Corporate History: Lincoln Electric

Lincoln Electric is a long time corporate citizen on Greater Cleveland.

John Lincoln founded Lincoln Electric Co. in 1895 to make and repair electric motors. John C. Lincoln Founded The Lincoln Electric Company with a capital investment of $200.00. The product: electric motors of his own design. By the time his younger brother James joined Lincoln as a salesman in 1907, John had expanded into rechargeable batteries and had also begun researching arc welding. John dedicated himself to research and left James to handle management.

In the workplace, James formed an advisory board made up of elected employee representatives from each department. Its twice-monthly meetings became a cornerstone of the company's Incentive Management System, which Lincoln based on six tenets: people as assets, Christian ethics, principles, simplicity, competition, and customer satisfaction. As part of the system, piecework pay and group life insurance (unusual at the time) were begun in 1915. Meanwhile, John perfected the electric arc welding machine that soon became the company's chief product, and in 1917 he formed The Lincoln Electric Welding School.

In 1934 workers offered to work longer hours during the Depression in exchange for a share of the company's profits; that year bonuses averaged 30% of pay. By the 1940s Lincoln was the world's #1 maker of arc-welding equipment, with subsidiaries in Australia, Canada, and the UK and licensees in Argentina, Brazil, Canada, and Mexico. Lincoln added a pension plan and an internal promotion program during WWII as ship manufacturing fueled demand for its products.

William Irrgang, a German engineer with 26 years at the company, succeeded James Lincoln as president in 1954 (James became chairman). Under Irrgang and Lincoln the company practiced conservative policies: It prohibited capital spending projects with paybacks greater than one year. Irrgang became chairman in 1965 and was named CEO (a new title) in 1972, the same year George Willis, a Harvard MBA and devotee of the Incentive Management System, became president. Willis was constrained by Irrgang's conservatism and the economic woes of the early 1980s. Sales dropped and though Lincoln's policy of not laying off workers was strained, workers shifted jobs into maintenance or sales work.

Irrgang died in 1986, leaving Willis in control. Willis quickly expanded product lines and geographic coverage. Soon the company's offerings included robotic and gas-based welding products. When he retired the next year, Willis left a legacy of expansion and debt. Though sales had doubled and the company's international presence had grown to 15 countries, debt had risen from about $18 million in 1988 to $222 million in 1993. Lincoln also had trouble exporting its incentive system to other countries. The company returned to profitability in 1994, cutting jobs and closing factories in Europe and Latin America and adding jobs in the US.

Anthony Massaro became CEO in 1996. He looked overseas for opportunities, including deals in China, Indonesia, and Italy. In 1997 Lincoln consolidated production at its European plants and agreed to settle some of the lawsuits alleging that a type of its welding wire contributed to building damage in California's 1994 Northridge earthquake.

In 1998 the company acquired Indalco, a Canada-based maker of aluminum welding wire, and Germany-based Uhrhan & Schwill, which made pipe-welding systems. It also obtained a 50% stake in Turkish welding company AS Kaynak and opened a distribution center near Johannesburg, South Africa. In 1999 Lincoln sold its electric motors business to Regal-Beloit.

In 2000 Lincoln bought a 35% stake in the Kuang Tai Metal Industrial, a Taiwan-based company that makes mild and stainless-steel welding wires. That year Lincoln was poised to acquire Italian welding consumables maker C.I.F.E., but canceled the deal and went after UK-based welding-equipment maker Charter. Unfortunately, that deal didn't work out either. In 2001 the company opened a new research facility in Cleveland; the next year it acquired 85% of Polish welding equipment maker Bester S.A.

In 2004 John Stropki replaced Anthony Massaro as president and CEO of Lincoln Electric. Mr. Stropki also became chairman when Mr. Massaro retired near the end of 2004.

Photo Credit: Lincoln Electric Company