MANUFACTURING: Shovels Up

Sometimes the seasons move swiftly. Sometimes there comes an hour when men say “Yesterday it was winter. Today it is spring.” Very like that was the change which came over U. S. business fortnight ago when war broke out: whole industries burst into flower, steel, machine tools (see p. 59), aircraft (see p. 63), etc. Many a smaller business feels the push of the season in the same way. Typical of many such were the new conditions last week faced by Marion Steam Shovel Co., No. 2 U. S. maker of shovels (No. 1: Bucyrus-Erie), 1938 net sales: $3,239,029.

In 1883 a nimble Ohio farm boy named Henry M. Barnhart was operating a balky steam shovel, grubbing gravel from the Kenton, Ohio, pits for the roadbed of the new Chicago & Atlantic Railroad (now Erie). Irritated by repeated breakdowns of his crude machine, he built a model of a better one, showed it to farm machinery maker Edward Huber. Practical Mechanic Huber knew a good thing when he saw it. He got together with Inventor Barnhart and Hayman George W. King, founded the Marion Steam Shovel Co., began turning out the “Barnhart shovel.”

The Panama Canal, Trans-Siberian Railroad, Boulder Dam, New York’s subways, many U. S. railroads, were built with Marion shovels (now no longer steam, but electric & Diesel driven). Monster of the Marion line is a $450,000 strip coal mining shovel, which can scoop up 50 tons of earth, dump it on top of a seven-story building 226 feet away.

Boast of Marion is that not a cent of new capital has been put into the business since the founders scraped together $20,000 and began operations 55 years ago. Nothing to boast of, however, are the company’s net income deficits for seven of the last nine years’ operations. Marion’s big income comes from the sale of mining shovels and since Depression I the industries that use them have been in the dumps.

In 1927 descendants of the founders sold out for $7,000,000. The deal was financed by the sale to the public of $3,550,000 of 6% first mortgage bonds, $2,643,900 of 7% cumulative preferred stock, 100,000 shares of no par common (current price $3.75). Although funded debt has been reduced by almost one half, Marion owes $1,619,388 back dividends on her outstanding preferred. Two years ago net sales of $6,174,822 gave the firm a $338,191 net profit; last year the company was back in the red, almost $500,000; last week Marion’s big, handsome, conservative president, James Hatton Waiters, a crack salesman (who had been on the verge of recapitalizing the company), suddenly observed that apparently Marion was about to have a “very good year.”

Reason for the sudden change: the advent of World War II changed the minds of Marion’s customers in the latent coal-copper-iron business. They wanted shovels —wanted them fast. In ten days Marion got $1,000,000 worth of orders (one-sixth of a normal year’s business).