For more than 165 years, Walworth has represented the summit of valve technology. But when Mexican businessman Salomon Waisburd purchased the business in 2002, the company was virtually bankrupt. The turnaround that Waisburd subsequently engineered is one of the most compelling success stories of the 21st century. Dan Harvey describes how he brought it back from the brink of extinction.
When Salomon Waisburd purchased the Walworth Company six years ago, he became the proud owner of a business entity that has endured for almost two centuries. However, as he entered into the bargain, he harbored no delusions. He knew full well what he was getting himself into: The company he decided to acquire, while one of the best known names in valve technology, had fallen upon hard times.
However, as the floundering organization’s newest chief executive officer, Waisburd, capably assisted by his son, Jacobo Waisburd, the company’s new vice president of operations, turned things around quite nicely in a remarkably brief period.
Today, Walworth, now headquartered in Mexico City and renamed Walworth Valvulas, S.A. de C.V., is completely revitalized and provides a variety of fluid control valves for numerous industries and customers throughout the world.
FROM BOSTON TO MEXICO
To pinpoint Walworth’s beginning, you need to go way back to 1842, when founder James Walworth established the company in Boston. “It is one of the oldest valve companies in the world, and through the years it produced about 40,000 different products,” says Jacobo Waisburd. “In fact, the company invented many of the valves still used throughout industries.”
The company found its way into Mexico following a long history of acquisitions and takeovers, relates Waisburd. Eventually, in the 1970s, a Mexican business group purchased Walworth. “The group closed down all of the U.S. facilities and moved its headquarters here, where it became a holding company that expanded itself to include more than 50 businesses,” he says.
However, the rapid expansion extracted a financial toll, as the Mexican investors incurred large debts that eventually drove the company into bankruptcy. “In 2002, Walworth went up for sale once again, and that’s when my father entered the picture,” recalls Waisburd.
Salomon Waisburd’s role in the ongoing scenario wasn’t an easy part to play. Essentially, he bought himself a company that had no money or inventory. By the time he officially took charge, in January 2003, Walworth only had 180 employees. But Waisburd parlayed that remaining asset into a company turnaround. Members of the old engineering and sales teams possessed extensive experience and industry knowledge, and Waisburd leveraged the accumulated acumen into his planned revitalization. He further bolstered his efforts by placing a strong focus on customer service. In particular, he reduced delivery time. Before the company changed ownership for what is, hopefully, the final time, customers endured long wait times before seeing their orders filled. Walworth now delivers valves within 24 hours.
Walworth accomplished the service improvements by replenishing its inventory and establishing a substantial foundry network. “We work with five foundries in Mexico, which are the main source of our raw materials,” says Waisburd.
The increased inventory of raw materials enabled the new-generation Walworth to manufacture product at more attractive costs. Moreover, now able to place more products in the marketplace, Walworth enhanced its competitiveness.
“Also, if customers have an emergency, need to quickly change valves, or experience a problem in the field, we can immediately provide the service they need,” says Waisburd. “In Mexico, no other company provides such service.”
VERSATILE VALVE LINE
Today, Walworth’s product line includes butterfly valves, cast and forged ball valves, globe valves, gate valves, relief valves, stop check valves, tilting disc pressure seal valves and plug valves. Walworth builds all valves to meet or exceed international standards and their design addresses the rigorous specifications for various industries. “We service customers in just about any industry that requires fluid control, but our major sectors include oil and gas, chemical, petrochemical, pulp and paper, power generation, and wastewater treatment,” reports Waisburd.
Products are made with materials such as carbon and alloyed steels, austenitic and duplex stainless steels, nickel alloys, ductile iron, and bronze.
Walworth’s carefully engineered rebirth also entailed physical expansion. The company recently increased its main manufacturing facility in Mexico City to include 200,000 square feet. The new space accommodates new machining, warehousing and testing facilities and represents a $12 million investment. Specific infrastructure upgrades include CNC machining equipment, advanced computers and software systems, and NDE testing with magnetic particle, ultrasound and X-ray capabilities. The company also has in-house facilities for cryogenic, fire and fugitive emissions testing. Fugitive emissions testing, which Walworth accomplishes with methane and helium, addresses global concerns specifically related to volatile organic compounds emissions.
Enterprise expansion also included opening a Houston location in November 2007. In addition to its new office and warehousing space, the site accomplishes machining, modification and assembly specifically targeted to North American customers. “We established the 100,000-square foot site to act as our main location to service the United States and Canada, as Walworth valves are installed throughout North America,” comments Waisburd. “Also, we determined that it was critical to strengthen our presence in the U.S. marketplace.”
In addition, Walworth added to its China infrastructure by opening a new plant in Kunshan, which increased its Asian sites to three. “With our new Mexico, Houston and China facilities, we can easily service customers around the world,” says Waisburd.
Indeed, Walworth is a truly global player. It has extended its reach beyond North America, Central America and South America and into Algeria, Egypt, Israel, Kazakhstan, Kuwait, Malaysia, Nigeria, Qatar, and South Africa, as well as European countries and other countries in Asia.
FIVE-YEAR GROWTH SPURT
The Waisburd/Walworth era has already taken the company far in a very short time. “Initially, the situation was very difficult for us, because we came into a company that was in very bad shape,” relates Waisburd. “But we dealt very aggressively with the then existing problems and, as a result, we’ve enjoyed substantial growth each year.”
He reports that the company experienced 40-percent growth the first year that his father headed the company. In the second year, Walworth recorded 45-percent growth. The following year, growth increased to 50 percent. The past couple of years saw 25-percent growth. Translating all of that into dollars, Waisburd reveals: “We started with sales of $10 million a year. This year, we will do more than $75 million.”
Offering what can be considered a significant understatement, he adds, “So, looking over the past five years, we have been pretty successful in dealing with the problems that we inherited.”
Still, the company faces other challenges as it continues moving forward, including the increasing costs and availability of raw materials. But the Waisburds have positioned Walworth well to face these issues, by establishing its new facilities and increasing its inventory – measures that will ultimately enable it to better penetrate its target markets and deliver finished products to the market customers in a more timely fashion.
Looking ahead, Waisburd says the company is investing in yet another China facility, slated to open in 2009. “Also, we will be making investments in other products for oil exploration,” he adds. “As such, we plan to open facilities in Venezuela and Columbia, also in 2009. In addition, we’re exploring more possibilities in Europe.”
Still, Walworth considers itself a relatively small company in the valve market. “We compete against companies that record sales in the $800 million to $2 billion range,” indicates Waisburd.
As Waisburd’s assessment suggests a David vs. Goliath scenario, larger competitors may want to consider the kind of stones this smaller organization can sling. They should also be wary of the force and velocity behind the projectiles. After all, look how fast and far Walworth has come since the Waisburds took over.