Burgmaster: Entrepreneurial Spirit Sapped by Corporate Decay

Burgmaster: Entrepreneurial Spirit Sapped by Corporate Decay In 1947, Fred Burg delivered the first turret drill to Beckman Instruments from a factory in Burbank, California — a machine that cut setup time by 35–50%, invented in his garage after watching a turret lathe at a customer visit. By the early 1960s, Burgmaster had 80% of its niche, filed 50+ patents, and reinvested 2.5% of revenues in R&D every year. Then Houdaille Industries acquired it in 1965, brought in managers who believed "a good manager can manage anything," and systematically extracted value through arrogance, bureaucracy, and complacency — before KKR's 1979 leveraged buyout applied a final coat of financial pressure to a business already hollowed out. This case follows Charlie Munger's ABC framework of corporate decay through one of American manufacturing's clearest examples.

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