Keeping it rolling7 December 2001
Morris Inc is out of Chapter 11 and ready for the future, CEO Jack Stinnett tells Alex Dahm Morris Material Handling, Inc of the USA, one of the world's largest crane companies, has managed not just to survive its brush with bankruptcy but also to develop new products and to invest in its production facilities.
When it filed for Chapter 11 bankruptcy protection on 17 May 2000, Morris had $90m secured bank debt and $200m unsecured bond debt. It exited Chapter 11 on 28 September 2001 with the secured creditors owning about 90% of the company. The majority of owners are distressed securities investment funds of between $1bn and $4bn. Cash borrowing at exit was less than $10m, used to cover Chapter 11 fees, expenses and paying off previous loans and revenue bonds. Financing for emergence and operations is a $30m credit facility with Congress Financial, part of First Union Corporation. The post-exit unaudited balance sheet shows the current ratio (of current assets to liabilities) of less than 2 and shareholder equity in excess of $70m.
President and CEO Jack Stinnett says: "I think the company is very excited about our business opportunities post Chapter 11, and the board of directors, who have encouraged us to continue to grow and improve the company." All newly appointed directors were present at the first board of directors meeting on 30 October. Chairman of the board is Jerry Ballengee, a former president of Union Camp, a $5bn forest products company.
Morris today looks very different from the company that went into Chapter 11. Overseas interests have been sold and future strategy is to concentrate strictly on the North American, Canadian and Mexican markets, and return to domestic dominance, says Stinnett. Crane and hoist businesses were sold in the UK, Thailand, Saudi Arabia and Singapore to a management team. This company is now called Morris Material Handling Ltd (as opposed to Inc). Morris Material Handling Pty in South Africa was sold to another management team, as was Morris JDN in Australia, and Morris Automation was sold to Savoye Ltd.
As well as its Oak Creek Wisconsin headquarters, Morris Material Handling Inc has six other manufacturing operations in the USA, Canada and Mexico plus around 40 sales and service locations in the USA, 14 in Canada, two in Mexico and one in Chile that can handle smaller, 'kit' type cranes.
Morris was formerly a division of P&H Harnischfeger and P&H remains a strongly recognised trademark in North America. There are, for example, more P&H coke handling bucket cranes in service than any other brand, according to the company. Out of a total of around 34,000 large P&H cranes, more than 30,000 are in North America, according to Stinnett. Morris Inc has a trademark agreement to use the P&H name indefinitely, but should it become a public company this would be time restricted to 20 years for cranes, and 22 years for spare parts. Given the inevitable confusion over the existence of Morris Inc and Morris Ltd, it is likely that we will increasingly see the historic P&H brand being promoted, rather than the company name.
Before Chapter 11 Morris Inc had a 20% to 24% share of the North American crane market. This dropped to about 15% as a result of going into Chapter 11 but, according to Stinnett, Morris Inc is now selling cranes "at or in excess of the historic market share". In 2000 consolidated sales of the North American company were $208m. For the first 10 months of 2001 sales were down 20% due to the impact of Chapter 11 and the soft US economy.
During the 16 months in Chapter 11 a total of 878 cranes were built, 75% of these between 2 ton and 20 ton capacity, and the remaining 25% up to 300 ton capacity.
One of Morris's latest products is the M series Hevi-Lift hoist launched at February 2001's Promat show in Chicago. This hoist, available in several frame sizes, is to replace both the Redi-Lift, formerly imported from Morris UK, and the P&H HL 300 Hevi-Lift.
The heavy lift division has also developed a new product line for powerhouse service cranes up to 200 ton capacity. Morris was having difficulty competing in this important segment with its more costly traditional heavy duty designs. European competitors fill this niche with their large capacity package type hoists. Morris says its new P&H-branded 'built-up' range "still gives the customer the traditional quality features of a foot mounted horizontally split heavy duty hoist gearbox and open barrel drum but uses new manufacturing techniques to significantly reduce the price." Also while in Chapter 11 the company continued to invest, for example by spending more than $1m on new machine tools for more efficient production. "We used the opportunity to continue to improve the company," Stinnett says, a process set to carry on by continuing to integrate operations.
Morris launched in October an electronic crane training simulator in collaboration with Interactive Educational Systems Inc, a susidiary of North American Crane Bureau.
Morris Material Handling Inc in the USA is also the exclusive Americas importer of UK-based Morris Material Handling Ltd's electric chain hoist, the S-3.
For the future, improvements are planned in the product range. Equipment development will include a hoist with a capacity of less than 3 tons. Also being looked at are niche markets such as utilities.
Cranes delivered while in Chapter 11 included three for Nucor Steel's new melt shop in Yamato and a further three cranes are ordered for the Blytheville plant. These are 40 ton, 100ft span rotating trolley, high production shipping bay cranes.
Units ordered since exiting Chapter 11 include two "CMAA Class F severe duty" coke handling bucket cranes, for more than $2m, by Fluor Daniel for a US oil company. There is also an order, worth $1m, from the Port of Greenville for a P&H dockside bucket crane. The US Navy has ordered a new 30 ton capacity crane worth almost $500,000 to be used in a ship repair yard. Amergen in Clinton, Illinois has ordered a $1.3m 250 ton capacity nuclear power plant crane.
Modernisation business for 2001 includes a multi-million dollar order on three P&H refuse handling cranes for Wheelabrator Technologies in Florida. The job includes complete new trolleys and refurbishment of the Static Stepless controls. Also on refuse handling cranes, on two units for American Refuel, NY was a $1.1m order to replace sections of runway girders, the crane rails and end trucks.
Two modernisation projects totalling $750,000 at the US Navy's Puget Sound Shipyard in Washington State include replacing cabins, bare wire span conductors and the AC magnetic controls with ergonomically designed cabin, P&H Smartorque adjustable frequency controls, new festoon systems and new mainline conductors. Similarly, Georgia Pacific in Zachary ordered $300,000-worth of new cabin and Smartorque 2000 drive system for its woodyard portal crane.
Following a successful crane modernisation project in 2000, a major petroleum company awarded Morris a follow-up order worth $500,000 to modernise a coke handling crane. This involved supplying and installing a new cabin, putting in new wiring throughout and replacing various components.
On a fire damaged non-P&H crane at LaFarge Cement in Oklahoma, Morris was awarded a $300,000 order to replace the controls with Smartorque 2000 and put in new motors and brakes.
While the US market continues to be soft, Morris Inc is confident about its prospects. "The P&H trademark is alive in cranes and hoists, now leaner and more competitive than ever," the company says, "with expanded product lines, improved production facilities and a distribution network in the Americas that is the envy of many of its competitors."