Warner & Swasey for Sale

When National Defense talk began in Washington, the first industry to be branded a "bottleneck" was machine tools. In a normal year, most U. S. industrial production--notably the $2-3,000,000,000 a year of automobiles--could not be turned out without $100-150,000,000 worth of machine tools. Key to mass production, the machine-tool industry consists of some 800 small family-owned units wherein mass production plays little or no role. Few machine-tool companies are big enough to have a listed stock.

Last fortnight one of the oldest and fattest of these private handicrafters came before the public: Warner & Swasey of Cleveland, which has been dubbed "Tiffany of turret lathes," filed a registration statement with SEC, planned to offer (through Smith, Barney & Co.) 276,580 shares of common stock for sale. Now owned by a handful of Warners, Swaseys and old employes, the stock will probably be offered at less than $30 a share. Only about $1,000,000 of the $8,000,000 or so realized will go to Warner & Swasey Co.

Warner & Swasey's owners are selling to the public in time of prosperity. Always a feast or famine industry, machine-tool makers are now stuffed with orders due to World War II and defense. The industry's current production is at the rate of $400,000,000 a year, three to four times "normal." Warner & Swasey is at its all-time busiest. Its sales for 1940-3 first half were $8,178,000, more than for the whole of 1929. Profits for the half were $2,137,000, more than for the whole of 1929 or 1939.

In 1880 Worcester Reed Warner, 34, of Massachusetts' Berkshire Hills, and Ambrose Swasey, 34, ex-farm boy of New Hampshire, emptied their pockets and formed a $6,000 partnership. Heavily bearded Partner Warner's hobby was astronomy. When in knee pants he pushed a pin through his mother's window shade to see a sun eclipse. In 1881 he built a 9 1/2-inch telescope, began making W. & S. famous in the optical world. In 1893 their 40-inch Yerkes instrument was exhibited at the Chicago World's Columbian Exposition. Last year their 82-inch McDonald telescope was erected in Texas.

With Warner busy on sky-gazing apparatus, Swasey had equal success with machine tools. Working with Pratt & Whitney, machine-tool builders in Hartford, Toolmaker Swasey sweated far into hot summer nights inventing the epicycloidal milling machine for producing true gear curves. This made possible today's silent automobile gears. Swasey also im proved brass-working machines and turret lathes. W. & S. now makes 60% of all U. S. turret lathes. Widely used to turn out other machine tools, the W. & S. turret lathe is at the heart of the defense program.

Head man in W. & S. today is round-faced Charles J. Stilwell, 54, who joined the company in 1910, became European sales chief, has been an executive since the founders died. When machine-tool makers were called a "bottleneck," urbane Charley Stilwell went to Washington as their spokesman.* Said he: "Don't call us names until you've tested us. Give us orders. We will fill them."

He has the orders now, with more to come. Since September, W. & S. has increased its capacity 50%, taken on over a thousand men. Early this year, the machine-tool industry was selling almost half its output abroad. Unlike some units, W. & S. early began to favor domestic orders over more lucrative foreign sales, some of which are still waiting at Atlantic docks. Thus W. & S. is well entrenched with its U. S. customers. But some of them are more important to defense than others. If any U. S. industry has to learn the meaning of the word "priorities," W. & S. and its hundreds of tiny colleagues will probably learn it first.

*He was not the first W. & S. president to do so. Frank Augustus Scott was Woodrow Wilson's first chairman of the War Industries Board in 1917, withdrew because of ill health, was ultimately succeeded by Bernard M. Baruch.

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