GLOBAL INFORMATION XCHANGE

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Shareholders, Customers, Employees

_____________________________________________________________________________________
Vol. 1, Issue 7
July, 1997 _____________________________________________________________________________________ Global Now
By Larry Nance

This is the second in a series of articles about Global's businesses worldwide.

Of Rhinos and Large Machines
October first. The phone rings. "Tosha's going to have her calf any minute. Can you bring the guys down and video? It'll be a first." The response: "Sure."

Tosha and Mac are wild caught white rhinos at Fossil Rim Wildlife Center in Glen Rose, Texas who are part of the North American White Rhino Species Survival Plan established in 1982. White rhino are so called because of the white mud with which they cover themselves to keep cool in their native African habitat. They are really "wide" rhinos which describes their mouths used to graze grasses as opposed to black rhinos whose mouths are narrow, have a prehensile lip, and graze on bushes and the like. Tosha and Mac are so named because Gail and her group love and use Macintosh computers: Mac and Tosha. Their baby, when she comes, will be "Laptop."

A video and sound crew is installed in the rhino barn. By the way, rhinoceros are wonderful, gentle animals who love to have their ears scratched and rubbed, and eat oranges.

Full crew ... waiting: a day, then two, then a week, then the crew is thinned to four, then two weeks and the crew's down to the old director, camera guy and a grip; now we're into Thanksgiving. Then early in the morning December 6, two months later and 17 months round trip, the baby's here. Who knew! None of us had any history on this stuff.

Enter Rockleigh (Rock) S. Dawson, former banker and now 10-year veteran and President of Global's Ameri-Forge operation in Houston, Texas. Rock's office has a regular tremble that runs through it, like rhino chasing yuppie Land Rovers. You get used to the tremble quickly because it's bad if things are not shaking, if that regular compressive sound ever stops. That around-the-clock, year-'round compressive sound means money is being made with every "thump." Equipment "meantime-between-failure (MBF)" is as unpredictable as Tosha.

Ameri-Forge has been sitting by the Houston Ship Channel for 11 years. It's the largest forged flange manufacturing plant in the world. Rock's 110,000 square foot facility houses the "Dante-esque" beasts that shake the 39 acres: two 7,000, two 4,000, one 2,500, two 2,000, three 1,600, and one 650 ton mechanical presses made in Russia and Czechoslovakia. There's also a 3,000-ton hydraulic press made by Lake Erie that feeds the ring roller.

The late Dr. Paul Carlotti threw $13 million dollars on Channel waters upon founding the company, making his first Ameri-Forge flange in 1986. The business has gone from a 1986 goose egg to $50.5 million in sales last year supplying 50 customers with "round flat steel with holes" product that requires little effort to move it out the door, such is the demand. The 294 hourly and 25 exempt staff also manages and supports product machining, drilling, stamping, and painting.

First one shift, one press; then two presses, one shift; then three presses, two shifts. Today there are three shifts. Every press depends on computer driven die designs, robotics, and microprocessors. The "chips" regulate the exact length, weight, and volume of A105 red-orange heated steel bars rendered plastic before being sheared off and "thunked" into a black patty under the watchful eye of an operator with comparable heavy metal nerves and physical disposition.

Ameri-Forge began as an alternate to import pipe flanges destined to the oil patch. Ameri-Forge is now gearing up to also manufacture "undercarriage" components for earth-moving equipment and the like. Today, they can sell as many flanges as they can produce. Rock believes that Ameri-Forge can also pound out an estimated $130 million niche of the $700 million U.S. domestic undercarriage market. They are gearing up to do just that. The undercarriage market potential worldwide is an estimated $1.8 billion.

The 4,000-ton workhorse press was bought for about $3 million. It was pressed into 'round-the-clock operation some nine years ago. During that time it has made an estimated $100 million dollars in sold product. Then in April it died. Percussive maintenance, the fine art of whacking a device to get it working, didn't work. Who knew when Tosha would deliver! Who knew when ol' 4,000 would give it up; six months to get another, two months to install and get it back in production. In the meantime, production and gross goes straight into the toilet. And then, robotics goes down. Wheelbarrows and forklifts are pressed into service.

Yes, yes: there's production capacity constraints, mixing parts production between the 2 and 4,000 ton press to maximize efficiencies ... that's a given. But ol' 4,000's dead, robotics are down, so what now? It's miracle time.

"We start to work fixing the robotics. Then, we find another press in Houston," Rock says, between the comforting background whomps. "We had it installed and up and running; producing, within two months. That's unheard of. It just doesn't happen." But it did.

These rhino tough behemoths are not plug and play. They tower over ant sized operators passing around glowing metal with tongs and forklifts. These engineering marvels depend on a 21 mega-watt electrical substation out front that was designed and built by Dashiell specifically for Ameri-Forge. The substation is being expanded right now to meet growing production demands, and the reinstallation of the resurrected, refurbished 4,000 press which will suck up watts and joules as fast as hot steel can be micro-measured, extruded and sheared: "the key to the production process."

"We think we can do $200 million by 2001," Rock says. "$70 million of which are flanges, the rest undercarriage." Right now there's a $24 million, five-month backlog. More capacity constitutes lines on schematics on the table that jump in time with the whomps.

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Global Roundup

In The News

Dallas, TX (July 23, 1997) Global Industrial Technologies, Inc. (NYSE:GIX) announced today the signing of a definitive agreement for the sale of Marion Power Shovel Company and authorization to purchase up to 10% of Global's outstanding shares under an enhanced stock buyback program.

The sale of Marion to Bucyrus International Inc. (Bucyrus) for $40.1 million will complete Global's previously disclosed plan to exit the construction and mining equipment industry. Global expects to receive $39.0 million in cash net of selling expenses and commissions associated with the disposition.

Largely as a result of the sale of Marion, as well as the write down of certain assets (primarily inventory) that the Company has identified as being overstated in the Specialty Equipment Segment, Global will recognize a pre-tax charge to earnings of $26.0 million in the third fiscal quarter ending July 31, 1997. Accordingly, Global will not pay any U.S. Federal taxes during fiscal 1997, and will pay significantly reduced U.S. Federal taxes in fiscal 1998.

Considering these factors, the Company expects to report net earnings before the special charge in the range of $2.00 and $2.15 per share for the fiscal year ending October 31, 1997. The Company's per share earnings from continuing operations, applying the previously anticipated 25% tax rate, would be in a range of $1.60 and $1.75 for the fiscal year.

"We believe the actions we are announcing today, and the strength of our core operations, position us well to meet our stated objective of achieving average annual earnings per share growth of 15%," said J.L. Jackson, Chairman and Chief Executive Officer of Global. "Because of our confidence in the outlook for our businesses, we have asked the Board to authorize the purchase of up to 10% of Global's outstanding common stock as part of an enhanced stock buyback program.

"Our performance for the year is being affected by a number of temporary business issues, including short-term production disruptions at Ameri-Forge, weaker-than-anticipated demand for certain refractory raw materials sold by Global's Minerals Segment and the impact of a strong U.S. dollar versus European currencies," continued Jackson. "However, several operating factors provide us with encouragement for our future performance. At Harbison-Walker, for example, operating profits for fiscal 1997 should be up a minimum of 15% versus year-ago levels. Operating profits are being enhanced by cost cutting measures and significant new business. In addition to the Raytheon sale in January, we have just signed the largest contract in our Company's history: a three-year, $27 million contract to supply refractory products to Compania Siderurgica Huachipato in Chile."

"Our Industrial Tool segment is enjoying a record year in sales and earnings, and we expect momentum to continue into fiscal 1998," said Jackson. "While Ameri-Forge turned in disappointing results year-to-date due to manufacturing equipment problems, replacement equipment is now operational, and once the refurbishing of original equipment is completed we will have significant new capacity to meet customer demand."

Forward-looking statements concerning divestitures, earnings and results from operations are contained in this announcement. The following important factors could cause actual results to differ materially from those described in such statements: the timing of any divestiture transaction and its resultant value to the Company; foreign exchange rates; unanticipated realization of contingent liabilities; unanticipated delays in production or shipments; and significant variances in sales or costs at a major business unit.

Dallas (July 23, 1997) - Global Industrial Technologies, Inc. (NYSE:GIX) Refractarios Chilenos (RECSA) subsidiary has signed a three-year contract valued at $27 million (U.S. dollars) to supply refractory products for Compania Siderurgica Huachipato, the largest steel producer in Chile.

Refractories are heat and chemical resistant ceramic linings for industrial furnaces, ladles, kilns, incinerators, and other heat-processing/containment vessels used in the iron, steel, aluminum, copper, cement, petrochemical, chemical processing, glass and waste incineration industries.

Global is combining production capabilities of RECSA, a producer of magnesite, chrome, and spinel refractory products for the copper and steel industry, with that of recently purchased Lota Green in Concepcion, Chile, producer of high alumina refractories to the steel, copper and cement industries.

RECSA will supply 23,580 metric tons of refractory products that will be used to line steel-making furnaces and vessels at Compania Siderugica's steel mill in Talcahuano-Concepcion, Chile. The Huachipato plant is the only integrated steel mill in Chile. The initial shipment of refractory products will commence in August 1997 and will be completed within a three-year period.

Harbison-Walker

There's a new kiln at Hile

H-W's Hile Plant in Northeast Maryland is courting a world market for its refractory bricks. A new state-of-the-art shuttle kiln has been put into operation that will increase production capacity to 30,000 tons of brick a year. It was only ten years ago when lagging sales resulted in production fluctuations from 5,000 to 18,000 annual tons. Those days are over. Raytheon's $25 million order to supply linings for their new smokeless coke oven plant at Inland Steel in East Chicago, Indiana is stoking Hile's fires. The revitalized plant is set to knock out a record 24,000 tons this year. Hiring is up 27 percent to supply a three-shift staff. The existing Hile tunnel kiln is set for renovation, as is the plant railway and communication systems, rapid-tooling for presses, and upgrading the office facilities.

During the second renovation stage, new raw materials crushing and mixing equipment, and a multiple-cavity press for pressing large bricks will be installed. ISO 9000 certification is also in the works for Hile that is slated to be complete in the near future.

Refractories Institute Board Appointment

Jess Hutchison (Vice President International) said in conversation recently that it is time H-W assumes the role of industry spokesperson, get on some boards, publish white papers in trade journals and generally get the word out and raise sand. Well guess what, things in this area are picking up. H-W President Juan Bravo has been named to the Refractories Institute's Executive Committee Board. The appointment was made at a recent meeting of the board in Washington, D.C. Lots to follow. We'll keep you updated on developments.

Refractarios Mexicanos, S.A. Refractories in our Lives and Service to our Customers
By Felipe Hernandez (Translated from May's REFMEX magazine)

REFMEX's 800 employees are dedicated to the production of quality ceramic bricks used to line ladles and vessels in which steel, copper, and other products are melted. Tlalnepantla produces alumina silica bricks and other products. Ramos Arizpe produces basic refractory ingredients that go into the making of ceramic brick. We pride ourselves on the fact that our products are competitive in quality and price. We track our markets constantly. What are our customer's needs? How can we differentiate ourselves from the competition? What are our strengths? What can we do to increase revenues?

We are competing in a global market with advanced technologies and strategies. Our customers want the lowest price, but at the same time more service and value, a good selection of products, quick turnaround, long-term financing, and a new concept called "integral service."

Technical support is also one of our hallmark services. We consult with our customers in helping them find solutions specific to their needs. Our quality control and packaging is the best and is provided at no extra cost. We track each order from request to when it arrives on site. In short, we put ourselves in our customer's shoes and produce accordingly. That's service. That's value.

INTOOL

For the first time ever, the INTOOL's Houston Plant is seeing daylight thanks to either a tornado (written in the initial excitement as "Toronado" implying it had been hit by a 50's vintage automobile!) or certainly high winds around 1 p.m. Tuesday, June 17. INTOOL President Tom Hurst reported no injuries. Damage was confined to the first floor office area where a "massive" amount of water was dumped when the outside second floor wall collapsed. The manufacturing area suffered minor damage. Roofing contractors were on the scene within 30 minutes of the storm's passing. The entire area was secured by 3 p.m. Power was up around 6:30. The second shift production crew and maintenance department cleared water and debris.

No data was lost thanks to Jim Wright and his staff's backup power supply kicking in as advertised. The outage was subsequently "transparent" to computer and machine memories. Production was back to normal by the third shift. Restoration of the building was scheduled for completion within two weeks. Back to the ventilation: the group liked the view so much they installed windows in the new wall.

INTOOL'S home page is www.intool-inc.com.

ITD Automation

ITD's pushing $2.2 million as part of the Fastening Systems project out the door to KUKA Welding and Robot Systems Corporation. The equipment is slated for production of Jeep's'98 Grand Cherokee at the Chrysler Jefferson North plant in Detroit. Orders from other assembly line automation houses totaling an additional $800,000 have also been received for this same project!

IT Is Working

ITD's new proprietary EtherNet based network (TorkNet) is up and running at the Tower Automotive (formerly A.O. Smith) plant in Barrie, Ontario, Canada. This system is the first of its kind in the fastening industry. The network is used to collect assembly torque data which is sent to a central computer from over 40 separate fastening tool controllers on different assembly lines located all around the plant.

Duffers for Charity

ITD Automation employees have contributed to and participated in a charity golf outing and auction for The Haven, a spousal and children abuse center in nearby Pontiac, Michigan.

Their home page is http://www.ITDAutomation.com/2.html

Industrial Energy Products

Surf IEP's homepage at www.airetool.com Corrosion Technology International, Inc.

CTI's on the move. The Green Bay office and CPS sales team moved into new 2121Woodale Avenue quarters adjacent to the manufacturing facility. The goal is to "increase efficiencies." Green Bay is hard at work on a "jumbo zinc cell" order, a totally new request. Corrosion Technology Chile S.A., (CTCH) administrative functions in Santiago have been transitioned to RECSA. "...More efficiencies and reduced costs...." CTI Pacific Pty Ltd out of Sydney, Australia, is packing up for bigger digs. They're doing "nine cells a day" down under, they say. Subsequently: more space.

New faces worldwide: Plant Manager Paul DeGryze, Plant Controller Paul Inniger both in Belgium; Homero Hernandez, Mexico's Plant Controller who has come over from REFMEX; and the Chris Hilberth, Dallas' new Marketing Manager. Hey everybody! Welcome! Don't forget to write.

CTI surf's up at www.ctipacific.com.au

Global Processing Systems, Inc.

Jeffrey

Jeffrey's BD rubber shredder is making its mark around the world with sales in Brazil, Indonesia, China as well as the U.S. This specialized shredder is used in the manufacture of rubber compound from either natural or synthetic base materials. The machine is made from stainless steel made to withstand corrosive liquids used in the manufacturing process.

Shred-Tech

Out of Cambridge, Ontario comes word that Shred-Tech's got a new product in the form of a hydraulic powered shredding unit that's mounted on a roll-off platform. It's transportable, self-powered and doesn't need the care and feeding of a trailer. Just roll one off the trailer and start snarking. It meets European safety and road transport standards, which makes it marketable worldwide. It'll chew up tires, metal and plastic drums, carpet, stoves, refrigerators, municipal and industrial waste, plastics, paper, and a neighbor's falling down fence. Hey, it makes on-site clean up a cinch and crunches "selected" hazardous products for safe transport. _____________________________________________________________________________ Global View

Walking the Talk Winners

Gary Bolton (Production Supervision/P&IC, Harbison-Walker Fairfield, Alabama plant), Kathy Bridgeman (Cost Accounting Supervision, Harbison-Walker, Pittsburgh), Raul Rodriguez Ruiz (REFMEX Guadalajara Office/Warehouse, and Jeanette Quay (Senior Attorney, Global Corporate Law Department, Dallas) have been selected as winners of Global's "Walking the Talk" award. The winners will be presented with their awards August 1st in Dallas.

Here's what singles them out.

Gary: "...He exemplifies the keystone values ... is highly respected... and is the link between order entry and operation scheduling at Fairfield. Gary is praised both locally and by the Central Order Entry group for his professionalism. Gary has recently developed a data capture program to print out production kiln car tags. This program ... was cited for its functionality. Plans are in progress...to include the program as part of the management information system for company wide use."

Kathy: "She has been working on QAD for two years ... converting H-W's old accounting and cost systems ... and it has been no small task. It takes dedication, hard work and perseverance. Kathy stayed nights and weekends doing whatever it took for the system conversion to be successful. Her dedication ...inspired everybody in the department to work harder and as a team...."

Raul: "He has been loyal and dependable for 32 years. He comes 12 kilometers on his bike to work every day, rain or shine. He's never been absent without good cause. He's never had trouble with his partners. During 1997 the Warehouse Department had to put out three times more product than normal. Mr. Ruiz kept the situation under control working extra hours ... motivating his partners to do a good job ... he teaches us and gives us technical advice ... He's our best friend."

Jeanette: "She recognized a major problem and took decisive action to resolve it. Jeanette has implemented an entirely new approach to the management of individual cases in tort litigation involving Harbison-Walker products. Following a year of study ... Jeanette ...made the made decision to divorce the claims processing from the actual litigation function ... The new methodology will, over the next decade, result in savings to Global of millions of dollars.... "

Here's our other work mates, in no particular order, who were nominated for "Walking the Talk" awards.

INTOOL Inc. - Dallas
Larry LeSieu

INTOOL Inc. - ITD AUTOMATION - Michigan
Nancy Haynes

INTOOL Inc. - ITD - Houston
Al Wilson
Carolyn Pavlovsky
Larry Gonzales

Corrosion Technology International, Inc. - Dallas
Donna Reeves

Marion - Brisbane, Australia
Roy MacCarthy

HW - Pittsburgh
Christopher Macey
Eric Wiethorn
John Sutton
Michelle O'Connor
Rose Cassidy

H-W - Garber Research Center
Andrew M. Burkhart

H-W - Toledo, OH
Bob Lutes

H-W - Windham, OH
Nick Proto

H-W - Hammond
Elnora Key

H-W - Calhoun
Anthony (Tony) Howell

H-W - Ludington
Craig Turner

Refractarios Mexicanos, S. A. de C. V. - Tlalnepantla
Agustin Aguirre
Arturo Abundis
Carlos Cruz Maya
Efrain Reyes Solar
Eloisa Murguia
Emilio Hernandez
Espiridion Ramirez
Felipe Gomez
Francisco Gonzalez Olora
Francisco Perez
Humberto Basurto
Joaquin Gaspar
Jose Antonio Arreguin
Juan Manuel Piņon
Juan Piņon Rodriguez
Mario Candido Gomez
Miguel Guevara C.
Moises De La Rosa Llamas
Rodolfo Rodriguez
Salvador Segura
Valentin Hernandez

Refractarios Mexicanos, S. A. de C. V. - Ramos Arizpe
Arturo Gonzalez
Catarino Magallanes
David Cabrera
David Vargas Bustos
Jesus Vidaņes
Jorge Reyes Sanchez
Luis Elias Flores Longoria
Manuel de Jesus Rodriguez
Mireya Plata
Pablo Guerrero
Paulino Velazquez Loya
Roberto Escutia
Roberto Tovar
Veronica Urbina

Refractarios Mexicanos, S. A. de C. V.
Lazaro Cardenas, Michoacan
Pablo Rivas

____________________________________________________________________________________ Global Culture

Why is company culture important to the financial success of Global?

Only if our company provides an overall acceptable return on investment, fueled by earnings growth, will we have a shareholder base that will continue to buy and hold our stock thereby providing essential capital to run our businessesŠ

Only if our products and services provide excellent values will customers buy and benefit from them, allowing us to maintain the earnings growth necessary to achieve shareholder returnsŠ

Only if our employees care and are proactively involved in continually improving our businesses, will we be able to supply products and services that provide excellent values for our customersŠ

In other words:

Only if we create and maintain a Win-Win-Win among shareholders, customers and employees will we achieve ongoing financial success.

Gary Garrison, Chief Financial Officer, Global Industrial Technologies

__________________________________________________________________________________ Global Tech
Becomeng Computur Literut

"What's wrong with a manual typewriter?"

Here's what change issues with which businesses are "rasling" every day. They wail:

"I need a network, I don't have one. But why do I really need one?"
"I have a network but it costs too much to manage."
"I've got to expand my network. It's stuffed up. It's too expensive. What am I to do?"
"Do I manage the network myself or outsource it?"

The Corp may have a mainframe (a big IBM 2001 monolith, but with today's shrinking technology, probably a "monolette"), along with "dumb terminals" which have few "networked" desktop capabilities.

The Corp may have mainframes and an "enterprise" (desktop Novell type) network; or just an enterprise network fashioned with the old workhorse (quickly becoming outdated but so far dodging a bullet in the ol' chip) Systems Network Architecture (SNA); Frame Relay, or the, "sniff," sophisticated Asynchronous Transfer Mode (ATM). ATM is the goal of the elite network crowd. ATM's claim to fame is use as a high-speed, failure-resistant, standards-based backbone (backbone network really, which serves as a primary conduit for "traffic", 0's and 1's in bursts called "packets") that is often both sourced from -and destined for other networks, and for access to wide-area ATM networks.

`Rank and file networks are, however, rigged with Ethernet, Token Ring, and Fast Ethernet network interface card (NIC) equipped workstations and so far are resisting the joy of the more expensive leap to voice, data and video all on one network.

Corporations have IT because of the huge volume of information that must be handled on a daily basis, managed quarterly, and reviewed annually. A company cannot afford to spend any more time than is absolutely necessary in managing information. Corporations have to be able to use information, effectively and efficiently. Manage as opposed to use: that's the real issue.

The corporation serves Wall Street, period, that's why we're all here. The more efficient is our operation, the more attractive we are to investors. "Investors" mean money to grow and create new businesses, products, and markets.

Companies must be able to communicate with one another on "an open line." Companies have to know what they all are doing by the hour, eight hours a day, seven days a week, 365 days a year (60x8x7x365). Companies have to be able to anticipate market upswings, as well as dives, by relentlessly monitoring the big picture and using it to benchmark the corporation's performance against the competition as well as our own productivity. They have to be able to gather, manage and maintain historical data quickly to leverage virtual modeling of processes, procedures, and product performance which before may have taken as long as a year, but can now be compressed into a month or less.

Companies have to be able to find new ways of using every shred of information generated to increase overall efficiencies. They have to continually shrink production windows and all of the attached costs. It has to be done this way because the competition is doing it.

Now part of network management is designing, maintaining and managing what is called a "consistent office environment" (COE). A COE means that The Corp is standardized on everything from word processing to inventory control: the computers, software, and connectivity throughout The Corp's LAN/WAN environment is the same.

A COE (if designed right) is cheaper to buy, maintain and manage. It's more efficient; and if outsourced properly, much cheaper and easier to upgrade. A COE is also much easier to either grow or shrink as the demands of the business change.

Cutting to the chase: A COE is mandatory. There's no choice. Either initiate a COE or live with a network that is overwhelmingly not what it ought to be. Without COE network elements may or may not be able ever to communicate market shifts, design and model new products quickly, maintain inventory controls, do the books across domains, deal with investors, and tell The Corp's story by the minute. Corporations around the world have already lost control of information management. Regaining control is The Corp's goal.

Bobby Dylan sang it best: "Šthe times they are a changingŠ.". For IT that means a steady arrow of time-cataract of change, in which we are assigned collectively either to master or be doomed to watching the competition's navigation lights merge into the downstream horizon. LN

Next episode: Getting virtual. ______________________________________________________________________________ Global Talk:

We Get Letters, faxes and e-mails

Word of the Month

Niche: noun, French niche, from the Latin midus, a nest. Pronounced neesh, with a long e, like knee. Frequently confused with "notch," to make a cut into wood, gun handle, or other soft materials.

  1. A recess or hollow in a wall, usually intended for a statue, bust or vase
  2. A place or position particularly suitable for the person or thing in it
  3. Verb transitive, niched; participle/present participle, niching, to place in, as in a niche
  4. Business jargon to describe a particular market segment

Global Information Exchange is published throughout the year at Global Industrial Technologies, 2121 San Jacinto Street, Suite 2500, Dallas, TX. Fax news and other items of interest to: GIX, Attn: Larry Nance, 214/953-4595.

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