Certain-teed Shakeup

Last week the one & only man in the U. S. by the name of Baumhogger acquired a less unusual distinction. He became the third Montgomery Ward man to head a big building material company. The others are Ward's Chairman and President Sewell Lee A very, who is also President of U, S. Gypsum Co., and Johns-Manville's President Lewis H. Brown, who was once Ward's assistant general operating manager of all plants. Walter Gilbert Baumhogger resigned from Ward's last August "for no particular reason" after a successful six-year job as vice president in charge of retail stores. Last week he was elected president of Certainteed Products Corp.

Installed in his new office on Manhattan's Pershing Square, where his first official act was to fix the buzzer, hefty President Baumhogger prepared to make the fur fly for Certainteed. Shuffled out of the management along with his predecessor, Chester E. Rahr, were five executives including 70-year-old Chairman George Marion Brown, who had been the mainspring of Certainteed ever since its beginning as a small tar-paper plant in East St. Louis in 1904. Precipitator of the shuffle was Phoenix Securities' smart President Wallace Groves, who bought Mr. Brown's controlling interest in Certainteed last spring. What Mr. Groves wanted was a stake in the current building boom. What he acquired was a big com pany with a poor record. Certainteed has had losses every year from 1928 to 1935, when it made a small profit. It shows a loss for the first nine months of 1936.

Certainteed is the third largest U. S. manufacturer and distributor of gypsum products, chief of which are ordinary wall plaster and wallboard. Its name was derived in 1917 from a trade-mark for the asphalt roofing which was its original product and is still its mainstay. Its weakness was a result of boomtime expansion which culminated in the purchase of Beaver Products, makers of Beaver Board and "Bestwall," original gypsum wallboard, in 1928. To acquire Beaver Products the company had to issue $13,500,000 in bonds, thus simultaneously gearing up productive capacity and enormously in creasing its burden of fixed charges. A long price war with Sewell Avery's U. S. Gypsum helped matters not at all. Depression came two or three years too soon for Certainteed.

Recovery, however, came by no means too late. Last summer Phoenix Securities' Groves helped put through a dazzling recapitalization plan which substituted 382,300 shares of $1 par common stock for 382,300 shares outstanding at a declared value of $15 a share, eliminated back dividends amounting to $52.50 a share on 63,004 shares of preferred, erased sinking fund arrears of some $882,000. Meanwhile Certainteed began to nose slowly upward on the building wave, made a profit of $131,000 for the third quarter. To accelerate this rise by putting Montgomery Ward efficiency into Certainteed will be President Baumhogger's job.

Now 42, the only Baumhogger was born in Brooklyn and studied electrical engineering at Pratt Institute before he went into business. He got his first job with Montgomery Ward in 1921, became general merchandise manager in six years. When he was in charge of Ward's retail stores his ambitions for his end of the business were so great as to jar the habitual harmony between Ward's mail order and retail business. Since he moved from Wilmette, Ill. to Montclair, N. J. he has had a lot of fun fishing as a member of the Atlanta Tuna Club at Block Island.

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