Berkshire Hathaway Inc. is a holding company with an ever-increasing number of subsidiaries engaged in a myriad of business activities. Originally in textiles, Berkshire's reach has extended to insurance, retailing, manufacturing, publishing, and banking. Run by the dynamic Warren Buffett and his partner Charles Munger, Berkshire's name and reputation have become synonymous with its legendary investment portfolio, which has garnered excellent results far in excess of the S & P 500 and other indicators.
Berkshire Hathaway Inc. and its subsidiaries are involved in several different businesses, the most significant of which is property, casualty, and auto insurance (GEICO) both directly and through reinsurance. Berkshire's other businesses include publishing (the Buffalo News , World Book, Childcraft; manufacturing (See's Candies, Campbell Hausfeld, Kirby, Fechheimer Brothers Company); retailing (Borsheim's, Helzberg's Diamond Shops, Nebraska Furniture Mart, R.C. Willey Home Furnishings, H.H. Brown Shoe Company, Dexter Shoe), and banking (Mutual Savings & Loan Association). Investing through its insurance subsidiaries, Berkshire often buys major shares of other publicly traded companies (American Express, Capital Cities/ABC, Coca-Cola, Gillette , Salomon Inc., Washington Post, and Wells Fargo); its chairman, Warren Buffett, is renowned for his expertise in selecting stocks with hidden appeal and staying power.
Berkshire Hathaway Inc. began as a textile company, incorporated as Berkshire Cotton Manufacturing Company in Massachusetts in 1889. In 1929 several other New England textile manufacturers with much common ownership--Valley Falls Company, Coventry Company, Greylock Mills, and Fort Dummer Mills--merged into the company, which was then renamed Berkshire Fine Spinning Associates. This operation accounted for about 25 percent of the fine cotton textile production in the United States.
The glory years of the New England textile industry were numbered. The Great Depression of the 1930s contributed to its decline, as did competition from the South and overseas. Wages were lower in the South, and Southern workers had fewer alternatives than New Englanders for working in the textile mills. Further, market factors favored the coarser types of goods produced in the South, while wage differentials between the U.S. and foreign competition were often significant.
The New England textile business recovered somewhat during World War II, thanks to military demand for its products, and had a similar brief recovery during the Korean conflict. Still, the industry declined again after each of these upswings.
In 1955 Berkshire Fine Spinning merged with Hathaway Manufacturing Company, a New Bedford, Massachusetts, textile maker dating back to 1888. The resulting company, Berkshire Hathaway Inc., had more than 10,000 employees and nearly six million square feet of plant space, but its financial performance was dismal. Berkshire Hathaway closed its extensive operations in Adams, Massachusetts, in 1958, and the same year sold its curtain plant in Warren, Rhode Island, to Pilgrim Curtain Company. The company recovered a bit the following year; a contract negotiated between Berkshire and its unionized employees in 1959 marked the first wage increase for New England textile workers since 1956.
By late 1959 and into 1960, the company was operating profitably and had a backlog of unfilled orders. Depressed conditions returned quickly, however, and in 1961 Berkshire cut its work week to four days at several plants and showed a loss for the year. In 1962 the company closed three plants in Rhode Island and showed even greater losses, due to depressed prices for its products. The financial hemorrhaging continued into the mid-1960s, despite cuts in Berkshire's workforce and an extensive plant modernization. In 1965 came a major change in the company's management: a partnership led by investor Warren Buffett had purchased enough stock to control the comp
