CORPORATIONS: The Industrial Radicals

From all over the world, engineers flock to Milwaukee’s famed A. O. Smith Corp. to goggle at a machine that is nearly two blocks long. It is the first “pushbutton” factory and, though built 30 years ago, it is still a mechanical wonder. Only 75 men operate the machine as its automatic arms drag in flat sheets of steel, shape, hammer and rivet them, pop them out as automobile frames at the rate of 10,000 a day.

Even the super-efficient U.S. auto industry can hardly beat such efficiency; it orders 40% of all its auto frames from A. O. Smith. The company has made a profession of revolutionizing mass-production techniques. It has become the world’s largest maker of steel pipe, also turns out 24 other products ranging from glass-lined vats to landing gear for B-47 jet bombers. In the last ten years, A. 0. Smith’s sales have mushroomed from $46.7 million in 1941 to $176.6 million last year, its net has nearly tripled to $7,500,000.

There is only one thing the company has not changed: its control. It is still owned by the same family which founded it. Through three generations of Smiths, the company has been passed on from father to son. Last week the fourth generation took over. At 30, Yaleman Lloyd Bruce (“Ted”) Smith, great-grandson of the founder, stepped into the presidency.

Bicycles to Cars. Hard-working Ted Smith will have to hustle to match the production genius and shrewd business judgment of his predecessors. The company’s founder, English-born C. J. Smith, who started a Milwaukee machine shop in 1874, revolutionized the bicycle industry. He replaced the frames built of heavy, costly solid iron with light, strong frames made of steel sheets rolled into tubes. His son, Arthur O. (for Oliver) Smith, who gave the company its present name, used the tubular construction to build the industry’s first pressed-steel auto frames (for the 1903 Peerless).

But it was Arthur’s son. (and Ted’s father), Lloyd Raymond Smith, who brought the company its biggest growth. By 1913, when he took over, the plant had built a tidy business for its hand-assembled auto frames. Smith set his engineers to see if they could devise a machine to do it automatically. It took six years and $8,000,000, but by 1921 the wonderful machine was ready. In 90 minutes it performed the 552 separate operations required for ‘a finished frame.

Bombs to Tanks. During World War I, when Ray Smith took on contracts to build aerial bombs, his engineers worked out a new method of arc welding to seal the bombs. Later, he used the welding process to make high-pressure oil tanks, which until then had been tediously assembled by hand in riveted sections. Soon, Smith had 90% of the oil-tank business.

Then he began thinking about the laborious process of making steel pipe from solid blocks of metal. Shortly after, the company began turning steel sheets into 40-ft. tubes, which a flash-welding machine transformed into pipe in 30 seconds. As a result, Smith not only revolutionized the steel-pipe industry, but made possible the web of gas and oil pipelines covering the U.S., including World War II’s Big Inch and Little Big Inch pipelines (built with A. O. Smith pipe). Some newer products: glass-insulated hot-water heaters for homes, steel-and-glass silos for farms which eliminate spoilage from mold.

When Ray Smith stepped up to chairman in 1936 (he died eight years later), he turned the presidency over to William C. Heath, whom he had hired away from Fairbanks, Morse & Co. in 1931 to boss his manufacturing. Heath bossed the company’s World War II production of almost two-thirds of all the bomb casings used by the Allies. In 1945, when Ted Smith came out of the Air Force as a 2nd lieutenant, Heath began grooming him for the presidency. Heath will still be around, as chairman of the policymaking executive committee, to keep an eye on the youngster.