Posted 5/23/2011 12:00 am
Updated 2 years ago
Like so many companies, Central Moloney Inc. has felt the blowback from the bursting housing bubble. But the Pine Bluff firm decided to position itself for the market rebound it says it knows is coming.
The company, founded in 1949 as Larkin Lectro Products Co., saw its revenue rise to $110 million in 2010, a 25 percent increase over the $88 million it reported in 2009, a sure sign that Central Moloney's tactics have achieved some success.
Central Moloney builds electric distribution transformers and their components at two sites in Pine Bluff. In March, it announced a $12 million 150,000-SF expansion adjacent to its current 400,000-SF transformer plant. The expansion is expected to create at least 200 jobs, and Chris Hart, vice president of personnel and community relations, calls that a conservative estimate. Central Moloney, headed by President and CEO Bo Siever, currently employs 550.
The company has five main transformer product lines, with most of those transformers used in new residential construction - new housing starts, in other words. "We were like the rest of the industry and we were feasting off of record new housing starts back in 2005 and also the huge backlog that was created in August of '05 from Hurricane Katrina," Hart said. That created essentially an 18-month backlog that lasted us well past the housing market starting to trend down."
And then the market fell right off the cliff.
With the backlog gone and housing starts plummeting, demand followed. Central Moloney worked hard to keep as many people working as possible, Hart said, and then it moved to "get creative."
"We decided that this was our time to move and capture ... as much of a market share as we possibly could, so during that time we began to branch out, to reach out, to offer larger units and to ingratiate ourselves in different ways with customers," Hart said. "And we increased our customer base and our market share."
Hart said that demand for the company's "three-phase" units, used in commercial and industrial applications, increased. Although houses weren't being built, shopping centers and apartment complexes were, and the company realized "there was still market to be had," he said. And it targeted that market.
"We wanted to be able to accommodate our customers by producing larger units that can handle higher voltages, and we have definitely made inroads when it comes to that," Hart said.
And that's where the announced expansion comes in.
The 62-year-old company has been adept through the years in evolving to meet customer needs. In its early years, as Larkin Lectro, the company primarily built welding equipment to meet the needs of the old Arkansas Power & Light Co., which at the time was based in Pine Bluff.
At some point, AP&L needed transformers and asked Larkin to build them. In the process, Larkin Lectro morphed into Central Transformer Corp., moving to solely manufacturing electric distribution transformers.
The 1960s were a time of great growth for the company as it responded to increasing demand from utility companies. In 1965, Central Transformer acquired Moloney Electric of St. Louis and the company changed its name to Central Moloney Transformer Corp. The company was now among the top five makers of transformers in the U.S.
More change came when Colt Industries bought Central Transformer in 1968. Colt eventually became Coltec Industries with Central Moloney Transformer Division serving as one of Coltec's several subsidiaries.
In 1970, Central Moloney expanded into the manufacturing of components for transformers - bushings, switches, wildlife guards, etc. - and created Central Moloney Components Operation.
Company leader Bo Siever, a mechanical engineer, started at the company in 1969, conducting research and development for products that came to be manufactured by the Components Operation.
In late 1993, Siever was among a group of top managers and other investors who sought to buy Central Moloney from Coltec. Their offer was accepted, and in 1994 the privately owned, Arkansas-based company acquired the name it bears today: Central Moloney Inc.
Finally, in 1998, the company converted to an Employee Stock Ownership Plan, or ESOP, corporation. The Central Moloney Inc. Salaried Employee Stock Ownership Plan & Trust owns all the company's stock. "Talk about creating initiative in employees - when they own a slice of [the company], it helps motivate," Hart said.
Central Moloney's annual payroll exceeds $30 million, Hart said, and "we spend an additional $8 million here within Jefferson County with suppliers, vendors." The company seeks to meet two needs, Hart said. The first is to be good stewards of the community; the second is to ensure that the shareholders' investment is rewarded.
Most of the hourly employees are members of Local 1658 of the International Brotherhood of Electrical Workers, which has had a presence at the company since 1958. Hart said the average hourly wage of a Central Moloney worker exceeds $17. In addition, the company offers noncontributory pension plans and short-term disability and life insurance policies.
"Those bargaining-unit employees have their defined pension plan, and the rest of us are the ESOP members whose fortunes rest upon the success of the company," Hart said.
Central Moloney, by both working to grow its market share in lines other than residential and in betting on the future, appears to have found renewed success.
Hart said, "We are putting our money where our mouth is and saying that [the economy] will come back, and we know it will. And when it does, we want to be ready."