Bodycote International PLC

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Bodycote International PLC

Hulley Road
Macclesfield
SK10 2SG
United Kingdom
Telephone: +44 1625 505300
Fax: +44 1625 505313
Web site: http://www.bodycote.com

Public Company
Incorporated: 1923 as G.R. Bodycote Ltd.
Employees: 7,400
Sales: £448.4 million ($716 million) (2003)
Stock Exchanges: London
Ticker Symbol: BOY
NAIC: 332813 Electroplating, Plating, Polishing, Anodizing, and Coloring; 332811 Metal Heat Treating; 332812 Metal Coating, Engraving, and Allied Services (Except Jewelry and Silverware) to Manufacturing; 531210 Offices of Real Estate Agents and Brokers; 541380 Testing Laboratories; 551112 Offices of Other Holding Companies

The United Kingdom's Bodycote International PLC is the world's leading provider of metallurgical services to the steel, engineering, aerospace, defense, automotive, and other industries. The company has developed four core specialties: Heat Treatments, including metal joining processes using electron beam and laser welding, and vacuum and exothermic brazing; Metallurgical Coatings, using electroplating, mechanical plating, nickel and zinc alloy plating and other coatings technologies to provide anti-corrosion, anti-wear, decorative, and other surfaces; Hot Isostatic Pressing (HIPping), a method for hardening metals and other materials using high-temperature and high-pressure treatment techniques; and Materials Testing of a large range of materials, from metals to textiles to organic materials, using a variety of testing methods. Bodycote operates nearly 250 plants in 21 countries—primarily in North America and Europe, but with a limited presence in the Middle and Far East. The United Kingdom accounts for just 14 percent of overall group sales, which topped £448 million ($716 million) in 2003; North America represents 40 percent of sales, while the rest of Europe generates more than 45 percent of group sales. Traded on the London Stock Exchange, Bodycote is led by CEO John Hubbard.

Knitting Beginnings in the 1920s

The Bodycote International entering the 21st century bore little resemblance to the company founded in Hinckley, Leicester, in the heart of the English textile industry in the early 1920s. The original G.R. Bodycote Ltd. began as a textile manufacturer in 1923, and remained under the control of the Bodycote family into the 1950s. Bodycote, which went public in 1951, originally specialized in manufacturing underwear under the Guardian brand name, then added its own line of Aero brand outerwear, including raincoats.

By the late 1960s, Bodycote had come under the control of rapidly expanding British conglomerate Slater, Walker. Founded in 1964, with a market capitalization of just £3 million, Slater, Walker had expanded rapidly into a variety of industrial and financial areas. By the end of the 1960s, Slater, Walker's value had leapt to more than £280 million. The conglomerate by then counted more than 500 companies under its control, including Bodycote. As part of its acquisition by Slater, Walker, Bodycote then took over a number of textiles operations from its new parent.

Under Slater, Walker, Bodycote launched its own expansion and diversification effort. In 1969, Bodycote paid some £140,000 to acquire fellow Leicester knitwear manufacturer Arthur Gee, adding that company's line of women's outerwear. The following year, Bodycote acquired another textile group, Simla Textiles, a merchant converter, for £150,000, while targeting new acquisitions. By mid-1971, Bodycote had completed several more acquisitions, adding Smith Blankets, D. Spiro and Sons, Heathgate, Joyce Fabrics, Henshaw Knitwear, and Selwyn Textiles. In that year, the company reorganized its divisional structure around its three primary business areas of knitwear and outerwear manufacturing, blankets and household utensils, and textile merchanting and converting.

The company, initially focused on the U.K. markets, began exporting more of its products, and in 1971 set up a new export sales subsidiary. The company also took on a new name, Bodycote Holdings, with the original company, G.R. Bodycote, remaining as a subsidiary.

By then, however, Slater, Walker had already begun dismantling its industrial conglomerate ahead of its mid-1970s repositioning as an investment and financial services provider. In 1971, Slater, Walker began preparing to spin off Bodycote as an independent company. As a first part of this process, Slater, Walker backed Bodycote's acquisition of Valdown Jersey Fabrics, owned by the Dwek family. Under terms of the cash and shares agreement, Valdown's owners acquired 44 percent of the enlarged group—in which Valdown's operations accounted for 59 percent of revenues—and the right to increase their stake in Bodycote to up to 50 percent. At the same time, Arthur Bodycote, who had remained with the company after its acquisition by Slater, Walker, agreed to step down, and buy out G.R. Bodycote at the same time.

Changing Markets in the 1980s

Joe Dwek now became the driving force behind Bodycote's growth through the 1970s. Bodycote's first move was to turn to the international markets, and in 1972 the company paid £1.4 million to acquire Dutch textile group Ehco. The purchase marked the group's diversification into industrial work clothing and safety garments, and also brought it onto the European continent for the first time. Another purchase that year, of Taylor and Hartley Group, had added to the group's industrial clothing operation, as well as adding women's dress production. By the end of that year, Bodycote, now with sales of more than £15 million, was ready to regain its independence.

Renamed Bodycote International, the newly independent company included the former Bodycote and Valdown operations, as well as other Slater, Walker textile interests, including Brocklehurst Fabrics and Ormerod Brothers. Dwek continued the group's move into industrial textiles and household textiles, and in 1972 led the sale of the company's knitwear division to Stirling Group. Instead, the company made a new series of acquisitions, including Supercraft Garments and head- and eye-safety products and garments maker Wm Stephens in 1974. The company continued its exit from consumer textiles markets as it repositioned itself as a focused industrial textiles group. Bodycote also pursued its international expansion through the decade, building a manufacturing presence in Germany and Sweden, and becoming one of Europe's largest integrated industrial textiles producers.

Yet the oil crisis of the 1970s, the resulting British recession, and especially the flood of cheap textiles from Asian markets at the end of the decade forced Bodycote to make an unusual decision. At the end of the decade, the company decided to abandon its traditional operating sector and instead move into a new industrial market altogether. That process got underway with the acquisition of Blandburgh Ltd., based in Macclesfield, in Cheshire. Dwek remained Bodycote's chairman, but now was seconded by Blandburgh's John Chesworth, who had founded the company in 1972.

Blandburgh had grown quickly into a major provider of heat treatment services in the United Kingdom, and formed the basis of Bodycote's transformation into a metallurgical services company. Bodycote quickly began making new acquisitions, picking up Zinc Alloy Rust Proofing from Astra Industrial Group for £700,000. Another company acquired at this time was the dyeing and finishing group William Denby and Sons, which primarily added its textile coating and laminating capacity to Bodycote. By the end of 1980, Bodycote had already reduced its reliance on textiles from 90 percent to just 10 percent of sales, and continued selling off the majority of its textile holdings into the early 1980s.

Bodycote continued to build its metal treatment capacity through the decade. A notable acquisition for the group came in 1983, with the purchase of Nemo Heat Treatments, based in Stockport, adding its specialty in vacuum hardening techniques. Not all of Bodycote's expansion involved metallurgical services. In the mid-1980s the company made a foray into the packaging sector. Yet those operations remained marginal for the group and were abandoned in the late 1990s.

Metallurgical Services Leader in the 21st Century

Instead, Bodycote began refocusing itself as a metallurgical services specialist. A major step toward that goal came in 1990 with the acquisition of Metallurgical Testing Services Ltd., based in Edinburgh, Scotland, allowing the company to add a new prong to its range of metal treatment services. The next step came with the formation of Bodycote HIP—and the group's entry into the emerging Hot Isostatic Pressure market (HIP).

Having established its core competencies, Bodycote now began constructing its international presence. The company moved into North America, acquiring Industry Metal Technology Inc. in 1992. The company also opened operations in Belgium that year. At the same time, Bodycote established a number of new plants. While Heat Treatment remained its largest operational division into the next decade, the company successfully built its HIP division into the world's leading hot isostatic pressure specialist.

Company Perspectives:

Vision: To be recognised as a leading provider of metallurgical and testing services and the partner of choice for outsourcing needs, aspiring to deliver enhanced value to all stakeholders.

Mission: To provide world class companies with metallurgical and testing services that make a positive contribution to the success of their business. To earn sustainable profits which attract shareholder interest. To engage, develop and retain competent people, harness their enthusiasm and inspire them to excel.

To act as a good corporate citizen.

By the mid-1990s, Bodycote's industrial empire stretched over 50 plants worldwide. The North American market remained a primary target for the group. In 1996 the company bought Hinterliter Heat Treating, adding six new plants in the United States and Canada. That purchase was followed by the acquisitions of Texas-based Metallon in 1996, and Ohio's Alpha Heat Treating Co. in 1998. Elsewhere, the group continued its expansion as well, such as its 1996 acquisition of Poole, England's Lymington Plating. The following year the group strengthened its Scandinavian presence with the purchase of Brukens Thermotreat in Denmark. In 1997, also, Bodycote became the leading heat treatment specialist in France with its acquisition of that country's HIT, which also gave the company operations in Spain, Portugal, and Italy.

By then, the company had sold off the last of its textiles operation—a maker of bulletproof vests—as well as its remaining packaging operations. Now fully focused on metallurgical services, Bodycote continued its global expansion. In 1999, the company acquired Metal Treating and Progressing Heat Treatment, in the United States, then Sweden's Dala Plating Gruppen. Back at home, Bodycote boosted its U.K. position with the purchase of Thermal Processing Group in 1998.

Bodycote continued its acquisition spree into the new century, buying up a number of companies in Sweden, Canada, and France. In 2001 the company stepped up its presence in Germany with the purchase of that country's Nussbaum Metal Technology. The company also gained market leadership in the United States that year through its acquisition of finishing specialist Lindberg, paying more than $102 million.

The company next prepared to continue its expansion into the Far East. Yet the economic slowdown at the beginning of the 21st century, coupled with a drastic drop in the aerospace and other key industries, put Bodycote under pressure. With revenues slipping, and profits falling, the company was forced to abandon its expansion drive, and instead institute cost-cutting measures, including the shedding of a number of employees. By 2003, the company had managed to stabilize itself, but forecasted a return to market growth only in 2006. Nonetheless, Bodycote clearly had positioned itself as a global leader in the metallurgical services sector.

Principal Subsidiaries

Bodycote de Mexico SA de CV; Bodycote H.I.P. Limited; Bodycote Heat Treatments Limited; Bodycote IMT Inc. (U.S.A.); Bodycote IMT NV (Belgium); Bodycote Industrial Materials Technology GmbH (Germany); Bodycote Materials Testing A/S (Norway); Bodycote Materials Testing BV (The Netherlands); Bodycote Materials Testing Limited; Bodycote Materials Testing Srl (Italy); Bodycote Metallurgical Coatings Limited; Bodycote Omnitest Inc. (U.S.A.); Bodycote Powdermet AB (Sweden); Bodycote Technitrol Inc. (Canada); Bodycote Warmebehandlung GmbH (Germany); Bodycote Ytbehandling AB (Sweden); Coutherm (France); Hauzer Coating Centrum BV (The Netherlands); HIT Industries (France); Staalharderij NEVE NV (Belgium); Traitement Thermique Belge (Belgium).

Key Dates:

1923:: The company is founded as G.R. Bodycote, a maker of underwear, in Leicester, England.
1951:: G.R. Bodycote goes public on the London Stock Exchange.
1969:: The company is acquired by fast-growing industrial and financial conglomerate Slater, Walker.
1972:: The company acquires Valdown Jersey Fabrics, in a cash-share deal giving Joe Dwek the right to acquire up to 50 percent in the company; renamed Bodycote International, the company is spun off from Slater, Walker as an independent company; Bodycote then begins to specialize in the industrial textiles sector.
1979:: Bodycote acquires Brandburgh Ltd., a heat treatment specialist, launching its transformation into a metallurgical services group.
1983:: Bodycote acquires Nemo Heat Treatments, based in Stockport, adding its specialty in vacuum hardening techniques.
1990:: Bodycote acquires Metallurgical Testing Services, in Scotland.
1991:: The company forms Bodycote HIP, entering the hot isostatic pressing market.
1992:: International expansion begins with Industry Metal Technology Inc. in the United States.
1996:: The company acquires Hinterliter Heat Treating in the United States.
1997:: The company sells off the last of its former industrial textiles operations; the company acquires Brukens Thermotreat in Denmark and HIT, based in France.
2001:: The company acquires Lindberg, based in the United States, for $102 million.
2003:: The company begins cost-cutting measures in response to a slump in the metals market.