Berkshire Beyond Buffett(11)

Table 2.5

Acquisition Times

Insurance Non-Insurance

1960s National Indemnity (NICO), National Fire & Marine

1970s BH Homestate Buffalo News, See’s, Wesco

1980s Borsheim, Fechheimer, Nebraska Furniture Mart, Scott Fetzer

1990s Central States, GEICO, Gen Re, Kansas Bankers Surety Ben Bridge, H.H. Brown, Dairy Queen, FlightSafety, Helzberg Diamonds, Jordan’s, Star, MidAmerican (Berkshire Hathaway) Energy, NetJets, RC Willey

2000–2005 Benjamin Moore, Clayton, CTB, CORT, Forest River, Fruit of the Loom, Garan, Johns Manville, Justin, McLane, MiTek, Pampered Chef, Shaw, XTRA

2006–2010 Applied Underwriters, BoatUS, Medical Protective, US Liability Business Wire, ISCAR/IMC, Larson-Juhl, Marmon Group, Richline, TTI

2010s Guard BNSF, Lubrizol, Oriental Trading


Table 2.6

Ownership Types

Public (Dispersed Ownership) Public (Sizable Family Ownership)

BNSF Benjamin Moore

CORT Clayton Homes

Fruit of the Loom CTB

Gen Re Dairy Queen

Johns Manville FlightSafety

Lubrizol Garan

MidAmerican (Berkshire Hathaway) Energy Justin/Acme

XTRA Shaw Industries

Wesco


Table 2.7

Founding Times

Insurance Non-Insurance

19th century Medical Protective Benjamin Moore, BNSF, H.H. Brown, Buffalo News, Fechheimer, Fruit of the Loom, Johns Manville, Justin, McLane

20th century pre–World War II GEICO, Gen Re, National Indemnity (NICO) Acme, Ben Bridge, Borsheim, Dairy Queen, Helzberg Diamonds, Jordan’s, Lubrizol, Nebraska Furniture Mart, Oriental Trading, See’s, Star, RC Willey

20th century post–World War II Applied Underwriters, BoatUS, Central States, Kansas Bankers Surety Business Wire, Clayton, CORT, CTB, FlightSafety, Forest River, Garan, ISCAR/IMC, Larson-Juhl, Marmon Group, MidAmerican (Berkshire Hathaway) Energy, NetJets, Pampered Chef, Scott Fetzer, Shaw, TTI, XTRA

21st century Richline


It is frequently said that Berkshire subsidiaries are very old, but this is also not the case. Rather, they are of different vintages. Ten date to the nineteenth century (Fechheimer being the oldest, dating to 1842); half were founded before World War II, and the other half since (see table 2.7). Among the youngest are Richline, a jewelry manufacturer established in 2007, and Forest River, the recreational vehicle manufacturer founded in 1996 out of the ashes of an older group of assets. Of contestable age, given corporate mergers, reorganizations, and consolidations, is Burlington Northern Santa Fe, which dates to 1849 but was formed in 1995, and Berkshire Hathaway Energy, formed in 1998 but the product of mergers and acquisitions by a company founded in 1971.

Berkshire also claims geographic diversity. Nearly half of the states in the United States are home to headquarters of one or more Berkshire subsidiaries, which dot the map across the country (see figure 2.1 and table 2.8). Omaha is home to Berkshire’s headquarters, several insurance subsidiaries, and four other subsidiaries. Another fifteen Berkshire subsidiaries cross the Midwest, seven are located out west, eleven are in the south, and nine are in the east





Figure 2.1

Map of Berkshire Hathaway companies.


The locations of Berkshire subsidiary headquarters reflect that Berkshire is principally an American company, though several subsidiaries—Gen Re, Lubrizol, and MiTek among them—have long maintained international operations. Even so, Berkshire has only acquired one significant non-U.S. subsidiary: ISCAR/IMC, a global leader in the manufacture of metal cutting tools.14

ISCAR/IMC was founded in 1952 by Stef Wertheimer, today an Israeli billionaire, who in 1937, at age nine, fled Germany with his parents to escape Hitler’s Nazism. The family settled in Tel Aviv, where Wertheimer later joined the British Royal Air Force (RAF) as an equipment technician. Using the skills he acquired with the RAF, Wertheimer opened a small metal tool cutting factory in the backyard of his home, which he called ISCAR, short for Israel Carbide.

Wertheimer and his family, led by his son Eitan, transformed the tool company into the world’s largest metalworking network. ISCAR is the flagship member of a group of metalworking firms called International Metalworking Companies B.V. (IMC). The group consists of scores of subsidiaries founded by local entrepreneurs over the past century and now operates in a dozen countries. All manufacture specialty metal products, primarily for domestic aerospace and automotive industries. IMC’s products are small, cheap tools used in the large expensive machinery of customers. The value added by these tools is substantial, as they make the machinery more efficient, thereby increasing customer profits.


Table 2.8

States Hosting Berkshire’s Subsidiaries

MIDWEST

Nebraska (all in Omaha) Applied Underwriters, BH Homestate, BH Media, Borhseim, Central States, Nebraska Furniture Mart, NICO, Oriental Trading