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Going from a tiny shop to an industry leader

You might say Gleason Corp., which is preparing to mark its 150th anniversary, helps make the gears of industries turn all over the world.

“We offer to the market everything they need to produce gears,” said Alan Finegan, director of marketing and a longtime Gleason employee.

Leading companies, from automobile parts manufacturers to those in the aerospace industry, make use of Gleason’s products. The company employs nearly 2,500 people worldwide, with around 700 of them at the Gleason Works, a block-long facility on University Avenue.

Not bad for a business that started out as a tiny Rochester shop.

According to “The Gleason Works, 1865-1965,” a company publication, Gleason’s beginnings go back to when Irish emigre William Gleason joined John Connell to start a two-man shop in Brown’s Race. Back then, readily available water power drew such businesses to that area like a magnet.

“Brown’s Race was the first industrial area in our city,” said Christine Ridarsky, City of Rochester historian.

Three years later, Gleason and Connell joined with Col. James Graham to form the partnership of Connell, Gleason & Graham, which manufactured engine lathes, planers and woodworking machinery.

Gleason, a trained mechanic, designed all of the firm’s line of metal working tools and machines. Sixty-six-hour work weeks were normal.

That partnership eventually dissolved, and Gleason went on to found the Gleason Tool Co. in 1875. The following year, he patented a machine of his own design that helped revolutionize the gear-making industry: the first commercially practical bevel gear planer.

Bevel gears transmit power at right angles—think of two whirring, toothed cones nose-to-nose—and must be made to close tolerances to function properly. Gleason’s bevel gear planer automatically cut gears with great precision time after time.

“When a gear was cut on that machine, subsequent gears, cut with everything set the same on the machine, would be identical,” said Gary Kimmet, who retired from Gleason in 2008 as vice president, worldwide sales and marketing.

Fire destroyed Gleason’s shop in 1889, but he rebuilt and was soon at work designing an entirely new line of machines. As the market for bevel gears grew, his firm came to specialize in the design, manufacture and sale of progressively more advanced bevel gear-making machinery, which it sold to companies that used such gears.

The company hired its first European representative in 1890, and three years later sent William Gleason’s daughter, Kate Gleason, overseas to secure orders for its products. In 1903, the firm incorporated as the Gleason Works.

Demand for Gleason’s machines grew, as did his firm’s need for space. In 1905, the firm began building upon land it had purchased at what is now 1000 University Ave.—the first building to rise was a foundry. In 1911, those in charge of the Gleason Works decided to transfer all of its production facilities from Brown’s Race to that site.

As the American auto industry grew in the 1920s, its need for bevel gear machinery rose with it.

“Virtually all motor vehicles were rear-drive, which means that the engines were north-south (and) you sent power east-west,” Finegan said. “Nearly all motor vehicles had bevel gears in them.”

By the time Kimmet joined the Gleason Works’ research and development department in 1969, its main facility on University Avenue hummed with activity. More than 3,000 people worked at the plant, which produced gear-making machinery and the tools. Just about everything—from manufacturing the components of gear-making machines to assembling the finished products—was done in-house.

“All those people were needed because the machines were very, very complicated,” Kimmet explained. “They had thousands of individual parts.”

All of that began to change in 1973, when the Organization of Petroleum Exporting Countries oil embargo hit. Drastic gas shortages drove car buyers toward more fuel-efficient vehicles and prompted Congress to radically increase automobile and light truck mileage standards.

Responding to new market demands, auto makers re-engineered many of their models, creating front-wheel-drive vehicles that were smaller, lighter and more fuel-efficient.

“Front-wheel-drive cars did not use bevel gears, and it knocked the heck out of our business,” Finegan said.

As demands for its primary products fell, the Gleason Works began to focus upon manufacturing machinery for the making of cylindrical gears—flat-faced, circular gears with teeth on the outer rim. Though the market for such gears is greater—even rear-wheel-drive vehicles use more of them than bevel gears—so was the competition for customers.

“The people that make equipment for making cylindrical gears … there’s many more of them out there,” Finegan said.

While taking on the challenges of the new gear market, the Gleason Works continued to evolve—it became Gleason Corp. in 1984. At the same time, it grew more technologically advanced.

“The computer replaced a number of functions that were performed mechanically,” Kimmet said.

Though it developed its own machinery for making cylindrical gears—such as the Phoenix line of gear-cutting machines—Gleason chose to widen its presence in that market via acquisitions. The 1996 acquisition of the German company Hermann Pfauter GmbH & Co. was a major milestone.

“Pfauter was nearly the same size as Gleason at the time,” Finegan said. “They were a real player in gear hobbing, (cutting) gear grinding, gear cutting tools.”

Gleason’s acquisition of the Pfauter Group also gave the corporation a competitive edge in Europe.

“You can be a lot more competitive manufacturing where you’re selling products,” Finegan asserted.

Gleason Corp. has acquired several other firms over the years, while continuing to evolve as a business. In 2000, after some 32 years as a publicly traded firm, the corporation decided to go private.

A team consisting of the Gleason Foundation, the Gleason family’s charitable organization, corporation management and Vestar Capital LLC bought a majority of Gleason’s stock.

Gleason hired Brighton Securities Corp. to help with parts of the buy-up.

Though Brighton Securities chairman George Conboy admits he does not know why Gleason took that action, he said it probably did so because of the way the market seemed to treat the corporation’s stock.

“Insiders felt the company was worth a good deal more than the value assigned to it,” he said. “If the market was not going to value it adequately, they’d buy out … all those public shareholders,” Conboy said.

Heavy equipment manufacturers, especially those linked to the auto industry, commonly suffer at the hands of the market in this way, he said.

Gleason’s stock acquisition also gave the corporation greater freedom of action.

“It allowed them to take a more business-appropriate focus, and not a focus on ‘What’s our quarterly earnings number … will it please the media … will it please the shareholders?’” Conboy said.

Gleason currently has 12 production sites in six countries—including China and India—along with numerous sales offices and technical centers.

“We have the broadest product offering … and we have the broadest geographical coverage of our industry worldwide,” Finegan said.

Mike Costanza is a Rochester-area freelance writer.

6/12/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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