Purchase of Allied Paper
by SCM Corp. - October 2, 1969

The proposal to merge Kalamazoo's Allied Paper Corporation with the giant SCM Corp. of New York as announced Friday will, if approved by Allied shareholders, bring about a different type of business combination than previous mergers in the city's paper industry.

In the opinion of Dr. Ward Harrison, chairman of the Allied board, the proposed $35,000,000 transaction will combine the manufacturing facilities and paper technology skills of the Allied organization with the widely diversified industrial family of SCM Corp. In other words, the proposed merger would not be the acquisition of Allied by another firm in the paper industry, but the addition of a paper making division, Allied, to SCM Corporation's other holdings.

The history of Allied in Kalamazoo dates back to 1922 when a group of old line paper companies merged. They included the Monarch and King mills in Kalamazoo and the Bardeen mill in Otsego. In 1956 the Bryant mill was added. During 1967 Allied acquired the Rex mill and then sold it to another paper manufacturer, Eaton-Dikeman Company.

In 1958, when the present management of Allied took over, the company decided to specialize in three areas of production: book papers, business papers and school supply papers.

The Allied book paper lines now include grades from the thinnest bible paper to heavy book paper for novels. Business papers include forms, mimeo, duplication and offset for reproduction machines, bond, carbon insets and special coated papers for electrostatic office copiers. School supply papers include notebook filler, construction and drawing paper, pads, envelopes and reproduction and typing papers.

In order to gain a foothold in the business forms industry, Allied started purchasing business forms printing companies in 1960 and now operates plants for this type of manufacture in Dayton, Ohio; Denison, Texas; Kansas City, Missouri; Leipsic, Ohio; Los Angeles, California and Petersburg, West Virginia. Allied's sales in this field are over $22 million per year.

In support of the school supply paper manufacturing effort, Allied in 1965 purchased plants in Marion, Indiana and Chicago, Illinois. These plants use over 15,000 tons of paper per year and have sales of approximately $10 million per year.

In 1963, Allied built a bleached kraft pulp mill In Jackson, Alabama. It now produces at a rate of 470 tons per day. In 1965 a 236-inch wide paper machine was added at Jackson at a cost of $11 million. It now produces up to 250 tons of paper per day.

In addition to Allied's paper-making effort the company has been carrying on a research program oriented toward new papers to be used in the swiftly expanding office reproducing systems.

Kalamazoo has continued as the headquarters of Allied and, with an approximate local employment of 1,300, it ranks second only to the Brown Co., as an employer and taxpayer within the City of Kalamazoo. Total Allied employment in the United States is 2,880 people.

The SCM Corporation today consists of the consolidation of the SCM Corporation and the Glidden Company, which merger occurred in July of this Year. In the Fortune magazine 500 biggest companies, SCM ranked 311th in 1966. The Glidden Company ranked 226th. The combined company SCM, Glidden and Allied when merged, with combined sales of over $700 million per year, should rank with the largest 100 companies in the United States.

The firm's present name, SCM Corporation, was adopted in 1963 and comes from three of its original component firms, Smith-Corona Inc., and Marchant Calculators Inc., both well known producers of typewriters and other business machines. T h e SCM executive offices are at 410 Park Ave., New York. (SCM was incorporated in New York in 1924 as successor to a company formed in 1903.

Since 1956 the company, then Smith-Corona Inc., has substantially diversified its activities. In 1956 it acquired Kleinschmidt Laboratories Inc., a manufacturer of telecommunications equipment and in 1958, Marchant Calculators Inc., a manufacturer of rotary calculators, and British Typewriters, a manufacturer of typewriters in England. In 1960 it entered the office copy field.

In 1966 it acquired the Proctor-Silex Corporation, a manufacturer of portable electric appliances and other housewares and industrial drying equipment, and, in 1967, L&W Machine Works, Inc, a manufacturer of textile finishing equipment, and The Shetland Co., Inc, a manufacturer of electric housewares and floor care equipment.

Also in 1967, the Glidden-Durkee Division was added by merger, Glidden is engaged in the manufacture and sale of a diversified group of products including food products, paints and chemicals.

The SCM Corporation, as currently constituted, has 30 percent of its sales in office equipment, 31 per cent in coatings, resins and chemicals, 26 percent in foods, 7 percent in household appliances and housewares and 6 per cent in other categories.

In the Office equipment field, SCM manufactures a broad line of electric and manual portable and office typewriters sold under the Smith-Corona name as well as manufacturing under a private label. The SCM electrostatic office copying machine enjoys the second largest distribution in the United States and requires very large quantities of specially coated papers.

SCM is one of the largest manufacturers of coatings and resins in the United States and is well known for its complete line of paints, enamels, lacquers, varnishes and other products. They are traded principally under the brand names Glidden and Spread-Satin.

The chemicals operation of Glidden-Durkee includes manufacture of pigments, colors, metal powders and organic chemicals. It is one of five major producers of titanium dioxide used in paper as well as in paints. Glidden-Durkee's organic chemicals are manufactured from the basic raw materials sulphate, turpentine and crude tail oil, by-products of the kraft paper industry, of which Allied is a part.

Glidden-Durkee's Durkee Foods operations produce industrial food products, specially prepared or packaged food products for the food service industry and a well known line of consumer food items. Fourteen plants in the United States and one in Belgium are used in these operations.

Proctor-Silex Incorporated, a subsidiary of SCM, manufacturers, at four plants in the United States and one plant in Canada, irons and ironing tables, pads and covers, toasters, coffee makers, ice cream freezers, juicers, drink mixers and other household appliances.

Shetland Incorporated, another subsidiary, produces, at one plant in the United States and one in Canada, electric floor polishers, rug shampooers and related floor care products, vacuum cleaners and electric blenders, knives and can openers. The principal trademarks are "Shetland" and "Lewyt".

The research, engineering and product development efforts of SCM are directed primarily toward improvement of existing products lines and development of new products in related fields Approximately 1,000 employees are engaged in these efforts. Research and development expenditures during the fiscal years ended June 30, 1965, 1966 and 1967 amounted to approximately $9,909,000, $11,013,000 and $13,465,000, respectively.

In commenting on the proposed acquisition of Allied by SCM, Dr. Harrison, who would remain chief executive officer of the Allied Division of SCM Corp., notes the several areas in which the two firms complement each other.

"In the field of office copiers," he notes, "SCM is very knowledgeable. These machines require a special type of paper. SCM does not now manufacture such paper. Allied does and can bring this specialized knowledge to SCM.

"Again, Allied uses nearly 1,000 tons of titanium dioxide a year to whiten paper. SCM manufactures this chemical. Allied manufactures tail oil and turpentine as a byproduct of its southern mill. SCM has a plant exclusively devoted to refining these products. The combination of effort is obvious.

"It is our feeling that our Allied employees, and the entire Kalamazoo community, should be pleased at the prospect of becoming associated with the well diversified SCM Corporation."
 

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