Glen Dimplex

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Glen Dimplex

Ardee Road
Dunleer, County Louth
Ireland
Telephone: (353) 041 685
Fax: (353) 041 685
Web site: http://www.glendimplex.com

Private Company
Incorporated: 1977 as Glen Dimplex
Employees: 8,500
Sales: EUR 1.5 billion $1.9 billion (2004)
NAIC: 335221 Household Cooking Appliance Manufacturing; 335211 Electric Houseware and Fan Manufacturing; 335222 Household Refrigerator and Home and Farm Freezer Manufacturing; 335224 Household Laundry Equipment Manufacturing; 335228 Other Household Appliance Manufacturing

Glen Dimplex is the world's leading manufacturer of electrical heating products and also produces a wide range of other appliances. Based in Ireland, Glen Dimplex has built up a collection of prominent appliance brands, including Dimplex, Stoves, New World, Belling, Galaxy Showers, Burco, AquaVac, Faber, Glen, Gobline, Roberts Radio, and others since its founding in 1973. The company's products include a full range of domestic and commercial heaters, boilers, stoves, gas and woodburnng decorative fireplaces, radios, vacuum cleaners, among other products. Glen Dimplex has established a global presence, with manufacturing and sales subsidiaries in the United Kingdom, Germany, Norway, Canada and China and sales offices in France, the Netherlands, Belgium, Italy, Japan, and Poland. The company also owns two distribution subsidiaries in Ireland, and maintains a 20 percent stake in NACCO Industries subsidiary Hamilton Beach/Proctor-Silex in the United States. Together, these operations combine to produce sales estimated at more than EUR 1.5 billion ($1.9 billion) into the mid-2000s. Glen Dimplex is a private company owned and led by founder and chairman Martin Naughton.

FOUNDING AN APPLIANCE GIANT IN 1973

Martin Naughton held a degree in engineering and worked at a number of jobs through the 1960s before becoming production manager at AET, a prominent Irish appliance company, based in Dunleer. AET slipped into losses at the beginning of the 1970s, and by 1973 had been taken over by the Irish government's bailout arm, Foir Teo. At that time, Naughton offered to buy out AET. When his bid was rejected, Naughton led a number of other AET employees in setting up a new business, in the town of Newry, in Northern Ireland. Naughton named the company Glen Electric, and launched operations with just ten employees. The company then began producing its own electric radiators. Naughton's original goal was modest, hoping to build the company to an employee base of 100 people and sales equivalent of EUR 1.5 million per year.

Naughton's timing was inauspicious, to say the least. The oil crisis, coupled with a long miners' strike, had sent the country into a long recession, and had also sent electricity rates spiraling upward. By the mid-1970s the government had raised electricity rates, and especially the off-peak rates, by some 70 percent. The British government had also begun promoting a scheme encouraging people to switch off their electricity during parts of the day in order to save energy.

Yet Naughton later viewed the challenges of the period as part of the company's later success. As he told the Sunday Business Post : "It was probably no bad thing to start at a difficult time. If you start at an easy time, you get soft. I think we learned from it. We run a very big organisation now, but we have the discipline and attitude of a small company. Every big company was once a small company. Every company has a style and it is trying to keep those attitudes—running it the same way—that has proven to be successful."

By 1975, Glen Electric had indeed succeeded in growing despite the worst of the recession, and in that year the company launched a new subsidiary in Newry. The company leased a factory building and began producing an expanded range of electric home appliances, including electric kettles and percolators.

Glen Electric's big break came in 1977, when Dimplex, then the United Kingdom's leading heating appliances brand, went into receivership. Originally founded as Habin Limited, an operator of garages and service stations in the Southampton region, that company had acquired the rights to the "Dimplex" electric radiator design in 1949. By the following year, the company had focused its operations on heating appliances, and changed its name to Dimplex Plc. The company grew strongly through the 1950s. In 1954, for example, the company launched construction of two new factories in Southampton. Before construction had even been completed, demand for the Dimplex heater proved so strong that the company was forced to double the size of its factories.

Dimplex went public in 1959 and continued to build on its success over the next decade, expanding its range of heaters, and developing a strong export business. By the end of the 1960s, the company was not only the U.K.'s leading electric heater brand, but was also a prominent name in markets including Canada, Australia, South Africa, New Zealand, Belgium, the Netherlands, Italy, Portugal and Japan. At the beginning of the 1970s, Dimplex also entered the United States.

The 1970s spelled disaster for Dimplex, however, as electricity prices soared, and the extended recession crippled its sales. Dimplex began posting losses as early as 1973, and by 1976 its losses had continued to top £600,000 per year. Despite its efforts to rebuild its profitability, Dimplex was forced to throw in the towel in 1977, entering receivership.

In that year, Naughton arranged a meeting with the company's receiver, claiming an interest in acquiring the far-larger Dimplex. Naughton later admitted to the Irish Examiner that his real interest in the meeting was in order to engage in a bit of "industrial espionage." Yet Naughton, joined by financial advisor and future business partner Lochlan Quinn, quickly became captivated by the idea of taking over Dimplex itself. By the end of that year, Glen Electric had completed the Dimplex acquisition, becoming Glen Dimplex. Naughton took 74 percent of the newly enlarged company, with Quinn holding the remainder.

EXPANSION: 1970–89

Naughton quickly turned the Dimplex operations around, and by the following year, Glen Dimplex was prepared for more expansion. In 1978, Naughton came full circle, as it were, when Glen Dimplex agreed to acquire AET, which had continued to struggle against losses through the 1970s. The new subsidiary was then relaunched as Bitech Engineering.

In 1981, Glen Dimplex expanded again, this time boosting its commercial operations through the creation of a joint-venture with Burco Dean. Founded in the late 19th century, Burco Dean's greatest success had come through the lauch of its "Baby Burco" Washboiler in the 1950s. Over the next decades, the Burco name became one of the most well-known in the catering sector in the U.K. By the mid-1980s, however, expansion of the joint venture required too steep an investment for Burco Dean, and in 1985, the company agreed to sell the Burco appliance business to Glen Dimplex.

COMPANY PERSPECTIVES

Founded in 1973, Glen Dimplex is now the world's largest electrical heating business and holds significant market positions in the domestic appliance industry worldwide. With an annual turnover of EUR 1.5 Billion, the Group employs 8,500 people. Fundamental to its success is a policy of continuous investment in building brands, constant product innovation and providing its customers with the products which they aspire to.

The mid-1980s marked a period of significant expansion for Glen Dimplex. By the end of 1985, the company had acquired two more leading British appliance brands, Morphy Richards, a specialist in small home appliances, and Blanella, which produced electric blankets. The following year, Glen Dimplex expanded into the international appliance market, acquiring Hamilton Beach in the United States, paying $105 million. For Naughton, the Hamilton Beach acquisition not only gave the company a foothold in the North American market, but also allowed the company to expand its product technology. As Naughton told HFD at the time: "We see the companies as a lovely fit. We make heat-driven appliances; Hamilton Beach makes motor-driven appliances. We plan to market Hamilton Beach products under the Morphy Richards name in Europe and Morphy Richards products under the Hamilton Beach name in the United States."

At the beginning of the 1990s, however, Glen Dimplex appeared to take a step back from its international operations. In 1990, the company agreed to sell most of Hamilton Beach to NACCO Industries, which had just recently acquired the Procter-Silex brand group. NACCO then combined Hamilton Beach and Procter-Silex into a single subsidiary. Glen Dimplex's share of the new company initially stood at 35 percent, but was later reduced to just 20 percent.

INTERNATIONAL LEADER IN THE NEW CENTURY

Although it was refocused more closely on its core electric heating appliance operations, Glen Dimplex had not abandoned its interest in overseas operations. By the end of 1990, the company had completed the acquisition of KKW, the Siemens electric heating division, taking the company into the German market and giving it a strong position throughout the European market.

The following year, Glen Dimplex turned to Canada, where it acquired Chromalox, that market's leading electrical heater producer, and another Siemens' subsidiary, Westcan. In 1992, Glen Dimplex expanded its product range, buying up troubled stove British manufacturer Belling.

Through the mid-1990s, the company continued to combine geographic expansion with extensions of its product range. In 1995, for example, the company bought EIO, a manufacturer of floor care appliances and products based in Germany. The same year the company bought British electrical heating appliance producer Seagoe Technologies. These purchases followed the acquisition of Roberts Radio, a producer of highend radios and audio equipment, in 1994.

KEY DATES

1946:: Habin Ltd. is incorporated.
1949:: Habin acquires the rights to Dimplex electric heaters and the company name is changed to Dimplex.
1959:: Dimplex goes public.
1973:: Martin Naughton, formerly production manager at appliance company AET, founds Glen Electric.
1975:: Glen Electric builds a new factory in Newry, Northern Ireland.
1977:: Glen Electric acquires Dimplex and becomes Glen Dimplex.
1978:: The company acquires the AET factory in Dunleer, which is relaunched as Bitech Engineering.
1981:: Glen Dimplex forms a joint venture with Burco Dean.
1985:: The company takes over the Burco Appliances joint venture and acquires Morphy Richards and Blanella in the United Kingdom.
1986:: Glen Dimplex acquires the Hamilton Beach company in the United States.
1990:: Hamilton Beach merges into Nacco's Procter Silex and Glen Dimplex acquires control of Siemen's KKW in Germany.
1991:: The company enters the Canadian market through the purchases of Westcan and Chromalox.
2000:: Glen Dimplex acquires Faber in the Netherlands.
2002:: The company establishes a night-storage heater joint venture in China and enters the Scandinavian market with the acquisition of Norway's Nobo.
2003:: Glen Dimplex acquires Norway's Siemens Electrical Heating.
2004:: The Glen Dimplex Japan joint venture is established.

Into the mid-1990s, Glen Dimplex's revenues had topped the EUR 600 million mark. The company showed no sign of slowing its growth. By the end of the decade, the company had nearly doubled its revenues. Part of this growth came from its entry into France, where it acquired that market's electric heating appliance leader Mullen in 1996. The company also added a new range of floor care products through its purchase of AquaVac in 1997, and established the leading position in the German portable electric heater segment through the purchases of that company's AKO and WET in 1998.

By the end of the decade, Glen Dimplex had also established its first offices in Asia, setting up procurement operations in Hong Kong and China. These were followed by the creation of a manufacturing joint venture, Shenyang Dimplex Electronics, which began producing night-storage heaters for the vast Chinese market. The move was seen as an important investment, especially as the Chinese government introduced new low-priced nighttime electricity rates, encouraging the adoption and use of night-storage heaters. The jointventure, with the Chinese government and a electricity producer, called for the production of one million heaters.

By then, Glen Dimplex had also added a new subsidiary and product category, by acquiring the Netherlands-based Faber, a leading European name in the production of gas and log-burning decorative fires, in 2000. The company also added two new leading British cooker brands, Stoves and New World, in 2001; these were then combined with its Belling subsidiary.

Glen Dimplex entered the Scandinavian market in 2002, buying up Nobo, based in Stjoerdal, near Trondheim, Norway. This purchase was soon followed by the 2003 acquisition of Siemens Electrical Heating, also based in Trondheim, and the last of Siemens' electric heating appliance operations.

Glen Dimplex continued to grow into the mid-2000s, adding two new subsidiaries in 2004. The first, Halstead Boilers Ltd., strenghtened the company's range of home central heating boilers in the U.K. The second, Glen Dimplex Japan, was a joint venture with Globally Incorporated, part of the Matsumoto Kenko construction group, which established Glen Dimplex in Japan for the first time.

By then Glen Dimplex had considered, but rejected, the idea of going public, in part to allow Quinn to cash in on his 26 percent holding in the company. But, as Naughton told the Sunday Business Post : "We did look at it. We had a beauty show of various commercial banks. Basically, I didn't think I would enjoy running a public company. I value my privacy too much. And we are able to grow from our resources and will continue to grow. A lot of people are driven by quarterly figures and they look at their profits, and other people are doing things to please the analysts, but not because it is the right thing to do strategically. All our decisions now are strategic."

Instead, Naughton agreed to buy out Quinn's stake, reportedly for some EUR 200 million in 2004, giving him 100 percent control of the firm. The possibility of a future public offering appeared limited, particularly as Naughton had by then been joined by his son, Niall, in the company.

In 2005, Glen Dimplex went from hot to cold, when it acquired LEC Refrigeration Plc, based in the United Kingdom. Founded in the 1940s, that company produced and distributed refrigerators for both the domestic and commercial markets. Glen Dimplex promptly shifted LEC's production and headquarters to Merseyside, in a move completed in January 2006, ahead of the launch of a new LEC product line slated for April of that year. Martin Naughton had built Glen Dimplex from a humble startup in the 1970s to a world appliance leader in the 2000s.

PRINCIPAL SUBSIDIARIES

Bitech Engineering; Burco Appliances Ltd.; Dimpco Ltd.; Dimplex AS (Norway); Dimplex Cleaning Systems; Dimplex North America Ltd. (Canada); Faber International BV (Netherlands); Galaxy Showers; Glen Dimplex Benelux BV (Netherlands); Glen Dimplex Design; Glen Dimplex Deutschland GmbH (Germany); Glen Dimplex Espana Spain; Glen Dimplex Exports Ltd.; Glen Dimplex France France; Glen Dimplex Home Appliances; Glen Dimplex Hong Kong; Glen Dimplex Italia (Italy); Glen Dimplex Japan; Glen Dimplex N.I. Ltd.; Glen Dimplex Polska (Poland); Glen Dimplex U.K. Ltd.; Glen Electric Northern; Halstead Boilers; KKW Kulmbacher Klimageräte-Werk GmbH (Germany); Lec Refrigeration plc; Morphy Richards Ltd.; Muller France; Nobo Electro AS (Norway); NOBO Heating UK Ltd.; Roberts Radio Ltd.; Seagoe Technologies Limited Northern; Shenyang Dimplex Electronics (Glen Dimplex China)

PRINCIPAL COMPETITORS

Siemens AG; Samsung Electronics Company Ltd; Sanyo Electric Company Ltd; Aisin Seiki Company Ltd; Electrolux AB; Whirlpool Corp; BSH Bosch und Siemens Hausgeraete GmbH; LG Electronics Inc; GE Appliances; Liebherr-International AG; Maytag Corporation.