Colfax Corporation

Colfax Corporation is a leading marketer and world-class manufacturer of pump and power transmission products that command sustainable competitive advantage in their respective markets. Phillip Knisely and Steven and Mitchell Rales launch a new venture to acquire industrial assets. Other Rales' assets are merged with Colfax and a public offering is planned. Colfax Corporation is a privately held Richmond, Virginia-based manufacturing company with two operating groups. The Colfax Power Transmission Group, with its headquarters in Quincy, Massachusetts, is devoted to power transmission and component manufacturing. Subsidiaries include Warner Electric, Boston Gear, Delroyd Worm Gear Formsprag Clutch, Stieber Clutch, Ameridrives Couplings, Wichita Clutch, Nuttall Gear, Industrial Clutch, and Marland Clutch. The Colfax Pump Group, headquartered in Monroe, North Carolina, is comprised of four subsidiaries: Allweiler, Houttuin, Imo Pump, Imo AB, and Warren Pumps. Products include a broad range of rotary and centrifugal pumps. The Colfax business model, dubbed the Colfax Business System (CBS), is applied to all operations. CBS is an outgrowth of the much-respected Toyota Production System. It involves cutting costs in order to deliver a better value to customers, while also improving quality and service. These goals are primarily achieved by providing authority and incentives to Colfax associates, through what the company calls Total Associate Involvement. This business approach was refined by the principal owners of Colfax, Steven and Mitchell Rales, through their better known enterprise, Danaher Corporation. Steven and Mitchell Rales grew up in a close-knit, entrepreneurial family in Bethesda, Maryland. Their father, Norman, lived a rags-to-riches story, growing up in New York, an orphan who lost the rest of his family in the Holocaust. He made his fortune in real estate in Washington, D.C., and was involved in a myriad of other ventures, buying and selling interests in such businesses as the Texas Rangers baseball team, a Maryland bank, and various home improvement and building materials companies. In 1979, after working for their father, eldest son Steven along with brother Mitchell struck out on their own, forming an investment partnership that focused on less-than-glamorous manufacturing companies. The men were both still in their 20s. Among their early deals was the 1981 acquisition of their father's half-interest in Master Shield, which made vinyl building products, and the 1982 purchase of the Mohawk Rubber Co., a tire manufacturer. Then in 1983 they acquired a struggling Florida real estate investment trust, DMG Inc., and subsequently sold off the real estate holdings and bought their Master Shield and Mohawk Rubber interests. The Raleses renamed the company Danaher Corp, a tribute to a western Montana river where they enjoyed fishing. Steven served as chairman and chief executive, as well as the strategist and deal maker, while Mitchell became president, concentrating on the operational side of the business. In 1995 the Raleses decided to launch a new venture to replicate the success of Danaher in the fluid handling and industrial positioning industries, both highly fragmented and likely to benefit from the business model refined by Danaher. To head the enterprise they recruited Philip W. Knisely, who had some 15 years of experience in managing global industrial manufacturing operations. After graduating from the University of Virginia's graduate business program in 1978, Knisely launched his business career at Emerson Electric Company and quickly moved up the ranks, named president of the industrial automation equipment division in 1982 when he was just 28 years old and was soon also given responsibility over the power transmission division. Although he was very much a candidate to eventually head Emerson, Knisely decided in 1988 to leave the company and take over AMF Bowling, which had recently been bought from cor