“If I thought it was better for the business to have a family member in it, I’d find one somewhere,” insists David Linwood Coffin Sr., chairman of The Dexter Corporation. “I think the family has done better by parting with history.”
Coffin, 64, retired as chief executive of Dexter at year’s end, and it was announced that for the first time in the company’s history, which goes back to pre-Revolutionary War days, a nonfamily member, K. Grahame Walker, was taking over as CEO.
The business started by Seth Dexter in Windsor Locks, Connecticut, is the oldest company listed on the New York Stock Exchange. It has been in the Dexter and Coffin families for seven generations (the New York Times account of the leadership change said 17 generations, which would have taken it back to Columbus!).
David Coffin Sr. did look for a relative to succeed himself as CEO. His oldest child, Deborah, 37, is a psychologist in New Hampshire who raises sheep. His son Robert, 30, buys and sells classic cars in Connecticut. The only possible candidate was his oldest son, David Coffin Jr., 34, who lasted only three years in the company and quit in 1985 to become a dealer in commercial real estate.
Though disappointed that David Jr. did not choose to remain in the business, Coffin says, “Do you want to take somebody and try to tailor that person for the business, or attempt to, when they really don’t want to be tailored?” But one reason David Jr. quit may have been his confusion over the aims of his father’s succession plan.
The Coffins, whose main pastime over the years seems to have been flying airplanes (see below), have tried to keep their family’s venturesome spirit alive in the business. Some of David Sr.’s 40 acquisitions during his tenure as CEO did not turn out very well, and his successor, the British-born Walker, 52, wants a more focused company.
But Dexter is a family-controlled company that has grown through flexibility, by its willingness to “part with history” when necessary, by plowing profits back into product development, and by finding the best talent to manage the company. What started out as a tiny cloth-finishing factory on the banks of a canal a few miles from Hartford is now a publicly owned, $849 million Furtune 500 company making an assortment of paper and plastic products in this country and abroad.
Many details of the family’s history vanished in 1947, the year that David Sr. joined the company. Soon after he arrived, he was told that all the “junk” — correspondence and records dating back to the firm’s founding in 1767 — had been cleaned out of the warehouse and taken to the dump. Later, he gathered what documents be could, along with recollections of long-time employees and family friends, and wrote a short company history.
The founder, Seth Dexter, was a young man who tried his hand at several different businesses. At the original cloth-finishing plant, he also trained people to work in other textile factories. He opened a saw mill and, later, a grist mill. As the grain industry moved west, Seth’s grist mill became a feed mill, and he built a store that sold provisions to pioneers heading west. The store survived until 1928 when it was razed for a parking lot for employees.
Little is known about Seth II, David laments, except that business must have picked up by then, because Seth’s son was said to have been the wealthiest man in town. In 1797, he was reported to be worth about $8,000.
The company’s later success was built largely on the inventive energies of Seth II’s son, Charles Haskell Dexter, who is described as “both mechanically and commercially minded.” He developed its first important product, working in the basement of the old grist mill, where Charles experimented with some manila rope. According to David Sr., Charles made a wrapping paper out of it that was so strong “it took a man of some pull to tear it.”
Charles started making paper by using the Manila jute in saltpeter bags from the gunpowder mills in Hazardville, Connecticut. Soon he was hand-producing 200 pounds a day of his manila wrappers with hemp imported from the Philippines and in 1840 moved his equipment to a building on the east bank of the canal. The company is still making paper out of hemp on that site, which displays the original weather-worn sign, “C.H. Dexter and Sons.”
Charles, whom David’s history describes in his later years as suffering from rheumatism and “slightly stooped,” apparently relegated equal management responsibility to his son, Edwin, and a son-in-law, Herbert Coffin. Herbert, and not Edwin, eventually inherited ownership of the company — David is not sure why — but the brothers in-law continued to work together after Charles died in 1869 at age 59. Demand for paper was growing and they continued to experiment with new papermaking techniques.
After Herbert Coffin died in 1901, his two sons, Arthur D. (David Sr.’s grandfather) and Herbert R Jr., took over. “One made money and the other spent it,” David notes. “For instance, Herbert gave a park to the town of Windsor Locks, then he couldn’t pay for it. So my grandfather paid for it.”
Arthur and his son, Dexter Drake Coffin Sr., aggressively pursued technical breakthroughs that laid the foundation for the company’s diversification. One of their best hires was Fay Osborne, a recent graduate of the Massachusetts Institute of Technology. Osborne is credited with applying advances in production of long-fiber hemp to create a porous paper for two new company products: toilet paper and, later, tea bags. The company produced the first packaged toilet paper, which came with a wire loop that could be hung on a nail or hook. (One package of Dexter’s Star Mills premium brand is on display with other company products in the lobby of the three-story headquarters.)
The company stopped making toilet paper in the thirties after a competitor came to market with a softer, wood-pulp brand. But Dexter was by then making a carbon-coated paper for photo prints and also introduced the first paper for tea bags. Another innovation that emerged from Osbome’s laboratory was Staybrite, a tissue for protecting silverware and other polished metals against tarnish. Osborne was eventually promoted to vice-president and technical director of the company.
Following his father’s sudden death late in 1936, Dexter Coffin Sr., at age 38, became president. He bad little formal preparation for the job and felt little compunction about breaking with the business traditions of previous generations.
In those days, according to David Sr., there were a lot of “no-nos” — unwritten company rules. For example, the family did not want to let the company grow so big that it was beyond their capacity to manage. They would not hire anyone except residents of Windsor Locks. They would not pay dividends to family members (preferring to reinvest profits in research), and, to make sure the central Dexter-Coffin line maintained solid control of the company, they would not give stock to female members.
“My father and I did away with all those rules,” David Sr. recalls proudly. Even before it went public in 1967, Dexter Corp. began to pay dividends to family shareholders, and some of the family’s 15 percent stake has passed to female relatives (Dexter Sr.’s first wife, Elizabeth, was an active board member until her death in 1962).
When Dexter Sr. was 60, in 1958, he walked into David’s office and said, “You’ve just been elected chief executive officer. If you want my advice, you know where to find me.”
Even though David had been working for Dexter Corp. for 11 years, he was shocked. His father told him: “My father died before he trained me. I want to give you the opportunity to consult with me.”
And he did, for eight years. The son called Dexter Sr. “chairman,” not “father,” and he tended to be somewhat formal and serious of mien. The father and an associate, Harold Fleming, used to play tricks on him. Fleming, a vice-president of corporate development, now retired, recalls:
“Dexter Sr. used to come by and say, ‘Let’s go in and worry David a little bit.’ We’d kid him, give him a lot of free advice with our tongues in our cheeks. Once we tried to convince him to give everyone a 10 percent raise because morale was low. David would kind of look us over and give us his ‘Coffin look.’ ‘We’d all have a good laugh later.”
David, whose mostly gray hair is slicked back neatly, is no longer playing straight man. During his tenure as chief executive, he led the company into diverse new businesses and joint ventures. The company grew from $9.5 million in sales in 1958 to $849 million in 1989. All told, the company now employs 5,400 people in the United States and 16 other countries including Belgium, the United Kingdom, and Hong Kong. In its own plants and through joint ventures, it now manufactures a wide variety of products, from plastics for baby pacifiers and car bumpers to sealants, coatings, and paper for tea bags and disposable surgical masks and gowns.
It’s a vastly changed company from the one David Coffin Sr. took over, and so it’s not surprising that his plan for the training of his son, David Jr., was therefore much different from the one he received from his father. David Jr. says, “I basically did not work with my dad at all.”
David Jr. joined the company after earning an MBA in marketing and finance at the University of Denver. He felt that was important preparation for the career he knew he would eventually be expected to pursue at Dexter.
“Nobody ever held a gun to my head,” he says about his decision to work at the company, “but I thought it was what I ought to do.” His first assignments in the corporate finance and development departments lasted a year and a half. He then spent an equal amount of time in each of three areas: operations, sales, and marketing of various product lines. “I enjoyed the operations end more,” he recalls. “I liked the hands-on type of thing. But some of the audit and accounting work was less appealing.”
The training program was thus designed to give David Jr. exposure to several different divisions and departments. His father seems to have deliberately kept his distance. “I think my father was aware of what I was likely to run into as his son,” David Jr. says. “As such, I was consciously treated like an unprivileged employee.”
The approach, David Jr. admits, left him somewhat confused. “I didn’t understand much about what was going through my father’s head, about the road map I was following, if there was one,” he says. “I was just basically accommodating, just following what was advised day to day, quarter to quarter, without knowing the long-range scenario.
“I felt it was too early to inquire about the big picture. Looking back, I wish I had pressed the issue. I might have had a better feeling about the timing and how long I’d have to deal with some of the things I was uncomfortable with.”
But even a clearer idea of the succession plan may not have kept David Jr. at the Dexter Corp. He had other reasons for leaving. “On the business side,” he insists, “I was not comfortable with the entrepreneurial restraints and the short term financial orientation that was imposed by Wall Street. I also didn’t appreciate the internal politics of large corporate structures. And, as the son of the chairman, I felt my name often was more of a liability than an asset — I was under a microscope a lot of the time.”
When he finally quit, he knew it was “at the risk of disappointing my father, and knowing my responsibility for ending an unusually long family involvement,” he says. “But I think my father understood my position and respected my decision.”
David Sr. admits he was disappointed, but not too surprised. “I had gotten rumblings that he wanted to participate in a smaller business,” the father says.
Worth Loomis, Dexter’s recently retired (nonfamily) president, recalls: “David Jr. did a fine job. He had a good way with customers and an interest in developing new products. He left partly because of youthful impatience with the long, slow progress of product development in a highly technical business such as ours.”
But Harold Fleming, the former head of corporate development, to whom David Jr. once reported, says: “He used to watch the clock. I used to tell him, ‘You have to hang around to set an example.’ He’s smart and competent, but I don’t think he was dedicated enough.”
With David Jr. gone, the prospects of a family successor faded. David Sr. has an older brother, Dexter Jr., who spent his early career as a commercial pilot and didn’t join the firm until 1951, after David was well along in his executive training. “We’re two very opposite personalities,” David Sr. says. “He’s more of an extrovert than I am. And he didn’t like the confinement of the corporation.”
Dexter Jr., who was not available for comment, left the business after nine years and became an airplane and yacht broker in Florida. Now 69, he is retired. Although he maintained a personal interest in the business for many years, there was always a certain amount of tension between the brothers. “Even if we had gotten along,” David Sr. insists, “I think he would ultimately have chosen to leave.” He adds, “But it didn’t help that I was his boss.”
Dexter Jr. has two sons and three daughters, but none ever worked for the company. David Sr. deflects questions about them but does not deny the assertion made by one insider that “those who were qualified didn’t want in; those who wanted in weren’t qualified.”
So the Dexter Corp. rolls on, with K. Grahame Walker, a graduate of the Britannia Royal Naval College and the Institute of Mechanical Engineers, in the driver’s seat. Walker came to the company in 1967 with its acquisition of Hysol, a maker of specialty chemicals. He was managing Hysol’s U.K. office at the time. He went to California in 1979 as president of the Hysol division and relocated to corporate headquarters in 1985, with his appointment as senior vice-president.
The 23-year veteran will have to tie up some of the loose ends left by David Sr. and give the company a clearer idea of where it is heading. Earnings in 1988 plunged 17 percent, mostly due to increases in the prices of raw materials. But one of David Sr.’s acquisitions proved costly, too. As Dexter Corp. was reorganizing the new division, which makes plastic car bumpers, it discovered that a thermoplastic compound had not been properly made and the defect had to be corrected, at great cost. Another expense was a $6.6 million write-off from the divestiture of Dexter Corp.’s sailcloth and sailmaker’s hardware division.
Dexter Corp.’s stock price has traded between 20 1/8 and 34 1/4 during 1989, or about 11 to 17 times earnings. Reports of bids for the company, dismissed as rumors by David Sr. nevertheless gave some upward momentum to the stock and cushioned the downward pressure on its price. Karen Lane, an analyst at Merrill Lynch, sees encouraging long-term prospects for Dexter Corp. “It’s a good company, fairly well situated in a lot of businesses,” she explains. “They are positioning themselves better, too, with cross-marketing synergies and manufacturing consolidations that will help the divisions work better together.”
Looking back, David Sr. is candid about his business fumbles. He admits that some of his bold acquisitions during the past decade didn’t pan out, among them an industrial cleaning fluids plant in Atlanta and a paper mill in France. “But, on balance, I think we’ve made money on most of the mistakes, or broken even,” he says.
With David Sr. and his brother still controlling 15 percent of the stock, some family traditions will remain strong. Worth Loomis, the former president, points out that while the company’s longstanding aversion to debt has been somewhat softened, Dexter Corp. remains lightly leveraged, with long-term debt between 23 percent and 27 percent of capital. The company also continues to reinvest profits, with a minimum R&D ratio of 4 percent of sales. “Instead of using profit as a source of dole for the great family clan,” says Loomis, “Dexter has focused on trying to be a useful and relevant company. As long as David remains chairman and stays on the board, some of these policies will be strong and are likely to be passed on.”
Walker will permit no further diversification, however; in fact he plans to peel away product lines that don’t fit a narrower focus for the company. “We need to get away from the somewhat justified image we’ve created over the last decade of being a conglomerate, or a collection of largely unrelated businesses,” he says.
Walker insists his aim is not to dismantle all that David Coffin built, but to enhance Dexter’s global perspective and, more important, to give the company “the kind of technological and competitive thrust it needs to succeed in the longer term. You can’t be all things to all people.”
In his view, Dexter’s transition away from its family roots “is not going to create any shock waves.” He points out that nonfamily members have held the positions of president and chief operating officer for a very long time. Asked if it’s possible that David Jr. could decide to return one day and claim the top spot, Walker smiles, unruffled. “If he asked to come back,” he replies, “I think we would find a beneficial way to accommodate his talent. Should he demonstrate the right characteristics, he could ascend, but he’d have to do it on equal terms with everyone else.”
Fair enough. And meantime, Walker is unlikely to lose sleep, considering his and the board’s firm grip on the company. And the Coffins have little cause for complaint: Walker’s sober game plan for Dexter Corp. should add sizzle to their stake.
High-flying Coffins
Dexter Drake Coffin belonged to the first generation in his family to part with many traditions that harkened back to before the Revolution, but he inherited his ancestors’ enthusiasm for innovation and technology. Active in his community and in aviation, Dexter helped develop what is today Bradley International Airport near Hartford, Connecticut, 10 minutes from Windsor Locks. David Coffin says the airport was almost named after his father, but “it became generally recognized that Coffin was not an appropriate name for a commercial airport.” Dexter did, however, become the namesake of a bridge on Interstate Highway 91; the Dexter D. Coffin Sr. Bridge crosses the Connecticut River near the original Dexter Corp. factory.
Aviation became a family and a business passion. Just as his father, Arthur, had bought the first automobile in town, Dexter was the first in Windsor Locks to own an airplane. David claims that Dexter Corp. was one of the first to use aircraft in business.
For all his high-flying ideas, Dexter never became a pilot, but his wife, Elizabeth, did. “She had her own airplane,” recalls David, who also earned a pilot’s license. “I used to ask if I could borrow her airplane and she’d say, ‘Yes son, but you be very careful.'”
David considers aviation “a good discipline, because you learn not to make mistakes. There’s an old pilot’s saying, ‘There are old pilots and there are bold pilots, but there are no old, bold pilots.’ You try harder in an airplane not to make mistakes. They can be fatal.”
—J. P. H.