Divine diversity: for many companies among the North Carolina 100, venturing into new markets has proved to be a blessing.

Buildings, buses, batteries, baked goods, beef. There's no lack of diversity among the North Carolina 100 - or within them, for that matter.

"If you track the history of the North Carolina 100 companies, you'll see numerous examples of diversification," notes T. Michael Henderson, a national director of the Center for Family Business at the accounting firm Arthur Andersen, which compiles the annual list of the state's largest private companies.

Here are three that have stayed on a growth path by not being reluctant to head off in new directions.

Radiator Specialty Co.

Radiator Specialty's diversification back in the late '20s and early '30s was almost accidental, the way Herman Blumenthal tells it. "My brother was sitting in a restaurant in Pennsylvania when some plumbers came in discussing how to fix the boiler at the town's small hotel," says the Charlotte-based company's chairman and CEO. "The boiler was leaking, and they couldn't shut it down for repair because it was the dead of winter." I.D. Blumenthal gave them some samples of the company's Solder Seal.

So what if it was made to plug leaky car radiators? It did the job. As the plumbers talked eagerly about other products they needed, Blumenthal took mental notes. That, together with things he picked up as he traveled across the country pushing his products, prompted him to buy Golden State Rubber Mills in Los Angeles in 1933.

So don't let the name fool you. Radiators are not the company's specialty. Over the years, it has moved away from specializing in automotive products by adopting a concerted diversification strategy. And that has put its products in a lot of places that matter to a lot of people. Under commodes, for instance. Its plumbing division makes wax rings (sold as Sealmaster) that seal toilets into place. Or out on the open road. There, construction crews use its line of bright-orange highway cones to divert traffic around road work.

In all, Radiator Specialty, which employs 550, has more than 4,000 automotive, hardware, plumbing and traffic-safety products. But it all started with a leaky radiator.

In 1924, I.D. Blumenthal was looking for a venture to take him out of the family's dime-store business in Savannah, Ga., and into his own. While in Charlotte on business, his Packard's radiator sprang a leak. Someone told him about a local tinsmith, George Ray, who'd developed a new way of repairing radiators.

Back then, fixing a leak meant removing and draining the radiator, soldering the leak shut, then refilling and reinstalling the radiator. Blumenthal took his car to Ray, who poured in what he called a "magic powder" that sealed the leak with aluminum. It had an expansion rate 30 times that of cast iron. The hotter the engine, the better it worked.

Blumenthal got permission to market the powder, now called Solder Seal for Ray. The first year was lean, but he stayed optimistic. The next year, orders were up, and he pressed Ray to give him a 50% interest. Radiator Specialty was incorporated in 1925 and operated for a while out of a 12-by-14-foot office. A decade later, when Ray died, Blumenthal bought out his interest from the estate.

The company's move into highway-safety products was inspired by another need Blumenthal thought he could fill. "My brother was looking for a product to make in the 1940s when he noticed the orange safety cones along the road," Herman Blumenthal recalls. "The only one on the market had a round base and a tendency to roll. So my brother developed a square base and won the market." Today, Radiator Specialty makes and markets more than 20 traffic-safety products, including signs, barricades and safety clothing.

Over the next 40 years, Radiator Specialty purchased six companies, including Gunk Laboratories and Interstate Rubber Division. From the original one-room office, the company has grown to four plants (two in Charlotte, one in California and one in Canada), and its revenues have climbed to well over $100 million. Herman Blumenthal, now 80, became CEO in 1978, after his brother died. They had worked together more than 40 years.

The automotive division remains the company's mainstay. Its top-selling product is Engine Brite, which does what it says - cleans the grime off everything from carburetors to cam shafts. It was added to the product line in 1959 when Radiator Specialty bought Gunk Laboratories, then based in the Boston area. The company also makes specialized lubricants such as Liquid Wrench and Octane Performance Booster. They were first used by the auto-racing industry, beginning with IndyCars in 1931, and they continue to be staples for pit crews from NASCAR to go-cart teams.

Radiator Specialty's rubber-products business mostly served plumbers before World War II. But it took off when the nation's manufacturers were asked to convert their operations to war-time production. The company made insulation and vibration-control parts that went on B24 and B25 bombers. In 1941, it bought the Dayton, Ohio-based maker of Titeseal, a castor-oil-based gasket sealant that went on every warplane.

The key to Radiator Specialty's growth isn't just diversification. A sign in Herman Blumenthal's office, which doubles as a family museum full of photos and memorabilia, says: "The customer finally decides the fate of an enterprise. This does not mean that other corporate matters are less important, only that they are not more important." At the reception desk, a plaque reads: "A healthy, profit-making business is a wonderful thing. If you're lucky enough to work for one, take time to appreciate it and do your best to keep it that way."

It all boils down to one thing, Alan Blumenthal says. "It's a matter of family pride - we make good products. They're not luxury products, but they do the jobs they're advertised to do."

Keeping the company that way is his job. At 48, he is is Herman's oldest son and company president. He joined Radiator Specialty in 1971 after graduating from UNC Chapel Hill. "We continually try to figure out what we're most interested in selling and promoting. What products are we best served to spend time and money on, and where are the customers to grow the business fastest?"

And there's no sign of slowing down the acquisition or diversification strategy: "We're still growing," Herman Blumenthal says. "We're looking at new products and companies to acquire."

Coastal Wholesale Grocery Inc.

Merle W. Edwards, who runs Kinston-based Coastal Wholesale Grocery Inc. and the rest of the family business with his brother, T.L. Edwards, sums up its diversification this way: "Opportunities just popped up. We recognized them and went for it."

That statement covers a lot of ground. In the last 51 years, the business has been transformed from a small family dairy into a bona-fide conglomerate employing more than 500 and operating 26 convenience stores, an ice company and a wholesale distributor. Merle W. Edwards is president and CEO of Coastal Wholesale and Carolina Ice, and T.L. "Tommy" Edwards is president and CEO of Carolina Dairies and Freshway Stores. "We've been working together 30 years and have never had an argument," Merle Edwards says. "Our strategy is to try to operate our businesses as best we can daily."

For some family businesses, divisions are bought and sold based on the interests of family members. But Edwards says his family simply seized opportunities where it found them. Of course, he admits, that's easier to do when you "have a customer base and can develop the business at a good rate." The company's operations generate $130 million in revenues annually.

Edwards' father, E. Merle, founded Carolina Dairies in 1945. (He remains chairman of the family business.) As the environment for independent farmers soured like milk on a summer day, the elder Edwards considered diversifying. He'd been selling his dairy products to convenience stores for years and knew firsthand how the distribution channels worked. He also saw the stores making money and in 1968 decided to acquire one of his own. His convenience-store business boomed. Freshway now has 26 stores. The dairies produce 20,000 gallons of milk daily.

In 1970, he brought in Merle W., now 56, and T.L., 48. "As a result of our experience in the stores, we got more involved in selling groceries," Merle W. Edwards recalls. In 1974, after taking over from their father, the sons purchased Kinston Wholesale and filled their existing distribution channels with more merchandise than just dairy products. "It was a good investment because it pushed us into vertical integration by supplying our own stores as well as others," Edwards says. The wholesale business supports the convenience stores, providing dry goods, candy, juice and other items.

In 1986, they bought an ice company that produces 180 tons a day. "We didn't set out to buy an ice company," Edwards says. "But we thought of all those people who buy ice, and it seemed logical." The company markets the ice at its convenience stores and sells it to other retailers, such as supermarkets. When demand is high in the summer, it even sells to other ice companies.

But while ice is hot, other areas of the business have started to cool. "There's been a significant constriction of the wholesale market," Edwards explains. "Wholesale distributors are going out of business at a rapid rate." In an ironic twist, cigarettes - once a profit maker for stores - are the culprit. Philip Morris and R.J. Reynolds have raised their prices to distributors, Edwards says. That can wreak havoc on the margins for a distributor with 65% to 70% of sales in cigarettes - which Edwards says is the norm.

"The policy is driving out a number of distributors. I know four in Eastern North Carolina have gone out of business or changed hands in the last 12 months." By contrast, only 47% of Coastal's wholesale sales were in cigarettes. That's kept it above the fray. "Some competitors complain bitterly about it, but I haven't felt much impact."

Escalating transportation costs are another challenge. "Dealing with the regulations involved in transportation can make it very difficult to operate cheaply with 18-wheelers," Edwards says. Drug and alcohol testing is the major cause of cost increases, along with other regulations imposed by the Department of Transportation, which limits the number of hours drivers can be on the road. "It's sort of a one-two punch between the cigarette situation reducing profits and the regulatory environment increasing expenses," he notes. "I expect there'll be more consolidation and going out of business in my industry as time passes."

For large national wholesalers such as McLean, the giant Texas-based convenience-store distributor, costs continue to rise. "We can do better than the big guys," Edwards asserts. It's simply a matter of ratios. "We can operate less expensively per unit sold because we generally drive fewer miles." Edwards estimates that it costs $1.65 a mile to operate an 18-wheeler. Coastal's territory encompasses the Carolinas and Virginia. McLean has a 48-state territory, requiring it to work harder to make its long-distance runs profitable. Despite the competitive challenges, Coastal continues to operate at about 10% gross profit margin, Edwards says, comparing favorably to the industry's 8% to 10% standard.

With tightening margins, changing profit leaders and impending consolidation, the family's diverse operations are the keys to continued success, Edwards says. And that makes him philosophical about his industry's future. "We're all racing towards a cliff, and the last two or three to get there win."

Thomas Built Buses Inc.

"If it hadn't been for us," boasts John Thomas III, CEO of High Point-based Thomas Built Buses Inc., "Tennessee Williams would have been just another hack playwright." Back in 1926, the company, then called Perley A. Thomas Car Works, was one of the leading manufacturers of trolley cars. Thomas built the actual streetcar named Desire as part of a 100-car order for the city of New Orleans.

Perley Thomas, Thomas' great-grandfather, started the car works in 1916 when mass transit was coming into vogue. As the trolley market stabilized in the mid-1930s, Perley began looking for another market.

As fate would have it, the state of North Carolina put out a bid for the manufacture of 800 school buses. "We didn't make them, but we bid for 400 anyway," Thomas says. The company figured buses wouldn't require any drastic changes in the manufacturing process and would increase production and revenues. It got the bid and began its journey to becoming one of the world's largest manufacturers of school buses.

During World War II, the Thomas plant was converted to making mobile machine shops for the war effort. "After the war, though, it was back to business," Thomas recalls. The company was just one of many regional bus manufacturers. When the postwar boom faded, however, many of those smaller concerns folded. "During the '50s and '60s, the market consolidated to five or six players. Now, there are four major players and a handful of niche market players."

Thomas Built stayed successful by entering new markets around the world. In 1960, it bought a manufacturing plant in Canada. It began production in Ecuador in 1962 and in Peru three years later. The Ecuador plant was sold about four years ago for an undisclosed amount. The Peruvian plant was "aced out by the socialist government in the early 1970s," Thomas recalls, adding that the company is considering re-entering the market now that the situation has stabilized. The company has two plants in Canada and one in Mexico.

Thomas aims to diversify market risk by increasing the company's international business. "The U.S. markets are not that active," he says, "so we're manufacturing more buses for Central and South America." The company opened a plant in Mexico in 1995 that employs 75. The North American operations employ 1,625, most of them at seven plants in High Point.

Thomas Built has expanded its line, adding municipal buses. "Our product is basically meat and potatoes," Thomas admits. "We knew we could take some school-bus-type vehicles and modify them to look more commercial." Though the chassis design is the same, the move required some changes, such as nicer interiors. The company uses some outside contractors to keep costs in check. In 1977, Thomas Built began manufacturing chassis. This lets the company develop its own designs or modify its buses for specific markets, such as to transport the handicapped. And that has expanded its product base.

"Fundamental to us is the care our people exercise when designing, building and selling products for the different markets we're serving," Thomas says.

Earlier this year, the company completed the largest school-bus order in history, a 2,002-vehicle order for the state of South Carolina. In the school-bus market, Thomas Built is No. 1 in unit volume and No. 2 in sales, according to Thomas, 47. (He recently succeeded his father, John Thomas Jr., 68, as CEO.) Thomas Built's revenues have increased tenfold since 1972. Last year, it racked up $270 million in sales. Thomas expects to exceed that this year. The company turns out 12,000 school buses a year and 1,000 commercial ones.

Thomas says branching out is one of his growth strategies. "I'd like to see the commercial business grow some more to diversify our market risk," he says.

Margot Lester is a Carrboro-based free-lance writer.