Two Arkansas-owned electrical transformer makers with very long histories are looking to the future in a time of peak demand for their products, a hunger industry leaders call unmatched in recent memory.
And both companies — ERMCO Inc. and Central Moloney Inc. — have made bold announcements in the last eight weeks.
ERMCO of Dyersburg, Tennessee, just 25 miles from the Arkansas line as the crow flies, in mid-December announced its acquisition of Spire Power Solutions LP. Fifty-year-old ERMCO is a wholly owned subsidiary of Arkansas Electric Cooperatives Inc., and with Spire onboard is poised to be North America’s largest transformer maker.
Meanwhile, 73-year-old Central Moloney Inc. of Pine Bluff is putting a second factory in leased space in Panama City Beach, Florida, where it expects to begin production by the end of the first quarter of this year. Up to 250 workers are expected at the plant as soon as possible, CMI President and CEO Chris Hart said.
The employee-owned company has been building transformers at 2400 W. Sixth Ave. in the Jefferson County seat since 1953 and was founded in 1949, the year Mao Zedong’s Communists took control of China and the Soviet Union exploded its first atomic bomb.
By 2021, Central Moloney had $198 million in revenue, up from $172 million the year before, and the company is hiring and growing aggressively.
ERMCO produced its first units when Richard Nixon was a hugely popular president and Watergate was just the name of a Washington office building. The company expects to build its 8 millionth transformer this year.
ERMCO President and CEO Tim Mills wouldn’t discuss revenue numbers, but he was happy to talk about employee and production records.
“Our first transformer came off the line in 1972,” he told Arkansas Business. “The company has always been owned by the cooperatives of America, starting with original owners from the states of Arkansas, Kentucky and Wisconsin. Now the Arkansas cooperatives are the sole owners.
“We’re roughly at 1,800 production workers today at our Dyersburg offices and production facilities,” he continued. “And that number was below 900 as recently as 2016. So we’ve seen significant growth in our headcount over the last seven years.”
Production is also rolling at an unprecedented, breakneck pace. In 1988, ERMCO produced 70,000 units. By 2020, that yearly total was 400,000, and it has grown to 425,000-475,000 since.
“The base of operations is most certainly Dyersburg, but we have three other operating locations from the legacy ERMCO family, in Greeneville, Tennessee; Raleigh, North Carolina; and Antioch, Illinois,” Mills said. “All three of those came through acquisitions.”
The earliest was the Greeneville location in 1999, when ERMCO bought the General Electric Transformer Component Co. and renamed it ERMCO Components Inc., or ECI. “In 2017 we picked up the operation in Raleigh, called GridBridge and focused on power electronics. Then in 2022 we picked up the assets of a company that used to be a supplier to ERMCO, making the transformer core, a block of steel that is used to energize the transformer.”
Electrical transformers, most commonly seen as gray metal barrels mounted on poles, transfer power from one circuit to another, usually stepping up or stepping down the alternating current’s voltage. The current demand is associated with an aging power grid that can’t keep up with growing interconnections and demand for electricity. Many renewable power projects are waiting for transformers and other high-voltage equipment, and industry and congressional leaders are pushing for emergency spending to spur domestic production and cut the backlog. (See this week's Energy column)
ERMCO is raising its capacity with the purchase of Spire, based in Athens, Georgia, a deal completed on Dec. 15 that the company said “solidifies ERMCO’s position as a leading manufacturer of distribution transformers in North America.” Financial details of the transaction were not disclosed. “One hundred percent of the employees that were part of the Spire organization prior to the transaction, all retain their jobs,” Mills said. The company has about 1,000 workers.
Spire, a portfolio company of Mill Point Capital LLC, has been in business for a century, making liquid-filled and dry transformers branded as Power Partners, Pioneer Transformers, Jefferson Electric and V&F Transformers. Spire’s production facilities and workforce offered ERMCO expansion opportunities “into the critical renewable energy and data center markets,” said Mills, an Air Force Academy graduate who meshes well with boss Buddy Hasten, the AECI CEO and a former Navy nuclear submarine officer.
“We got interested in Spire early in 2022,” Mills said in a telephone interview. “We recognized that there was a shortage of transformers in the marketplace, and at the direction of the board of directors ERMCO was looking at ways we could expand our overall output, knowing full well that we were reaching peak production levels at Dyersburg.”
Hasten, who has been part of a high-level national panel studying the electrical equipment shortage for more than six months, said the supply problem has not been a fault of lax production. “What we’ve really learned in the studies we’ve done with the Department of Energy is that producers like Tim” have all ramped up production. “ERMCO produced more transformers than they had ever produced in any single year in their history. So really, it was record demand for these products in the United States.”
Hasten noted a large number of new resources being put onto the grid, transitions that all require new equipment. “Then there’s the equipment that gets old and needs to be replaced. The normal demand was augmented by all of these new resources being brought on. You think about transitions to clean energy, and lots of those require new equipment. There’s also what you might call IT infrastructure money running around, and lots of people trying to do projects at the same time. This has culminated in record demand.”
The ERMCO team knew that Spire was a solid competitor in the distribution transformer space, and could extend its product line into dry-type transformers, as well as three-phase transformers. “We saw all of these as additives to our portfolio,” Mills said.
Central Moloney found its own response in a very welcoming spot of northwest Florida, where incentives made the Bay County site irresistible.
On Jan. 12, CMI announced that a 140,000-SF plant in the Venture Crossings industrial park will make single-phase pole-mounted transformers. Central Moloney’s initial investment will be more than $20 million, according to Hart, the company CEO.
The company was courted by the Bay County Economic Alliance, Florida’s Great Northwest, the St. Joe Co., the Triumph Gulf Coast Fund and the University of West Florida’s Industry Recruitment Fund, among other entities.
Pine Bluff is still the company’s home, he said, but “in order to remain strong here at home, we have to cultivate opportunities elsewhere. By moving one product line out,” he added, “we get better at what remains while building a state-of-the-art facility dedicated to just pole-mounted transformers. … Our mission is not to coast. We will grow and grow the right way. Our story is just beginning.”
Hart said the second plant will not cost Pine Bluff any jobs. On the contrary, he said. “We’re looking to hire just about anyone who is dependable and willing to work.”
Central Moloney's History, Straight From the CEO's Mouth
For an oral history of Central Moloney Inc., voluble CEO Chris Hart is the perfect tutor:
“We started in 1949 as a company called Larkin Lectro Products. And that was a startup that answered a blind ad in The New York Times. Basically, the ad said something like ‘cheap manufacturing space available in Pine Bluff.’
“Larkin responded, and they were first in rented warehouse space at the Pine Bluff Arsenal. It’s funny how things work, but welding equipment, which was the basis of our business at that time, and transformers at their core, work alike.
“Arkansas Power & Light reached out to us because they used to have a headquarters on Sixth Avenue in Pine Bluff. They wanted to know if we could build transformers. It wasn’t a new technology, but there weren’t a lot of people making them, and AP&L wanted a local supplier. So we gave it a whirl, got the contract and broke ground at the current facility in 1952 as a company called Central Transformer Corp. So we’ve been making transformers in some form or fashion at 2400 W. Sixth Ave. ever since we moved into the building in 1954. Now, we’ve grown considerably since then.
“The original build was 80,000 SF, and now we’re roughly 430,000 SF at the transformer facility in Pine Bluff. This has been home ever since.
“You know how things work in the business world; there were some acquisitions and mergers, so Central Transformer and Moloney Electric of St. Louis merged [in 1965], and were bought by Colt Industries [in 1968]. We became the Central Moloney Division of Colt Industries.
“Colt sold off the firearms division and the name became Coltec Industries, and that’s the way we stayed until 1994, when there was a buyout of the company. Coltec was shedding some of their businesses ... so a group of employees and a few manufacturers’ reps bought it. As they were paid back their initial investment, the company got spun out as an ESOP [employee stock ownership plan], which is where it’s been since 1998.” It remains 100% employee owned.