History of Koch Enterprises
KOCH Enterprises, Inc. is beating the odds. Studies show that 80 percent of US businesses are family owned or operated by families. While 30 percent of these businesses reach the second generation, only 10 percent make it to the third generation. In other words, 90 percent of all family businesses fail, dissolve or are sold before reaching the third generation. For nine years now, KOCH Enterprises, Inc. has been run by Robert L. Koch II, fourth generation family member.
KOCH Enterprises is beating the odds in more ways than one. As KOCH Enterprises enters the 21st century, not only are they celebrating over 126 years of service, they have acquired six new businesses and a new joint ventures within the past 10 years and have been named the 12th largest private company in Indiana and one of the top 500 privately held businesses in the US.
Current President and CEO, Robert L. Koch II, believes the longevity and success of the company can be attributed to its willingness to change with the times. "In the early days, the company sold tin horns and metalcraft. Then we changed to paint finishing systems. Now we are an upscale engineering firm with subsidiaries that range from sealants and adhesives to aluminum die castings. In the ever changing world of business, if you donít change with the times, youíre going to fall behind," said Robert L. Koch II. One thing that has remained constant, however, are the Kochs.
Young George was always in search of an adventure. Every year it was his custom to build a flatboat, load it with handcrafted merchandise and float down the river to trade with townspeople. One year, George decided not to return to Evansville. He had sold everything aboard his flatboat by the time he reached Vicksburg, Mississippi and decided to call this home.
When the Civil War broke out in 1861, George enlisted in the Confederate Army. Little did he know his four brothers were fighting on the opposite side, in the Union Army. Fortunately the men never came face to face. After the war, George married and started a small tin shop in Vicksburg. In 1872, a tragic fire destroyed his tin shop and shortly thereafter, George and his wife Anna decided to board the Robert E. Lee Riverboat to return to Evansville, Indiana.
In 1904, the three sons incorporated the company name from the George Koch Tin Shop to George Koch Sons, Inc. in honor of their father. Though the name had changed, the sons maintained their fatherís philosophy of hard work, quality, service and innovation.
At the beginning of Louisí term as Managing Director, many people thought young Louis would not succeed. He proved them wrong with his passion to invent and build products that were ahead of his time. Louis studied sheetmetal pattern drafting and led the company into the sheetmetal industry.
The same year Louis became Director, 1903, he married Clarice Ashburn. Over the years, the couple had 9 children, Roderic Malcolm, George Ashburn, Mary Ellen (Helen), Robert Louis, William Albert, Martha Lois, Amelia Virginia, Katheryne (Kay), and Louis Joseph, Jr. (L.J.).
Because of his children, Louis was able to use his talents to keep George Koch Sons thriving during World War I. During Christmastime in 1914, no toys were imported from Europe. Louis experimented and developed tin horns as Christmas presents for his children. Orders began pour-ing in and George Koch Sons began production of its first mass-produced manufactured product.
After World War I, the sales of tin horns slowed down and George Koch Sons stopped production. Fortunately Louis came through again. Louis had formed a valuable relationship with Mead Johnson, Sr. who owned a company located two blocks from George Koch Sons. Louis solved Mead Johnsonís production problem of their number one selling product, Dextro Maltose, a nutritional drink. Mead Johnson, Sr. showed his appreciation to Mr. Koch for his achievement by guaranteeing all Mead Johnson jobs in Kochís line of work. Their relationship lasted almost two decades through the 20ís and the 30ís, and Koch provided them the services needed day or night.
Toward the end of the 30ís, Louisí oldest son, Malcolm, introduced George Koch Sonsí second manufactured product, metal floral containers. Based on the experience gained in the production of tin horns, a process was developed to manufacture metal floral containers. The new floral containers were in demand. Production expanded rapidly, and soon GKS products were sold to florists all over the country. With aggressive monthly advertising, George Koch Sons became the largest manufacturer of floral metalcraft in the world. Each of the sons worked after school and during the summers at the company and following college became permanent employees of George Koch Sons. This succession of family helped provide a steady growth during a period when other businesses failed. New ideas joined with age-old skills kept the company expanding.
George Ashburn was the second son to enter the company. After his graduation from the University of Chicago, he worked in Chicago and Omaha, Nebraska and later returned to work in and direct the Personnel Department at George Koch Sons. In 1953, Ashburn became the resident manager for George Koch Sons in Portsmouth, Ohio, where the company had received the largest ever sheetmetal contract to build an Atomic Energy Plant. Upon his return to Evansville in 1956, he served as Vice President and Industrial Relations Director, the position he held until his untimely death in 1959. Ashburnís community interest centered in the health field. He was the President of the Vanderburgh County Tuberculosis Association, President of the Mental Health Association and helped establish the Youth Division of the Southwest Mental Health Center. However, his two passions were George Koch Sons and politics.
Robert Louis was the third son to join the family business. Robert began work in the factory, but because of his perfect manuscript, George Koch insisted he work in the Accounting Department. All work was handwritten at that time, and none of the other brothers had legible handwriting. Bob received an honorary Doctor of Law degree from the University of Southern Indiana in 1992. Bob was very active in the community, serving on many community, bank, university and business boards. He later became President and Chairman of the Board in 1968.
William Albert, the next son, entered the business in 1938 after receiving his degree from Purdue University. He helped develop and standardize industrial finishing products. He left for the Navy four years later. Following the war, he directed advertising for the various division and later accepted a position at a subsidiary of George Koch Sons, Santa Claus Land, located in Santa Claus, Indiana. Bill became manager of Santa Claus Land, and now he and his family own the Koch Development Corporation, which includes Holiday World, Splashing Safari, Holiday Village, Christmas Lake Village and the Lake Rudolph Resort, all at Santa Claus, Indiana. Bill has served on the board of the International Association of Parks and Attractions and has been most active in politics at the state and national levels. Bill received an honorary Doctorate of Law degree from the University of Southern Indiana in 1977.
L.J. Koch, Jr., youngest son of Louis, had been around the company with his father and older brothers since birth. He officially began his career at George Koch Sons in 1943. Following his return from the service and graduation from Southern Methodist University, he began the supervision of the companyís paint products and items for the Metalcraft florist line. L.J. and his family now own Koch Originals, manufacturers of decorative metal furniture and floral equipment, with offices located on Main Street in Evansville, Indiana.
Louis turned the management of the company over to his sons in 1941, but held the title of President & CEO until 1968 when he named his third son, Robert L. Koch, President. Louis decided to devote his time and energy to the development of a childrenís park, Santa Claus Land, in Santa Claus, Indiana. It became a subsidiary of George Koch Sons and eventually expanded into Holiday World. Santa Claus Land was the first theme park in the country and is currently owned and operated by his son William and his family as Holiday World.
Louis died at age 97. From 1941 until his death in 1979, the operation and growth of George Koch Sons and its subsidiaries remained the primary interest of the life of Louis J. Koch. He consulted daily with his sons and stopped by the office each day until he could no longer drive. He lived to be proud and confident that his sons and grandsons would continue the business he had developed and incorporated into George Koch Sons.
The 1930ís brought about the industrialization of Evansville and a new division at George Koch Sons , the Industrial Division. George Koch Sons experienced continued success of the Metalcraft Division, but with the new industrialization of the city, noticed the need for a new product - paint finishing systems. George Koch Sons knew there was this need as they had trouble finding quality finishing paints to coat their metal. George Koch Sons realized that new companies needed quick-drying and durable finishing paint to use on their products.
The Industrial Division of Koch developed a baked-on finish which used painting and drying ovens, instead of a dry enamel finish that would not endure over time. Koch developed a series of standard ovens. They designed and manufactured paint ovens, spray booths and conveyor systems. A big part of this divisionís success came from the work Koch did for Mead Johnson, designing and manufacturing equipment to produce their Pablum and other products. Before Koch knew it, all types of manufacturing businesses around the Midwest began to look to Koch for their painting systems, drying ovens and other manufacturing needs.
In 1936, George Koch Sons decided for the first time to expand into an industry completely unrelated to their other business, the air conditioning industry. George Koch Sons bought a Carrier franchise and became the first franchised distributor for Carrier Air Conditioning Company. During this time, only two places in Evansville were air conditioned. They were cooled with well water that was run through a cooling coil with a large fan placed to blow across it and create cool air. Evansville became an air-conditioned city much sooner than any other major city.
In 1942, George Koch Sons stopped production of metalcraft for customers and started the construction of warcraft products. A federal law was passed that required all manufacturing of non-essential metal to be stopped in order to use all metal in the war effort. As with all companies at this time, the plantís chief duty became to support the country throughout World War II.
In support of the new law and increased war efforts, George Koch Sons built a new plant in 1942 on Upper Mount Vernon Road in Evansville. The craftsmen's metalworking skills were quickly put to use as they began the fabrication of parts for the famous LST ships. Other systems for the war effort were also produced at the new plant. These systems were produced for other factories throughout the US that included spray booths for aircraft wings, shell case testing equipment, and fixtures for aircraft wings and engines. Also manufactured were ovens for dehydrating, baking and testing.
Following the war, the plants went back to their regular product lines with the Metalcraft Division making an immediate success in their wrought-iron furniture line. The Industrial Division was also flourishing. They produced a conveyor that was, and still is, considered the most efficient in the wood finishing industry, the close-packing DeBurgh Conveyor.
During the 50ís, GKS was awarded several contracts. In 1952, the Atomic Energy Commission awarded Koch a 50 million dollar contract, the largest sheetmetal project ever awarded to one firm in American business history. GKS was also awarded contracts with General Motors, Chrysler and Ford for special metal finishing systems. These systems used a method of dip coating, flow coating and spraying - the forerunners of the electrocoating, electrostatic spray and powder coating systems the company supplies today.
Electronic advancements in the 60ís provided the company with an increased range of technology to provide new and improved finishing systems. This increase in technology also led George Koch Sons to the formation of a new division, Ashdee, to spearhead testing and research in the development of new equipment.
The 60ís also brought about George Koch Sonsís largest investment and the presidency of Robert L. Koch, third son of Louis. Robert was named President and CEO of the company in 1968. He served as President until 1980, but remained Chairman until his death in 1989.
Robert L. Koch steered the company through steady growth, increasing sales from $1 million to $200 million during his presidency. He also provided leadership for the Industrial Divisionís emergence as one of the major equipment suppliers to American industry. Robert L. Koch was responsible for the one million dollar investment purchase of Gibbs Die Casting. While this was the biggest risk ever taken at George Koch Sons, it marked the beginning of a very successful future for the company.
George Koch Sons had acquired small subsidiaries before; however, none had proven worthwhile enough to greatly expand the business. The purchase of the large, family-owned company, Gibbs Die Casting Corporation, was different. It opened new doors for GKS.
Gibbs Aluminum Die Casting Corporation was started in 1965 by Robert Kenneth Gibbs. He was the Chief Executive Officer, while his twenty-six year old son Nick was named President. In 1993, they changed their name to Gibbs Die Casting Corporation to focus on magnesium products as well as aluminum. Together they built Gibbs up to grow into one of the largest die casting companies in the United States. The manufacturing process of Gibbs has been accepted by the world casting market as superior to conventional die casting. In 1994, Automotive News named Gibbs Die Casting as 81 out of 100 top OEM suppliers to North America. Gibbs operates eight factories making custom aluminum and magnesium castings, machining and assembly and die building.
The purchase of Gibbs Die Casting, and the success of the company, led George Koch Sons to the interest of acquiring more businesses in different areas of production. In 1985, under the leadership of Robert L. Koch II, George Koch Sons acquired Uniseal, Inc., a wholly-owned subsidiary of George Koch Sons, Inc. At the same time GKS purchased Uniseal, George Koch Sons started Uniseal Rubber in Fenton, Missouri. Uniseal Rubber Products extruded low-density, close-cell sponge rubber in various shapes. In 1995, Uniseal Rubber joined Uniseal, Inc. and within the year moved to Evansville, Indiana.
Uniseal, Inc. was founded in 1960 with Walter Zahn and a group of his fellow chemists and chemical engineers. They expressed confidence in the future growth of sealants and adhesives. Uniseal actually began production in 1962 in the original 40,000 square foot facility located on Diamond Avenue in Evansville. Walter served as the Director of R&D and was later promoted to the position of President. Walterís son, Randy, also started in R&D, later became Plant Manager, then Vice President, and eventually President of Uniseal.
In 1986, Brake Supply, an auto supply company, was also acquired by GKS, which was founded by Jack Ashby in 1946. Jack formed this company over 45 years ago in Evansville, Indiana with just three people..Öturning brake drums, relining shoes and handling parts orders.
In 1962, Jack Ashbyís son, Tom, began working in the shop area. He rose from the positions of Customer Service and Purchasing to President and CEO in 1981. The two led the company over the past 25 years to become a company customers found they could trust and depend on for their products and services. They began asking Brake Supply to handle other service work for them. As a result, Brake Supply expanded their facilities and broadened their product lines. Brake Supply continues to offer the most complete service and parts facilities for serving mining, construction and industrial equipment users in the country.
In 1990, GKS entered their first ever joint venture and global market with Page-Koch Europe Limited, now known as George Koch Sons Europe Limited. They joined a company of the United Kingdom owned by Page Process Systems Limited, dedicated to designing, building, commissioning and servicing paint finishing lines for automobile and major industrial users throughout Europe. With the considerations of ecology, George Koch Sons Europe has designed machines with higher standards of environmentally engineered systems. Robert L. Koch II stated, ďthe commitment to enter the European market was of great historical significance. Our founder, my great-grandfather, left Europe to seek new opportunities in the United States.Ē
In 1994, George Koch Sons acquired Carrier Midwest. Koch is the fourth largest distributor of Carrier equipment and has long been recognized as a supplier of top-quality HVAC equipment. In 1991, Koch Air Conditioning sold their air conditioning installation business to concentrate on distribution. George Koch Sons has expanded to own four Carrier franchises that distribute and service Carrier products in Indiana, Kentucky, Illinois and Missouri.
In 1996, George Koch Sons entered its second joint venture with the David J. Joseph Company, the largest ferrous scrap broker and processor in the US. George Koch Sons, through its affiliated company Midwest Resources, became 51% owner of Audubon Metals. Audubon Metals LLC is located in Henderson, Kentucky. The company processes automobile shredder residue (ASR) and produces aluminum alloy for the manufacture of die castings.
Audubon Metals purchases ASR and other aluminum scrap from DJJ and other sources, separates aluminum from the ASR and smelt and alloys the scrap aluminum into secondary aluminum. This aluminum is primarily sold in molten form to another George Koch Sons subsidiary, Gibbs Die Casting, also located in Henderson, Kentucky.
Today, George Koch Sons is known as KOCH Enterprises, Inc. and is led by the fourth generation, the great-grandson of the founder George, grandson of Louis J., Sr. and son of Robert L. Koch. Robert L. Koch II began as Vice President of the newly formed Ashdee Division at age 23. With his ambition and drive for success, the sales rose; and two years later he became President of the Ashdee Division. As Vice President of George Koch Sons, Robert L. Koch II worked next to his father. In 1980, he became President; and following his fatherís death in 1989, he became CEO. In 1998, he was named Indiana Entrepreneur of the Year by Indianaís Chamber of Commerce.
He graduated cum laude with a mechanical engineering degree from the University of Notre Dame and earned an MBA from the University of Pittsburgh. Since he became president in 1980, company sales have increased more than five times.
James H. Muehlbauer, son-in-law to Robert L. Koch, joined the company in 1966, as Engineering Manager of the Ashdee Division and later the Industrial Division. In 1982, he was named Executive Vice President, and in 1999, President of George Koch Sons, LLC, a subsidiary of Koch Enterprises, Inc. He holds a BS in Mechanical Engineering and an MS in Industrial Administration from Purdue University, and in 1991 received the Purdue University Alumni Association Citizenship Award.
Innovation and excellence have always been the George Koch Sons philosophy. From George Kochís example of determination, optimism and faith in our industrial tomorrow, George Koch Sons has grown into the diverse corporation it is today. George Koch Sons expanded to include the Air Conditioning, Automotive, Industrial, Technical Products and Machine Services Divisions.
Robert L. Koch II explains that the success of the company can be viewed as an algebra problem. One side of the equation includes ownership of businesses in different industries. "All our business efforts havenít been put into one product [or] one type of business, but different kinds of products and different types of businesses. All of our subsidiaries are also in different business cycles. When one product is not selling well, another may be in demand. Owning many different types of businesses in different business cycles balances out the highs and lows that one so often sees in the manufacturing world. This side of the equation also includes educated, talented, dedicated and loyal employees who believe in GKS and the services we offer. This makes for a winning combination. Without either one of these parts, we would not be where we are today."
There are many firsts for George Koch Sons. George Koch Sons bought the first franchise of the Carrier Air Conditioner, received the largest sheetmetal contract and started Santa Claus Land, the first theme park in the US. Today, KOCH Enterprises, Inc. owns four subsidiaries, all family owned and continues to be family operated. KOCH Enterprises has beaten the odds and continues to beat the odds.
From the small tin shop on Pennsylvania Street, to a diversified industry with 3,500 employees and a manufacturing area of more than a million square feet, KOCH Enterprises, Inc. has grown enormously from Georgeís Tin Shop. Throughout the past century, the companyís reputation has not only been based on the quality workmanship of trained and experienced craftsmen, but also on a tradition of excellence that dates back to 1873.