country = U.S.
locations = over 250
key_people = Robert A. Reynolds Jr., Chairman, President and CEO
num_employees = 8,400
revenue = profit$5.25 billion USD
industry = Electronics
products = electronic, communications, and data instruments & controls
homepage = [http://www.graybar.com/ www.graybar.com]

Graybar Electric Company is an electrical distribution business, included on the Fortune 500 list of the largest United States corporations. Founded in Cleveland, Ohio in 1869, the company is currently based in St. Louis, Missouri. Graybar specializes in supply chain management services and is a leading North American distributor of high-quality components, equipment and materials for a number of industries.

History

Early History

During the post-Civil War Reconstruction era, an Entrepreneur named Enos Barton (who had served as a telegrapher during the war) worked for Western Union in Rochester, New York. During this period, Barton met George Shawk, the foreman of the company's Cleveland, Ohio shop. When that shop was closed down, Shawk bought some of the equipment and went into business for himself, making various kinds of electrical and other apparatus, including inventor's models. While on a trip to Rochester, he and Barton, who was then 26, agreed to go into partnership.

To raise the $400 her son needed for his share of the business venture, Barton's widowed mother mortgaged her home.

The new firm, located at 93 St. Clair St. in Cleveland, grew. In May 1869, Elisha Gray, an Oberlin College professor and inventor of telegraphic equipment, bought out Shawk's interest.

nearly destroyed the company, coming within two blocks of its small plant.

The destruction caused by the fire then resulted in even greater growth for Gray & Barton, as the company sold fire alarms, which were now in high demand, and also helped to rebuild the Western Union infrastructure in the city.

Incorporation as Western Electric

After several relocations, all in Chicago, the business was incorporated as the Western Electric Manufacturing Company in 1872 to meet the capital requirements of the telegraph supply business. The new company so closely allied with the elder Western that three of its five directors were Western Union executives. Moreover, Stager was named president, although it was Barton as secretary/treasurer who actually handled day-to-day affairs.

Although the young firm thrived in the telegraph industry, it was not until the invention of the telephone by Alexander Graham Bell in 1876, and the incandescent lamp by Thomas Alva Edison in 1879, that Western Electric began to gain stature as a large company.

Part-owner Gray held the title of company electrician and spent his days working on his inventions, becoming increasingly less involved in the operations of the shop, and eventually he sold his interest in Western Electric in 1875 and retired to pursue independent research and to teach at Oberlin College. In 1876 he filed a caveat with the U.S. Patent Office, announcing his intention to soon patent an invention that would transmit vocal sounds telegraphically. Gray dubbed his telephone "the harmonic telegraph." Only hours earlier, however, Alexander Graham Bell applied for a patent for the same idea, which became known as the telephone. As it turned out, what Bell actually patented would have never worked, while Gray's idea would have [http://www.fundinguniverse.com/company-histories/Graybar-Electric-Company-Inc-Company-History.html] . Western Union acquired both Gray's and Edison's telephone patents to challenge the American Bell Telephony Company (renamed AT&T in 1899), which led to a patent infringement suit and Bell ultimately being named the inventor of the telephone. Therefore it was Bell's patent and not Gray’s that launched the telecommunications industry.

As applications of electricity broadened, Western Electric not only sold the electric bells and batteries, telegraph keys, fire alarm boxes and hotel annunciators it originally manufactured, but also many items it purchased from other manufacturers.

Stager served as president of Western Electric until shortly before his death in 1885, and Barton then served as president from 1886 to 1908.

Western Electric Company was the first company to join in a Japanese joint venture with foreign capital. It invested in Nippon Electric Company, Ltd. in 1899. Western Electric held 54% of NEC at the time. Their representative in Japan was Walter Tenney Carleton.

By the turn of the century, Western Electric had become the main producer of telephone equipment in the United States [cite book |last=Mercer |first=David |title=The Telephone: The Life Story of a Technology|year=2006 |publisher=Greenwood Publishing Group|location=Westport, Connecticut |isbn=978-0313332074 | pages= p. 60] . It also manufactured arc lamps, lighting equipment and power apparatus, ranging from small fans to huge motors and generators. Right alongside this manufacturing business, the distribution business continued to grow, handling an extensive line of electrical supplies such as wire, conduit, wiring devices and pole line material.

By the 1910s the company became the world’s largest distributor [cite book |last=Adams |first=Stephen B. |coauthors=Orville R. Butler |title=Manufacturing the Future: A History of Western Electric|year=1999 |publisher=Cambridge University Press|location=Cambridge, UK |isbn=978-0521651189 | pages= p. 86] and the United States’ leading wholesaler of electrical supplies. These facts attracted investment by the American Bell Telephone Company, which also discovered that Gray and Barton could purchase supplies and sell them to the telephone companies more efficiently than the companies could acquire the supplies themselves.

A chain of warehouses was established across the nation, and the growth of the distributing business continued to increase through World War I and into the post-war period.

The Formation of Graybar

a separate entity was established for handling distribution of supplies and equipment. This new entity was named "Graybar" in honor of the company's founders, Elisha Gray and Enos Barton. This was the first time a major corporation had reverted to its original designation as the basis for its corporate name.

The Graybar Electric Company was capitalized at $9 million and consisted of 59 distributing houses in cities across the U.S. Graybar had become the largest merchandiser of electrical supplies in the world.

In 1929, Graybar employees purchased their company for its capitalized value, which consisted of $3 million in cash and $6 million in cumulative preferred stock.

the company's sales volume was more than $100 million, the number of distribution houses had jumped to 86, and there was a corresponding increase in personnel. Also that year, the remaining outstanding shares of stock were purchased from Western Electric with a $1 million check signed by Graybar President Frank A. Ketcham.

When the country entered World War II, Graybar's ingenuity and knowledge of logistics proved to be of immeasurable value in providing war-needed goods. Graybar became a vital link between America's manufacturers and America's defense needs. Defense-related business continued in the postwar years, with Graybar again aiding the military during the subsequent conflicts in Korea and Vietnam. Overall the company enjoyed strong growth in the years following World War II, its momentum not checked until the recession of the mid-1970s, which led to Graybar slashing its workforce by 20 percent. As a result, when economic conditions improved in the 1980s Graybar was unable to gear up quickly enough to meet the rising demand for electrical products.

The corporate headquarters moved from the Graybar Building in New York City to St. Louis, Missouri in 1982.

Recent Years

Graybar modernized its infrastructure, implementing one of the first computer-to-computer ordering systems, but a weak real estate market and slowdown in construction began to take its toll on the bottom line. Revenues, which had approached $1.5 billion in 1980, improved to just $1.89 billion in 1990, then fell to $1.74 billion in 1991, prompting the closure of some regional offices and another reduction in the workforce. Aside from a weak economy, it was also becoming clear to management that Graybar suffered from internal problems; the company was losing market share on its traditional electrical business while unable to make desired progress on the newer communications/data products. Business improved as the economy recovered in the early 1990s. Despite sales growing to $2.3 billion in 1994, management decided to realign the business starting in January 1995, forming two business groups, one for electrical supplies and another devoted to the increasingly important comm/data business. That same year, Graybar formed the Solutions Providers Alliance, teaming up with wholesale distributors Kaman Industrial Technologies, WWR Scientific Products, and Vallen Corporation. To accommodate an aggressive new growth strategy, Graybar added 45 locations, 2,400 employees, and 350 salespeople from 1994 to 1999. It also improved its network of warehouses, spending $144 million to construct 16 major new facilities that dramatically cut down on delivery time. As a result of these investments, the company was well positioned to take advantage of a strong economy in the final years of the 1990s. In 1999 annual revenues topped $4.2 billion, while profits almost doubled during this period, improving from $36 million in 1995 to $64 million in 1999. The improvement in the comm/data sector was of particular importance. In 1991 it accounted for just 17 percent of Graybar sales, but by 1999 totaled 38 percent [http://www.answers.com/topic/graybar-electric-company-inc] . Graybar engaged in some external growth, making several acquisitions in 1999 and 2000, the largest being Splane Electric Supply Co., a Detroit, Michigan, company with $30 million in annual sales, 70 employees, and six locations [http://ewweb.com/mag/electric_graybar_acquires_splane/] . In 2000 Graybar revenues improved to $5.2 billion, while net income topped $66.2 million [http://stlouis.bizjournals.com/stlouis/stories/2007/02/05/story3.html] . To support further expansion of its nationwide distribution centers, instrumental to the company's growth, Graybar placed a $100 million bond offering in the summer of 2001, the largest financing effort in its history [http://stlouis.bizjournals.com/stlouis/stories/2001/07/23/story8.html] . By this time nine of the 16 distribution centers started in 1997 were operational and the remaining seven were only months away from opening. Once the system was in place, Graybar was able to achieve its long-term aim of being able to ship to customers within 24 hours throughout the United States [http://www.answers.com/topic/graybar-electric-company-inc] .

A downturn in the economy, however, soon hurt business and forced management to fine tune the company's strategy. In 2001 revenues fell to $4.8 billion [http://money.cnn.com/magazines/fortune/fortune_archive/2002/04/15/321427/index.htm] and business continued to drop off in 2002 and 2003 to $3.99 billion [http://money.cnn.com/magazines/fortune/fortune500_archive/full/2003/401.html] and $3.78 billion [http://money.cnn.com/magazines/fortune/fortune500_archive/full/2004/401.html] , respectively. As it had done in the early 1990s, Graybar opted to invest in its infrastructure in order to be ready to take advantage of the economy when it ultimately rebounded. The company invested $90 million on new technology to provide customers with more detailed information on orders, deliveries, and payments [http://findarticles.com/p/articles/mi_m0EIN/is_2003_Oct_1/ai_108384338] . At the same time, it encouraged its 4,100 suppliers to implement a standardized bar code system to create an open, central database similar to that found in the retail industry. In this way, Graybar would distinguish itself from its rivals, graduating from the role of middleman to a supply chain expert capable of adding value to the process. Once the new system was functional, Graybar hoped to be able to sell detailed reports to both suppliers and customers in the then $73 billion electrical supply industry.

Graybar's revenues had increased to $4.1 billion [http://findarticles.com/p/articles/mi_m0EIN/is_2003_Oct_1/ai_108384338] in 2004, $4.3 billion in 2005 [http://money.cnn.com/magazines/fortune/fortune500/2006/full_list/401_500.html] , and a then-all-time high of $5 billion in 2006.

Today, Graybar operates a network of 250 distribution centers throughout the U.S., Canada, Mexico and Puerto Rico as well as authorized agents around the world [http://www.graybar.com/about/about.html] . Graybar Electric Company, Inc. is engaged internationally in the distribution of electrical, telecommunications and networking products and integrated supply services primarily to contractors, industrial plants, telephone companies, power utilities and commercial users. All the products Graybar sells are purchased from others. Through its suppliers, Graybar provides products such as boxes & fittings, business telephone systems, cabinets and racks, cabling management and pathways, chemicals and adhesives, communications wire, cable and fiber onduit, raceway and fasteners, controls and motors, copper connectivity solutions, distribution equipment, enclosures and industrial products, fiber connectivity solutions, heating and ventilating, industrial automation and control lamps, lighting and ballasts, life safety and signaling, networking and wireless, power distribution, security and notification, products terminating, splicing and grounding, testing instruments, tools and installation products, voice and accessory products, wire and cable, wiring devices, and protection and power conditioning for a number of markets and industries including contractors, electrical contractors, communications contractors, government, industrial security, service providers, and retailer hospitality solutions.

Sales for 2007 were more than $5.25 billion, positioning Graybar at #455 on the Fortune 500 listing [http://money.cnn.com/magazines/fortune/fortune500/2008/snapshots/10213.html] and #55 for privately-held companies [http://www.forbes.com/lists/2007/21/biz_privates07_Graybar-Electric_ES4O.html] . From January 1 to June 30, 2008, Graybar posted profit of $47.4 million on revenue of $2.7 billion for the six-month period, up from a profit of $39.7 million, on revenue of $2.6 billion for the same period in 2007 [http://www.bizjournals.com/stlouis/stories/2008/08/25/story5.html?b=1219636800^1689166] . In 2008 Graybar was named the ”most admired” Fortune 500 company in the Wholesalers: Diversified category [http://money.cnn.com/magazines/fortune/mostadmired/2008/snapshots/10213.html] . Graybar remains an independent distributor and is still one of the largest employee-owned companies in the United States [http://www.businessweek.com/magazine/content/01_25/b3737754.htm] .

Board of Directors

* Robert A. Reynolds, Jr., Chairman, President and Chief Executive Officer

* D. Beatty D’Alessandro, Senior Vice President and Chief Financial Officer

* Lawrence R. Giglio, Senior Vice President - Operations

* Kathleen M. Mazzarella, Senior Vice President - Human Resources and Strategic Planning

* Richard D. Offenbacher, Senior Vice President - Sales and Marketing

* Matthew W. Geekie, Senior Vice President, Secretary and General Counsel

* Dennis E. DeSousa, Senior Vice President - Sales and Distribution

* Frank H. Hughes, President and Chief Executive Officer, Graybar Canada

* Kenneth B. Sparks, District Vice President - Seattle District

* Robert C. Lyons, District Vice President - Tampa District

* Robert L. Nowak, District Vice President - Phoenix District

* Richard A. Cole, District Vice President - Chicago District

* Thomas S. Gurganous, District Vice President - Richmond District [http://sec.edgar-online.com/2006/03/23/0001068800-06-000220/Section31.asp] [http://www.reuters.com/article/pressRelease/idUS18232+21-Mar-2008+PRN20080321] [http://www.graybar.com/news/news_archives/news_release_073108.htm]

References

*"The Graybar Story", by Graybar Electric Company, Inc., March 2005

External links

* [http://www.graybar.com Graybar] Home Page
* [https://www.graybar.com/docs/GraybarStory.pdf The Graybar Story]

ee also

*Western Electric Company
*Elisha Gray
*Enos Barton
*Anson Stager
*Graybar Building (New York City, New York)
*Graybar Electric Company Building (Detroit, Michigan)