Graybar History

GraybarThe Story From its humble beginnings in 1869 as Gray & Barton to becoming one of North America’s largest employee-owned companies, Graybar has served as the vital link in the supply chain working to the advantage of its suppliers and customers. Who’s who in graybar’s history PREAMBLE TO GRAYBAR’S HISTORY Like any good story, Graybar’s legendary history features a cast of characters who defined and transformed the company into what it is today.

Enos Barton Born with the entrepreneurial spirit to one day lead a company, Enos Barton risked everything to co-found Gray and Barton, and built it from the ground up.

George Shawk A superb craftsman and telegraph maker, George Shawk owned a small manufacturing shop in Cleveland, which he would later co-own with Enos Barton and eventually sell his share to Elisha Gray. Elisha Gray Fascinated by all things electric, Elisha Gray was a renowned inventor of Setting the more than 70 patents who partnered with Enos Barton to form Gray and Barton.

Stage Anson Stager The general superintendent of raybar’s founding occurred One example of this was the the Western Union Telegraph during a period of U.S. history telegraph. The telegraph was an Company who helped Gray known as the Reconstruction, important tactical factor during the and Barton transform into the the post-Civil War era between 1865 Civil War, and it was also the fastest Western Electric Company through his integral business and 1877. way to transmit written messages relationships. As the Union was being restored over long distances during the post- Jay Gould and slavery was abolished, the nation war years. began to rebuild itself following the Until the Transcontinental The ninth richest man in American history, a railroad tremendous losses that had occurred Railroad was constructed in 1869, tycoon and financier who led during the war. While state and communication was delivered via Western Union to become one federal leaders grappled with telegraph or horse-and-buggy, mak- of the most profitable compa- nies in the country. complex legal and political issues, ing the telegraph essential to business individuals with vision and confi- operations. The telegraph industry dence created new opportunities was dominated by Western Union, Alexander Graham Bell for our nation’s growth. the first communications giant in Inventor and scientist who G is credited with the patent This era of invention and entre- the nation. of the telephone and a found- preneurialism laid the groundwork Together, the railroad and ing member of the National for significant industrial achievements Western Union connected America’s Geographic Society. and economic expansion. coasts, fueling westward expansion and the need for goods and services. Albert Salt As Graybar’s first president in 1925, Salt was a publicity mastermind and wasted no time in making Graybar a household name.

2 The Graybar Ssttory founding

Entrepreneurial Spirit he Graybar story begins widowed mother, who mortgaged to become a business partner on the with Enos Barton, a young, the family farm, to finance the pur- condition that the company would ambitious man who served chase. Barton moved to Cleveland, move from Cleveland to Chicago. as a telegrapher during the Civil War. where he and Shawk opened for In December 1869, the company Born in 1842, Barton was fascinated business in January 1869. opened its doors at 162 South Water by telegraphy and worked in the field Soon Shawk grew tired of the Street in Chicago. while finishing his education. He was business, and he sold his interest to With Stager’s influence, Western hired at age 20 as the Chief Operator Elisha Gray. Up until then, Gray had Union became Gray & Barton’s for Western Union’s office in been one of the firm’s best custom- biggest customer. In 1871 the Rochester, New York. Western Union ers. He was a professor at Oberlin Great Chicago Fire ravaged the city, also operated four manufacturing College and an inventor of telegraphic destroying Western Union’s head- shops around the country, including equipment. In the fall of 1869, Gray & quarters and most of its telegraph an operation in Cleveland. Barton was formed as a manufacturer lines. Fortunately, the fire stopped In 1867, Western Union closed of products, such as electric burglar two blocks short of Gray & Barton’s itsT Cleveland shop, which was pur- and fire alarms, Morse telegraph small plant. The company contin- chased by its superintendent, George instruments, railroad safety signals and ued to prosper as its 30 employees Shawk. On a trip to Rochester, he Gray’s electric annunciator – a buzzer worked diligently to help Western and Barton agreed to become busi- system used in hotels and offices. Union rebuild its infrastructure. ness partners. Full of entrepreneurial The success of Gray and Barton A year later, Stager convinced spirit, Barton left Western Union and attracted the attention of General Western Union to purchase one-third prepared to go into business with Anson Stager, general superintendent of Gray & Barton and the young firm Shawk. There was only one chal- of the Western Union Telegraph changed its name to the Western lenge – the 26-year-old Barton was Company. Stager trusted their Electric Manufacturing Company. strapped for cash. So he borrowed combined genius and could provide $1,500 – including $400 from his much-needed capital, so he offered

The Graybar Ssttory 3 all things electric

creating As Western Electric’s business expanded beyond the manufacturing of telephone equipment, American Opportunity Bell grew increasingly concerned. he invention of the telephone electrical equipment including trans- In 1921, Western Electric decided to in 1876 and the incandescent formers, fans and motors. Barton also split its manufacturing business and lamp in 1879 opened up a saw a huge opportunity in distribu- the supply department. Eventually, world of new opportunities for tion and envisioned a “department this led the company to spin off its Western Electric. Despite the rivalry store of electrical apparatus” that supply business as a separate entity between Alexander Graham Bell and would not only distribute Western in 1925. Elisha Gray over the patent for the Electric’s own products but also those Many names were in conten- telephone, Western Electric won a of other leading manufacturers. With tion for the new supply business, contract to manufacture telephones hard work and perseverance, Western but in honor of its co-founders, for the American Bell Telephone Electric opened its supply department management chose Graybar Electric Company, the predecessor of AT&T. in 1890, offering products from Klein Company, Inc. as the name of the American Bell eventually acquired Tools, Square D, Westinghouse company, which officially opened a majority ownership of Western Electric Company, Bryant Electric on December 11, 1925. Electric from Western Union and Company and General Electric. This Western Electric’s Vice President subsequentlyT awarded Western department also developed a sizable of purchasing, Albert Salt, was chosen Electric an exclusive contract to business selling Western Electric to lead the new company. Through a manufacture Bell telephones in telephone equipment. fortunate turn of events, Salt was able the United States. The rapid spread of electrical to establish Graybar’s first corporate In 1879, Thomas Edison invented service to homes across America office and put Graybar’s name on the incandescent bulb, leading to provided the supply department the world’s largest office building in the birth of the electrical industry. with an opportunity in the household the world at the time. To this day, Barton, who was serving as president appliance business, and the company the building at 420 Lexington is still of Western Electric, wanted a piece began offering items such as Western known as the Graybar building of the action. In the 1890s, Western Electric washing machines and (pictured above). Electric began manufacturing vacuum cleaners.

4 The Graybar story employee ownership Bell vs. Gray Alexander Graham Bell (pictured below) is credited with the patent of the telephone, but there are others who claim ownership of the invention, including Elisha Gray. On Valentine’s Day 1876, Elisha Gray submitted a caveat detailing his invention of transmitting musi- cal tones over a telegraph wire. A caveat is a formal declaration of the inventor’s intention to protect his idea before filing a complete appli- cation. Bell filed an application, but since their submissions were so similar, the Patent Office suspended the decision and offered Gray an opportunity to submit a full application. Since Gray’s financial backers were not interested in the telephone, Gray declined the invitation to of the century submit a full application and the patent was Sale awarded to Bell. ith President Albert Salt and the company was losing money leading the newly formed for the first time in its brief history. Even though Gray would never be recog- Graybar, the company In spite of the incredibly difficult nized as the inventor of the telephone, he was continued to prosper. But Western economic conditions, Graybar man- awarded more than 70 patents and authored Electric faced the challenge of finding agement led the company through a buyer that would maintain the the Great Depression with optimism. several books. Many books have been written generous pension, health and other The company continued to expand surrounding the controversy of the telephone benefits that employees enjoyed geographically and even added under Western Electric. 14 new offices in the 1930s. invention. In fact, The Telephone Gambit, When no outside buyers were Even during the Great Depression, written in 2008 by Seth Shulman, claims found, the employees offered to Graybar continued to make consis- purchase the company for $9 million. tent dividend payments and maintain that Bell stole the telephone’s key ingredient Initially, the employees paid benefits for employees and retirees. from Elisha Gray. $3 million, and Western accepted Graybar’s household appliance W$6 million of Graybar non-voting brand — encompassing washing preferred stock for the balance. machines, vacuum cleaners and other When the sale closed on January 1, products inherited from Western 1929, Graybar became the largest Electric — underwent dramatic employee-owned company in change in the late 1920s and early the nation. 1930s before succumbing to the lethal Just nine months after this effects of the Depression. For nearly momentous purchase, the stock mar- a decade from 1926 through 1934, ket crashed. By 1932, Graybar sales Graybar was a well-known had dropped 67 percent from 1929 consumer brand.

The Graybar Ssttory 5 the vital link in the supply chain

Soaring to AWARD-WINNING COMPANY PERFORMANCE New Heights Graybar is widely known by its suppliers, n 1934, the company chose that were scarce. Nearly 600 Graybar customers, employees and the communities it to discontinue its own line of employees served in the armed forces serves as a company with a great reputation that Graybar appliances, but remained during World War II, and women a distributor for other companies’ filled many of the jobs of men who adheres to high ethical and business standards. appliances. In fact, Graybar became went to war. In 2013, Graybar was recognized for the the nation’s largest appliance and The conclusion of World War II housewares wholesaler, distributing signaled the beginning of a golden twelfth consecutive year on the annual FORTUNE dozens of brands, but without incur- age for Graybar. As demand grew, World’s Most Admired Companies list. Graybar ring the costs of advertising and the company expanded its branches promotion. while adding new suppliers, products received many other accolades, including being In 1941, Graybar purchased the and customers. However, in 1970, named to Chief Executive Magazine’s “40 Best remaining shares of its stock from Western Electric stopped selling Companies for Leaders” list and Selling Power’s Western Electric, making the equipment through Graybar, ending company completely owned by the relationship between the two “Top 50 Companies to Sell For” list. employees and retirees, just as companies. I Graybar takes pride in being an industry it remains today. In 1968, the Carterfone decision The 1940s also marked an by the Federal Communications leader and these recognitions are a tribute to the important shift in Graybar’s busi- Commission helped create new company’s business model of employee ownership ness, as it focused on supporting the opportunities in the interconnect war effort by furnishing material and business, which Graybar was well and how Graybar strives to continually work to its equipment to the government. Sales positioned to capture. This set the customers’ advantage. representatives spent much of their stage for the robust growth of the

time advising customers on ways to company’s comm/data business. substitute available products for those

6 The Graybar Ssttory working to your advantage

Graybar established an innovative man- agement development program with Rutgers University, called the Graybar- to last Rutgers Supply Chain Management Built Program. The program helps develop n 1982, Jim Hoagland, a second- The late 1990s were marked by Graybar’s future leaders and has been generation employee and then rapid growth, fueled by the dot-com acclaimed nationally since its inception. Graybar President, moved the boom. But by 2000, the economy In 2008, Graybar articulated a list company’s headquarters to St. Louis, began to slow, dramatically affecting of core values that describe the princi- after being based in New York for Graybar’s business. Graybar’s earn- ples on which the company was built more than half a century. Hoagland ings sank to a 21-year low in 2003, throughout its entire history. In 2009, chose St. Louis because of its cost Graybar’s then Chairman, President Graybar celebrated 140 years of the advantages, central geographic loca- and CEO Bob Reynolds decided company’s original founding as well tion and quality of life. to make a bold investment in the as 80 years of employee ownership. In 1984, Graybar developed a zone long-term health of the company. He In 2012, Kathleen Mazzarella warehouse strategy and opened its first and the company’s board of direc- became the first woman to lead regional zone warehouse in Bethlehem, tors decided to dedicate $100 mil- Graybar. Her current focus for the Penn. Today, seven zones help speed lion toward an Enterprise Resource company is all about specializing in up Graybar’s distribution network. Planning (ERP) platform designed to customers, driving profitable growth I In 1987, Graybar implemented improve business operations and revi- and preserving Graybar’s employee a mainframe computer system from talize the company’s business. ownership structure. Honeywell Bull, the first enterprise- Today, this system supports From its humble beginnings as a level technology platform for the virtually every business process at small shop in Cleveland to the mul- organization. By the mid-1990s, the Graybar. Better yet, the company tibillion-dollar organization Graybar company developed an extensive experienced its three most successful has become, its philosophy of work- library of online training programs, years in the history of the company ing to the advantage of its customers, began using personal computers to from 2006-2008. suppliers, employees, shareholders improve productivity and even estab- Continuing Graybar’s history and communities continues to with- lished its first website. of employee development, in 2005, stand the test of time.

The Graybar Ssttory 7 graybar.com

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