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In the very first several months of McDermott's tenure, the company got an Austrian pump business and sold its 50 percent interest in Oil Characteristics Inc., a Tulsa, Oklahoma-based pump manufacturer for oil well. These moves were a sign of McDermott's desire to develop international market share and refocus the company's domestic company.
The acquisition was valued at roughly $51 million, consisting of the assumption of some $34 million in financial obligation. In 1995 McDermott separated the company's business offices from its manufacturing operations and moved the business's headquarters from Seneca Falls to Fairport, near Rochester. He believed managers were too near the company's operations; with added distance, he believed they would be able to better concentrate best well pump on strategic rather than functional issues.
Sales jumped in 1995 to $718.8 million, however incomes were flat at $18.1 million. However, the business was carrying out well under McDermott. Prior to restructuring charges, incomes per share were up 41 percent over 1994 and running earnings increased more than 26 percent. The business took a pre-tax restructuring charge of $18.5 million in connection with its divestiture of Environamics and the closing of its manufacturing centers in Venezuela.
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Goulds would continue to keep sales offices in Venezuela and make shipments there from its manufacturing facilities in the United States. In 1996 Goulds reported profits of $774 million and had more than 5,200 staff members throughout the world. It was a major supplier to engineering contractors all over the world. It was also the world's leading manufacturer of domestic well-water pump systems.
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The acquisition would be achieved through a tender deal to Goulds' shareholders at $37 a share, which was completed in May. According to Travis Engen, chairman, president, and CEO of ITT Industries, "This mix will produce the world's largest pump manufacturer and contribute substantial effectiveness for both development and expense enhancement." With the addition of Goulds Pumps, ITT Industries' fluid innovation service would represent more than 20 percent of the business's sales and contribute more than 25 percent of its operating earnings.
The fit between Goulds and ITT Industries was expected to be a good one. On the one hand, Goulds was a leading manufacturer of pumps for the industrial sector, while ITT Industries was a world leader in submersible pumps for local water treatment systems. In addition to cost performances, ITT Industries noted there was essential geographical performances in the mix.
Both business had operations in China, Taiwan, Singapore, Malaysia, and Indonesia. In Latin America, Goulds' presence in Venezuela and Mexico matched ITT Industries' operations in Chile, Argentina, and Brazil. The 2 companies together would serve more than 130 countries. Engen kept in mind, "The market's development and earnings capacity is most appealing in the developing world, where the integrated business will have access to the complete variety of infrastructure-related and commercial markets." ITT Industries' fluid technology business concentrated on the manufacture of pumps, valves, heat exchangers, and associated devices utilized to move, measure, and control fluids.
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Its markets consisted of wastewater treatment, chemical processing, construction, bio-pharmaceutical, aerospace, and general market. With the acquisition of Goulds, ITT Industries' fluid innovation company increased 34.9 percent in 1997 to $1.8 billion. Operating earnings, leaving out unique charges, was $156.7 million, a 38.4 percent boost over 1996. In General, ITT Industries had 1996 sales of $8.72 billion and was active in three main company sectors: fluid technology, automotive, and defense and electronics.
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The takeover was a friendly one, with ITT Industries' offer of $37 a share offering Goulds investors more value. The company's stock was underperforming in spite of 20 percent increases in net earnings for the past 2 years. As part of ITT Industries, Goulds would keep its own name and run as a completely owned subsidiary.
Then, in Might 1997, the Rochester Business Journal reported that McDermott would leave Goulds once the buyout was completed. It was revealed that Goulds would move its home offices back to Seneca Falls by January 1, 1998. ITT Industries desired to reintegrate Goulds' corporate managers with the business's production operations in Seneca Falls.
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It was originally McDermott's concept to separate leading management from operations as a way to improve effectiveness. Under McDermott's management, Goulds' bottom line and potential customers improved considerably. Although ITT Industries tried to persuade McDermott to stay on, he told the Rochester Business Journal, "I'm at a point where I do not think I could work for someone else." Roughly half of McDermott's management group left when he did.
Water Technologies; Industrial Products. Astor, Will, "Drawing Goulds Pumps' New Blueprint," Rochester Company Journal, March 31, 1995, p. 10., "Goulds CEO to Leave Company After Buyout," Rochester Organisation Journal, May 23, 1997, p. 1., "Goulds Ends Era of Ups, Downs by Consenting To Sale," Rochester Organisation Journal, April 25, 1997, p.
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1., "Goulds Pumps Readies for Growth in Demand," Rochester Organisation Journal, December 10, 1993, p. 4., "New Goulds Pumps CEO Targets Fundamentals," Rochester Organisation Journal, July 1, 1994, p. 1. Bruce, Caryn, "Goulds Pumps, Inc.," Central New York City Business Journal, July 1, 1991, p. 13. Ericson, Paul, "Matters of Survival: A Quality Strategy Revived Goulds Pumps, Inc., However Stephen Ardia States the War's Never Won," Rochester Business Journal, July 17, 1992, p.
10. Kurty, Diana, "Goulds Pumps Gets Innovative Ecological Pump Company," PR Newswire, October 27, 1993. Lambertsen, Mary Ann, "Goulds Pumps Names McDermott President and CEO," PR Newswire, June 27, 1994." ManufacturingSpecial Report: Goulds Pumps," Syracuse Organisation, March 1993, p. 6. Martin, Thomas R., "ITT Industries and Goulds Pumps Inc. Agree to $815 million Money Merger," PR Newswire, April 21, 1997. Morphy, John, "Goulds Pumps Announces Complete Year and 4th Quarter Results," PR Newswire, January 27, 1993. Murphy, Sean, "Goulds Pumps Announces Record Fourth Quarter Orders and Monetary Outcomes at Expected Level," PR Newswire, January 26, 1994., "Goulds Pumps Completes Acquisition of Leading Pump Maker in Austria," PR Newswire, December 5, 1994. Segelken, Jane Baker, "Seeing Red Puts This Business in the Black," Central New York Organisation Journal, February 1988, p.