Before Collinsville became the darling of Farmington Valley tourism and small-town polls, it was an industrial business center with an international reach and worldwide reputation. This, we knew.
There are details, however, of everyday Collins Company operational, manufacturing and financial dealings, which merit a second look. What’s valuable in this type of review is the opportunity to better appreciate how this company, with its unconventional business model and irreverent sensibilities, left an indelible path for the creative, entrepreneurial energy that still defines Collinsville today. About Town’s review begins and ends in 1946.
It was January/1946, arguably the height of Collins Company success, when Fortune published a detailed assessment of the business: “Collins Co., Collinsville, Conn: A phenomenon of Yankee shrewdness and conservatism bids, passes and survives.”
Fortune’s article, part expose, part puzzled respect, described the Collins Company as, “….the aging plant of an enterprise that is small business in one of its most profitable and most paradoxical manifestations.”
While at once describing the Company as quintessential New England, “at its most provincially conservative,” Fortune also characterized annual sales results as the work of “a lot of fancy international manipulation and fast pressure work.”
Founded in 1826 in an old, converted gristmill, the Collins Company grew to, “40 oddly assorted buildings…..which rambles over 35 acres along the river.” Fortune was also not impressed with the, “typical forge shop and small machine shop equipment, much of it very old.” Fortune further found the plant’s layout dysfunctional. It, “would discourage the most persevering efficiency engineer.”
The Company’s frugality, “second nature with Collins,” was highlighted in a number of respects. Prior to WWII, it ran a small steel mill for the purpose of salvaging scrap metal. By 1946, the Company was operating two electric-power plants and a steam plant, which in turn heated the office buildings, at no additional cost.
Selling the Brand
In 1845, the axe manufacturer produced its first machete. By 1918, a time when the Company had ceded much of its domestic market share to lower cost competitors, machetes had become their top seller. And by the time of the Fortune article, over 70 percent of the 5 million machetes purchased annually in Latin America were, “un Collins.” Customers could apparently request the brand by raising a clenched fist to the vendor, to signify the Collins trademark logo; or so the story went.
While the Company would continue to produce other tools, the 400 different types of machetes they manufactured would account for nearly 70 percent of sales to their foreign markets and represent 80 to 90 percent of the Company’s gross annual sales in 1946.
The Company was known for paying rapt attention to what Fortune called the, "whims of foreign customers;” cropped tips for the Cuban market; vermilion painted blades for the island of Puerto Rico, for example.
In 1946, the Company had about 650 stockholders. And, a maximum of 5 percent, of the 15,000 capital shares available, could be purchased by any single family. It was considered a solid investment, having paid out dividends every year since 1852.
In 1946, the $100 par-value capital stock offered investors just over a 5-percent yield. The going market price was $195. And between 1938 and 1946, the Company posted net earnings averaging just over 6 percent.
While pursuing a largely conservative strategy in terms of fiscal policy, the Company extended credit to their vendors, when necessary; at times up to 180 days. This was considered a high risk proposition in these business markets. They never lost money.
On another front, when advised by the New York banking establishment to abandon Brazilian and other Latin markets, due to a freeze on exchange rates, the Company moved ahead with shipments. They, again, never lost money and as a bonus deepened the well of goodwill they already had in these markets.
In the 1930’s, German manufacturers attempted a take over of the market by underselling Collin’s products by 40 to 50 percent. The Company responded by lowering prices, while keeping them 20 to 25 percent higher than the discounted models. The Company continued to maintain its premier position in the market.
By 1946, demand for machetes continued to exceed supply. The British were readying to re-enter the post-war market. Smaller domestic competitors were making in-roads into Latin America. And back in Collinsville, workers would be making themselves heard in ways that would throw the future into question.
Here’s the Deal
Coming on Tuesday, the people who made the Collins Company work ……. then not.
Thanks to Bill Volovski for the loaner of his vintage Fortune magazine!